# Bitcoin has subjective value - intrinsic value is irrelevant



## jman0war

_I have moved these posts from another thread to focus on this issue - Brendan _



Brendan Burgess said:


> He [Warren Buffett]  capped his criticism by saying that "[t]he idea that [bitcoin] has some huge intrinsic value is just a joke, in my view."


There's that phrase again _intrinsic value_.

Other than Air,Water and Food : which we all require for survival;  what has any intrinsic value?
Subjective Theory of Value has more relevance.

The cost of component parts + labour, does not give anything value.


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## Duke of Marmalade

jman0war said:


> There's that phrase again _intrinsic value_.
> 
> Other than Air,Water and Food : which we all require for survival;  what has any intrinsic value?


That really is silly.  A motor car has huge intrinsic value, so too a house, clothing, telephones, computers, health care, holidays etc.  These days "survival" is not the only contributor to human value but advanced as we have beyond the caveman instincts for survival we have not reached the stage where a digital entry on a SmartPhone representing nothing but that digital entry has any intrinsic value.


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## jman0war

Duke of Marmalade said:


> That really is silly.  A motor car has huge intrinsic value, so too a house, clothing, telephones, computers, health care, holidays etc.  These days "survival" is not the only contributor to human value but advanced as we have beyond the caveman instincts for survival we have not reached the stage where a digital entry on a SmartPhone representing nothing but that digital entry has any intrinsic value.


Not silly at all.
Theories of value.
Intrinsic Theory of value portends that value can be estimated by some objective measure.
Its rubbish.

Marcel Duchamp - Bicycle Wheel sold for 1.7m
http://www.thecityreview.com/s02pco2.gif

Value is Subjective.


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## Duke of Marmalade

Crazy stuff


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## Duke of Marmalade

jman0war said:


> Value is Subjective.


Yeah?  And my judgement and that of all the very smart ones is that the value of bitcoin is 0.00000.


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## jman0war

Duke of Marmalade said:


> That really is silly.  A motor car has huge intrinsic value, so too a house, clothing, telephones, computers, health care, holidays etc.  These days "survival" is not the only contributor to human value but advanced as we have beyond the caveman instincts for survival we have not reached the stage where a digital entry on a SmartPhone representing nothing but that digital entry has any intrinsic value.


Bitcoin fits nicely into your personal intrinsic values as bitcoin offers a way to transact with another in a censorship resistant way, that requires nobody's approval, no KYC or other personal identifying information, no ID restrictions, requires no trusted parties, no amount transfer limits, anywhere across the globe in seconds to minutes.

You won't get from the existing banking.
And that censorship resistance, approval-less and trust-less system my friend, has Value.

It's no wonder big banks and big government don't like it.


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## ant dee

Duke of Marmalade said:


> Yeah?  And my judgement and that of all the very smart ones is that the value of bitcoin is 0.00000.


I bet if you and all the very smart ones happened to find any bitcoin you would give it away right? Since your judgement says it's value is zero and all that...


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## Brendan Burgess

ant dee said:


> I bet if you and all the very smart ones happened to find any bitcoin you would give it away right?



You are confusing value with price.

It's value is clearly zero. 

It's price is $13,100 

If you give me a Bitcoin, I will take it and sell it on instantly. 

Brendan


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## ant dee

Brendan Burgess said:


> You are confusing value with price.
> 
> It's value is clearly zero.
> 
> It's price is $13,100
> 
> If you give me a Bitcoin, I will take it and sell it on instantly.
> 
> Brendan


Something doesn't sound right about this.

We know the price, we got the markets for it.

But value is what you predict the price will be at some undefined point in the future, for no specific reason?


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## Brendan Burgess

ant dee said:


> ut value is what you predict the price will be at some undefined point in the future, for no specific reason?



Not really.

It's not really up the non-believers to prove that a bag of air is worth nothing. 

It is up to people who believe that it's worth $14,000 to show some basis or calculation. I have yet seen any.

Brendan


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## TheBigShort

Value is subjective.

A second hand car comes onto to the market with any amount of prospective buyers. The average market value for the same car, model, year, condition etc is €10,000.

The car eventually sells for €12,000.

On the face of it this represents bad value. However it subsequently transpires that the purchaser, being offered a new job, is required to provide their own transport for the job. To the buyer, outbidding everybody else and securing the car for €2,000 over the market value will secure him employment in a job worth €35,000 pa. To the purchaser, this additional €2,000 paid to secure the car represents real intrinsic value, to everyone else, he overpaid.

On the face of it bitcoin represents bad value. Its market value is about €1 per coin. But each sells for €11,000 today. It subsequently transpires that the purchaser, realising the devaluation of fiat currencies through QE, conscience of market manipulation in stock, commodities, metals etc, aware of the on-going change to cashless societies, conscience of bank bailouts, bank fraud, enlightened to the concept of trustless financial transactions (blockchain) and wanting an option to move wealth from fiat system to trustless system (bitcoin) has driven the price up to €11,000.

Whether €11,000 represents value is for any prospective purchaser to determine. If you believe that the financial fiat based system is systemically diseased by fraud and corruption to such an extent that it is effectively dying a slow death (like all other fiat systems throughout history) and, is primarily dependent on US military and its allies to uphold its ‘value’, as I do, then €11,000 bitcoin represents real value.

If you think that the fiat based system is working fine, that it is robust enough to withstand current levels of fraud, and that there is nothing signaling to you that its demise is inevitable, that this time is different, then €11,000 is poor value.


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## Sunny

TheBigShort said:


> Value is subjective.
> 
> A second hand car comes onto to the market with any amount of prospective buyers. The average market value for the same car, model, year, condition etc is €10,000.
> 
> The car eventually sells for €12,000.
> 
> On the face of it this represents bad value. However it subsequently transpires that the purchaser, being offered a new job, is required to provide their own transport for the job. To the buyer, outbidding everybody else and securing the car for €2,000 over the market value will secure him employment in a job worth €35,000 pa. To the purchaser, this additional €2,000 paid to secure the car represents real intrinsic value, to everyone else, he overpaid.
> 
> On the face of it bitcoin represents bad value. Its market value is about €1 per coin. But each sells for €11,000 today. It subsequently transpires that the purchaser, realising the devaluation of fiat currencies through QE, conscience of market manipulation in stock, commodities, metals etc, aware of the on-going change to cashless societies, conscience of bank bailouts, bank fraud, enlightened to the concept of trustless financial transactions (blockchain) and wanting an option to move wealth from fiat system to trustless system (bitcoin) has driven the price up to €11,000.
> 
> Whether €11,000 represents value is for any prospective purchaser to determine. If you believe that the financial fiat based system is systemically diseased by fraud and corruption to such an extent that it is effectively dying a slow death (like all other fiat systems throughout history) and, is primarily dependent on US military and its allies to uphold its ‘value’, as I do, then €11,000 bitcoin represents real value.
> 
> If you think that the fiat based system is working fine, that it is robust enough to withstand current levels of fraud, and that there is nothing signaling to you that its demise is inevitable, that this time is different, then €11,000 is poor value.



That doesn't make sense. Your example of the car only makes sense if that is the only car on the market that the person can buy. At the end of the day he bought car for 12,000 that is only worth 10,000. Doesn't matter if it turned out that he bought it because it allowed him to get a job or it reminded him of the first car he got laid in.

Same with bitcoin. Even if you believe that the fiat based system is destined to fail, it doesn't mean that bitcoin is the only alternative. So where is the value in actual Bitcoin? I haven't seen anyone tell me where it is.


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## TheBigShort

Sunny said:


> That doesn't make sense. Your example of the car only makes sense if that is the only car on the market that the person can buy. At the end of the day he bought car for 12,000 that is only worth 10,000. Doesn't matter if it turned out that he bought it because it allowed him to get a job or it reminded him of the first car he got laid in.



I'm not buying the whole 'getting laid in a car' thing. This was a manifestation of the mass production of cars to the general public back in 1950's US, relative to the availability of cheap motels, b&b's and societal attitudes to sex before marriage etc,  the getting 'laid in a car' became common place.

Nobody has gotten laid in car since about 1983.


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## Duke of Marmalade

TheBigShort said:


> If you believe that the financial fiat based system is systemically diseased by fraud and corruption to such an extent that it is effectively dying a slow death (like all other fiat systems throughout history) and, is primarily dependent on US military and its allies to uphold its ‘value’, as I do, then €11,000 bitcoin represents real value.


So you have made up your mind.  Until now you have protested agnosticism as to the value of bitcoin.  But now you have decided that €11,000 "represents real value".  It is not obvious what made up your mind since the reasons proferred look remarkably similar to the Shortie Syndrome of your earlier thinking.


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## ant dee

Brendan Burgess said:


> Not really.
> 
> It's not really up the non-believers to prove that a bag of air is worth nothing.
> 
> It is up to people who believe that it's worth $14,000 to show some basis or calculation. I have yet seen any.
> 
> Brendan


I see, now the burden of proof lies on the bitcoin side.
And I guess the free trading activity on markets globally over the years that led to this price is not a proof.

But trading activity between various currencies against the Dollar is an accurate measure of each currencies worth (value??) is it not?

Is it not obvious that value is subjective? People are trying to define it in hindsight. And everything is so obvious in hindsight.
If bitcoin ever became worthless, there will be many geniuses saying 'I predicted that', never mind the fact that an open prediction is meaningless.
Never mind the fact they were doom-saying since 2012 or something.

This asset crushed, let us look at history, find a reason, find a pattern, aha, for that reason its 'value' was wrong.
Of course it doesn't really work when you try to apply that pattern to predict the future now does it?

We got the doom-sayers crying global financial collapse since 2009 with all sorts of fancy charts as 'evidence'.
We are not going to call these broken watches geniuses because they may happen to be right every decade or so.


For me, and I really think I am using common sense here, the idea that there is a 'value' to something different than its current market price is naive.
Wishful thinking for people who think they can predict the future.
Just a few assumptions to add, the market is sufficiently global, free, liquid and critical information is known to every participant at the same time.


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## newtothis

Brendan Burgess said:


> The truth is that it has no value.  It's possible that it might have a residual value of a few cents, but even that seems very unlikely to me.



I'm baffled. Can you explain your understanding of value? Mine is: "Value is what someone is prepared to pay for something". By that definition, Bitcoin clearly has a value. It may be highly volatile. You may* believe* it to be overvalued; someone else might believe the opposite. You seem to be suggesting there is some underlying concept of intrinsic value. If that's the case, what's the intrinsic value of a €20 note? It's nothing but a piece of paper with some nice pictures and security features which probably costs a tiny fraction of its face value to produce. 

Can you explain, please?


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## Brendan Burgess

Hi newtothis

Lewis Carroll puts it much better than I can.

“When _I_ use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.” “The question is,” said Alice, “whether you _can_ make words mean so many different things.”


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## newtothis

Indeed, but you've sidestepped the question: what_ do_ you mean by "value"? 

By the way, I just checked and according to my dictionary value is: "the amount of money that can be received for something", which makes your assertion "The truth is that it (Bitcoin) has no value" somewhat questionable. You can play with semantics, but what I believe you are saying is "Bitcoin is in my opinion overvalued", which is something else entirely.


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## Sunny

newtothis said:


> Indeed, but you've sidestepped the question: what_ do_ you mean by "value"?
> 
> By the way, I just checked and according to my dictionary value is: "the amount of money that can be received for something", which makes your assertion "The truth is that it (Bitcoin) has no value" somewhat questionable. You can play with semantics, but what I believe you are saying is "Bitcoin is in my opinion overvalued", which is something else entirely.



Hmmm, I remember my investment banking days and having discussions around the valuation of a portfolio of structured credit bonds like asset backed securities. And they were all priced as 'ah sure look, we can get a bid of this price' so that's the value. Stick it in the accounts and lets get rich..... All fine except it wasn't. What someone is willing to pay is not the value of something especially in a bubble.... If people are investing with that mindset, they are going to lose money because eventually people will not be willing to pay and then you are left the one with remaining question...Why should I buy Bitcoin and I have yet to see one answer that has made me think I wish I could own some. Exactly the same with asset backed securities backed by rubbish back in the good old days.... Maybe the value of bitcoin is not zero but I still haven't seen anyone tell me why it has value apart from 'somebody is willing to pay for it'.....It's nothing more but than an experiment in my eyes and it has developed every single attribute that you would associate with a bubble.

And by the way, I also don't really understand the fascination with Gold as an asset either so it is not a technology thing.


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## Firefly

There are two main types of people who transact in Bitcoin as far as I can see. Those engaging in illegal activity and those hoping for appreciation in the value of the coins. I can accept that there is a possibility of a more wide-scale use for Bitcoin in the future, but unless there is a take-up by the general population, in the near future, to actually buy stuff, then I think the intrinsic value will be limited to the value placed by those conducting illegal activity. If/when this happens, the price will plummet and those hoping to make a return on holding the currency itself will lose out and probably leave with what they can.


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## newtothis

Sunny said:


> What someone is willing to pay is not the value of something especially in a bubble....



I'm afraid you're wrong: that's exactly what the value of something is, by definition. Whether it's in a bubble or not is irrelevant (I'd happen to agree by the way that Bitcoin probably is a bubble on the principle of walking like a duck, sounding like a duck..... etc., but again, that's irrelevant).

Otherwise you're in the Lewis Carroll territory of choosing your own meaning of words: interesting concept, but hardly useful as a means of communication.

As I said, there's a big difference between saying "X has no value", which is demonstrably not true, and "I believe X to be overvalued".


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## Brendan Burgess

newtothis said:


> I'd happen to agree by the way that Bitcoin probably is a bubble



I want to make money myself and help other people to avoid losing money. 

The way people do this generally is to say : That share or property or whatever is worth €100. The price is €10 so it's a good buy.  The price is €1,000 so it's a bad buy.

One can get into navel gazing debates about the meaning of "worth" but it  does not help at all. 

Bitcoin is worth zero. 
The price is $8, 300 

No one should buy it at this price and anyone who owns Bitcoin should sell it before its price falls to match its worth.

Brendan


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## Sunny

newtothis said:


> I'm afraid you're wrong: that's exactly what the value of something is, by definition. Whether it's in a bubble or not is irrelevant (I'd happen to agree by the way that Bitcoin probably is a bubble on the principle of walking like a duck, sounding like a duck..... etc., but again, that's irrelevant).
> 
> Otherwise you're in the Lewis Carroll territory of choosing your own meaning of words: interesting concept, but hardly useful as a means of communication.
> 
> As I said, there's a big difference between saying "X has no value", which is demonstrably not true, and "I believe X to be overvalued".



Well, I am afraid you are wrong. You are getting confused between price and value and quoting dictionaries doesn't really add anything. Every day, billions and billions are traded on exchanges buying and selling shares that are either undervalued or overvalued. Going strictly by your definition of value when it comes to investing, nobody would ever need to analyse a company or industry because the value is simply the price. Nothing is ever overvalued or undervalued.
If Brendan says Bitcoin has no value, he might be wrong. Bitcoin might well have a value but he could just as easily be right. It could be worth nothing. Just because people are buying it now doesn't mean it is worth anything. If all this trading suddenly stopped in Bitcoin, what are you left with? Are you left with something you can use? No. Something you can spend? Not really as who would want it. Make something? No. Same as owning a share in the latest dot.com company that gets a market cap the size of apple but doesn't generate a profit or even knows how to make money with it's idea....I would have no problem saying shares in that sort of company are worthless even if trading prices indicate something else. Could be proved wrong there as well but entitled to say it.


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## PMU

Firefly said:


> There are two main types of people who transact in Bitcoin as far as I can see. Those engaging in illegal activity and those hoping for appreciation in the value of the coins. I can accept that there is a possibility of a more wide-scale use for Bitcoin in the future, but unless there is a take-up by the general population, in the near future, to actually buy stuff, then I think the intrinsic value will be limited to the value placed by those conducting illegal activity. If/when this happens, the price will plummet and those hoping to make a return on holding the currency itself will lose out and probably leave with what they can.


  This is an important point. There was a recent documentary on BBC 'Stealing Van Gogh' that said criminals use stolen paintings as collateral for drug deals etc. A criminal might not know exactly the value of a stolen Gainsborough relative to a stolen Van Gogh but would know it was worth a lot and would use it as collateral for obtaining drugs for a drug deal. You could see how cryptocurrency would fit into this model. If you can steal or force a cryptocurrency owner to hand them over, you use them as collateral for illegal activities.  You don't need to establish an 'intrinsic value'.  Anonymity is an additional benefit.  The cryptocurrency need not necessarily plummet in value; its value would be established relative to the profitability of the illegal activities.


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## TheBigShort

Value is subjective. 
The price that is determined is the market that is formed between buyers and sellers. If the selling price exceeds the buying offer, either one or both need to move to make a market. If neither move, or the move is insufficient then there is no market. Simples. 

As for bitcoin, if you accept its concept of a trustless decentralised form of currency, or at least its potential to be, then that may represent value to you. If not, then it doesnt represent value to you. 
How you determine the price to be paid on that value is in the eye of the buyer and seller. 
There are plenty of people who saw value in developing apartment blocks in rural towns. They saw potential that others could not see. In some cases it worked out ok, in other cases it didnt. 
Personally I see value in bitcoin at current prices. Im not advising to buy, its volatility is not for the faint-hearted. 
I see that value in the way how the current monetary system operates combining with increasing tensions in geopolitical affairs. My view is these two combining factors are starting to clash and that ultimately will be costly. 
Having an option to store money outside of this system has value - bitcoin can provide that option to me.


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## TheBigShort

PMU said:


> This is an important point. There was a recent documentary on BBC 'Stealing Van Gogh' that said criminals use stolen paintings as collateral for drug deals etc. A criminal might not know exactly the value of a stolen Gainsborough relative to a stolen Van Gogh but would know it was worth a lot and would use it as collateral for obtaining drugs for a drug deal. You could see how cryptocurrency would fit into this model. If you can steal or force a cryptocurrency owner to hand them over, you use them as collateral for illegal activities.  You don't need to establish an 'intrinsic value'.  Anonymity is an additional benefit.  The cryptocurrency need not necessarily plummet in value; its value would be established relative to the profitability of the illegal activities.



Cash is useful here as well.


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## Brendan Burgess

TheBigShort said:


> Personally I see value in bitcoin at current prices.



Hi Shortie

It's not enough just to assert that. 

You have to provide some analysis or calculation.  Some basis for saying they are worth $8,000 - each! 

So far, no one has been able to show why they are worth even $1 each.  

There is no comparison with a subjective valuation of apartments in rural Ireland.  I might say that I expect that the demand in Leitrim will rise over the coming years. At present, a two bed represents for €5,000 a year.  If I assume rent increases of 4% a year.  That would give it a range of €50k to €100k.  You might counter by saying that there is an excess of apartments in Leitrim and that the population is falling. So you expect that the maximum rent will be €3,000 which makes it worth between €30k and €60k. 

But I can show you my assumptions and my calculations. You can disagree with them and arrive at a different valuation. That is how markets work. 

But all the Bitcoin faithful are saying is "Bitcoin is worth $8,000" without any analysis which we could challenge.  Why is it not worth $80,000? 

Brendan


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## tecate

Brendan Burgess said:


> But I can show you my assumptions and my calculations. You can disagree with them and arrive at a different valuation. That is how markets work.


What analysis and calculations can you provide for a specific piece of paper - in this instance the 10 euro note - having a value of a pint of plain and a packet of peanuts?


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## newtothis

Sunny said:


> Going strictly by your definition of value when it comes to investing, nobody would ever need to analyse a company or industry because the value is simply the price. Nothing is ever overvalued or undervalued.



It's not my definition! Value and price are indeed two different things: I won't bother quoting you dictionaries again as I'm sure you can look it up.

The issue as I see it is that you are trying to replace opinion ("I believe X is overvalued") with fact ("X has no value"). A bit like Donald Trump's alternative facts: he may well believe there were more people at his inauguration than Barack Obama's, but that doesn't make it a fact.

It’s a demonstrable fact that Bitcoin has a value; that value is realised every time it is bought and sold at a particular price precisely because a buyer and seller have agreed at that point in time at that location what the value actually is. You may well believe differently, but that’s all it is: an opinion. Bitcoin may well drop in value to zero when people wake up to the bubble - if they ever do of course - but its value right now is not zero. If you still think it is, ask yourself what you would do if someone gave you 1,000 Bitcoins: would you just ignore them because you think they have no value? Seriously?


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## newtothis

Brendan Burgess said:


> So far, no one has been able to show why they are worth even $1 each.



It's really simple: the reason is because you can sell one for considerably more than that.


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## tecate

Sunny said:


> You are being robbed!


Indeed 
However, how does the euro have a value and how can you provide an analysis of that value?  It's the same thing.  The only difference is that FIAT is settled.  Crypto is going through a price discovery phase - and it may well end up near zero - I won't discount that possibility at all. It's value happens to be $8k+ today.  When the technology itself, regulation, the eco-system, etc. is complete and settles, then I'd expect price to settle also.  Where that price will end up at, we will have to wait and see.


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## Brendan Burgess

tecate said:


> What analysis and calculations can you provide for a specific piece of paper - in this instance the 10 euro note - having a value of a pint of plain and a packet of peanuts?



Good question. 

With 10 euro, I could have bought about 2 pints of plain anytime over the past ten years. 

I can buy them in any pub anywhere in Ireland or Europe, although the pints of plain may be more or less expensive depending on where I go. 

If the eurozone economy strengthens compared to the UK, my euro will probably gradually increase in value vs. sterling. 

I will be able to buy about two pints of plain for the foreseeable future.

I am concerned about QE. It may actually wipe out the value of the euro. But that does not mean that Bitcoin has any value.

Brendan


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## Duke of Marmalade

This debate invariably goes round in semantic circles with people throwing truisms at each other.  Let me try and put the _Boss _question in another way.  Imagine there was a complete blackout on the prices that bitcoin trades at.  You haven't a clue how much people are exchanging fiat for it.  All you know are the "intrinsic" facts - its limited supply, its decentralised nature etc. etc.  How would you go about putting a value/price on it?  The point is that with any other financial asset you can make plausible assessments of its capacity to earn fiat and that enables at least some valid attempt to put a fiat value on it.

The nearest I could see was the Investopedia attempt to project its ultimate share of world transactional currency and then dividing the total value of world currency requirements by 21M.  Is there any other metric which can be used (in the hypothetical absence of any published price).


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## jman0war

The thread title is wrong and misleading.

All value is Subjective, not just Bitcoin; there is no such thing as Intrinsic value.


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## tecate

Brendan Burgess said:


> Good question.
> 
> With 10 euro, I could have bought about 2 pints of plain anytime over the past ten years.


So the distinction between the two you are making is track record.  There's nothing else that differentiates them and there's no calculation or analysis that needs to be carried out as to why you can buy 2x pints with your 10 euro?

If so, I won't argue with that.


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## tecate

Duke of Marmalade said:


> How would you go about putting a value/price on it?  The point is that with any other financial asset you can make plausible assessments of its capacity to earn fiat and that enables at least some valid attempt to put a fiat value on it


A 2nd hypothetical for you..

You've just established the Dukedom of Marmalade as a completely independent statelet.  How many marmalade coins or notes do I need to buy those 2 pints?

It could be 1, 10 or 100.

What calculations or analysis are you going to show me to demonstrate how much is needed to buy those pints?


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## Duke of Marmalade

tecate said:


> A 2nd hypothetical for you..
> 
> You've just established the Dukedom of Marmalade as a completely independent statelet.  How many marmalade coins or notes do I need to buy those 2 pints?
> 
> It could be 1, 10 or 100.
> 
> What calculations or analysis are you going to show me to demonstrate how much is needed to buy those pints?


This is not a valid metaphor.  The _Boss _has explained how financial assets are valued in terms of money.  This is effectively using money as a unit of value.  There is a logical process - the asset has a money generating potential and can therefore be given a plausible monetary value.  That is distinct from the price level between money and goods and services which I have addressed in an earlier post.

The question that is posed is how on earth do you even begin to strike an exchange rate between bitcoin and fiat?


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## tecate

Duke of Marmalade said:
			
		

> The question that is posed is how on earth do you even begin to strike an exchange rate between bitcoin and fiat?


How do you do so when the next FIAT comes out? IE. Set price of new FIAT currency against USD/GBP/EUR?  Whats the difference?


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## Brendan Burgess

tecate said:


> What analysis and calculations can you provide for a specific piece of paper - in this instance the 10 euro note - having a value of a pint of plain and a packet of peanuts?



Hi tecate

I have been thinking of this a bit further.   I value Ryanair shares, my home, an investment property etc. in terms of the return they  generate.  So I can look at Ryanair's EPS and look at their outlook and then multiply that by a p/e ratio. You can challenge my analysis and forecasts and arrive at a different value. 

So that is how to value Ryanair as an investment.

You can't apply any of that, or no one has applied it, to Bitcoin.  So as an investment, it's worth zero. 

But, you argue, by the same token, the euro is worth nothing. 

Or put it another way, if we apply the same criteria by which we value the euro at two pints of plan, then we can arrive at a value for one Bitcoin. 

In theory, I can issue a Burgess Coin, and if I can persuade the World that each one is worth 100 pints of plain, then it becomes worth 100 pints of plain. But you would probably trust me even less than you would trust the evil Central Bankers. 

Brendan


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## tecate

Ok, so for shares & stocks there is some form of science in arriving at a value but for currencies, not so much..


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## newtothis

Brendan Burgess said:


> So that is how to value Ryanair as an investment.
> 
> You can't apply any of that, or no one has applied it, to Bitcoin.  So as an investment, it's worth zero.



By that logic, gold (or indeed any asset in case you throw the "gold has an industrial use" argument at me) has no value either. Or, come to think of it, a €20 note: try selling one for more than €20!


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## TheBigShort

Brendan Burgess said:


> You have to provide some analysis or calculation. Some basis for saying they are worth $8,000 - each!



Over last 10yrs US money supply has expanded by amounts greater than the supply expanded over the previous 80yrs. The economic system that harps on about how efficient markets are, is inefficient. Free market capitalisim is hostage to 'too big to fail' mantra. Meaning that it is open for fraudulent and corrupt business, or 'whatever it takes' QE. A cursory search for corrupt banking practices over the last decade puts the corrupt practices over the previous century into the ha'penny place. 
The banks are the platform for all financial transactions. They are diseased. 
Couple that with rising geopolitical tensions and the trajectory is one of increasing instability. 
The perpetual debt based system has cracked. Either a massive write down of debt, devaluing everything you ever owned or, inflate the debt away through rising wages, proxy wars. 

The option to transfer some of my money to a decentralised blockchain to hold my money is an intriguing idea and has appeal. Currently bitcoin is the chief crypto and to date, 9yrs on, has withstood all attempts to diminish its appeal - it is showing resilience. 
There is limited amount of 'space' on this blockchain - 21m units at the max. 

You want me to put a figure on it, by like an apartment in Leitrim, or wherever by way of a mathematical equation. But that is a waste of time, as your own example shows. 
What is the point in 'calculating' the value if another calculation can show the opposite? 
In other words, there is no mathematical formula or equation that can calculate the true 'intrinsic' value of anything. If there was there would never be price fluctuations. 

But hey, I dont want to be a spoilsport, so here is a calculation if bitcoin 'takes over the world'!!!

All the money in the world / 21m units of bitcoin = $ 2,695,769.78 per unit of bitcoin. 

Alternatively, 5% of that = $52,000 odd. 

I have a conservative estimate of $40,000 in AAM valuation game!


----------



## newtothis

Brendan Burgess said:


> In theory, I can issue a Burgess Coin, and if I can persuade the World that each one is worth 100 pints of plain, then it becomes worth 100 pints of plain. But you would probably trust me even less than you would trust the evil Central Bankers.



Now, you're getting close to the truth, but probably not in the way you imagine. Of course you can issue your own currency, and people have done (e.g. in localised settings). If you can persuade people it has a value, you can use it to buy things or exchange for other currencies. It has a value in other words. Exactly the same as Bitcoin: all you need is a market of buyers and sellers to agree it has some value: what form it takes is irrelevant. It could be a piece of technology such as Bitcoin or a piece of paper with some clever printing on it or a bar of gold or, God forbid, tulip bulbs. The fact that someone sitting outside that market thinks it has no value and is shouting about emperors and clothes, or that the value may in fact collapse to zero at some point in the future is irrelevant. It does objectively have a value and saying it doesn't won't alter that.


----------



## Duke of Marmalade

TheBigShort said:


> But hey, I dont want to be a spoilsport, so here is a calculation if bitcoin 'takes over the world'!!!
> 
> All the money in the world / 21m units of bitcoin = $ 2,695,769.78 per unit of bitcoin.
> 
> Alternatively, 5% of that = $52,000 odd.


At last we are getting something _Boss_.  Here is a methodology not unlike the one I cited from Investopedia.  There are many theoretical objections to the methodology - velocity of circulation, store of value etc. but it is at least something.  So can we agree for sake of future argument that if bitcoin eventually settles down as just another boring transactional currency it would be worth c. $ 10k per 1% of global penetration.  It is obviously nowhere near that now and the current price should be seen as  speculation on the final resting place, fair enough. 

Nonetheless it is worth trying to guesstimate how far along that path it is now.  We hear that it is possible to buy lattes in some joints. Would you say 1 in a million latte's are thus sold.  If lattes were typical we would then have a current value of $2.69576978.  But possibly that is unfair. We should look at bigger purchases.  I understand that a builder in Larne will accept bitcoin for his appartments.  I think also that a miner in Essex bought a house with bitcoin.  Still looks in the 1 in 100,000 range, that's $26.95.....  Another possible test of current penetration is how many folk earn their living in bitcoins. I think this is currently negligible, not even 1 in a million.

But the real point is that it will never be allowed to achieve penetrations anything like the 1% implied by current prices.  Why?  Because one of the main objectives of the bitcoin community (that's what they call themselves) is to subvert the control of currency by central banks.  Society will never let that happen.


----------



## PMU

TheBigShort said:


> Cash is useful here as well.


 But I think Firefly in post # 20 made a good point, i.e. if significant use is made of cryptocurrencies to support criminal activities, and a quick trawl of the Internet indicates this may be happening, it adds an additional factor in evaluation a cryptos 'value'. Firefly said “If/when this [i.e. t_he intrinsic value will be limited to the value placed by those conducting illegal activity_] happens, the price will plummet and those hoping to make a return on holding the currency itself will lose out and probably leave with what they can.” I think this is a valid point and if correct may well eliminate its USP, i.e. the lack of central bank control, which reasonably would influence its future price.


----------



## tecate

PMU said:


> I think this is a valid point and if correct may well eliminate its USP, i.e. the lack of central bank control, which reasonably would influence its future price.


You're suggesting that the only USP that crypto has is that it appeals to the criminal fraternity?
- It's programmable money
- It's value is not debased through the printing of money as with FIAT
- It can't be confiscated - by banks or government ...should someone decide that you will have to take a cut on your savings because the banks got greedy...or they or government mismanaged.
- It has major potential to upset the remittance industry.

I'm not doing it justice with that list - but those are some of the aspects that suggest a number of USP's.

Criminals have used cash for years - lets not throw the baby out with the bathwater.


----------



## newtothis

Wandering a bit from the point initially raised?


----------



## Protocol

In terms of currencies, "intrinsic" refers to those currencies which have value in the money itself.

Example: gold and silver coins.


----------



## TheBigShort

ant dee said:


> The central banks can go on managing and improving FIAT. And surely they will do a better job, even if crypto ends up just as a tiny bit of competition.



Spot on!

Nothing like a bit of competition to rejuvenate, reconsider and reinvent, is there?

Isnt this what free-market capitalism is supposed to initiate and embrace?


----------



## TheBigShort

Brendan Burgess said:


> So I can look at Ryanair's EPS



This is a book value of what has already been, correct?



Brendan Burgess said:


> and look at their outlook



This is subjective. Granted it is supported by facts and figures from various sources and their own mathematical analysis etc, but it is still a shot at predicting the future.
We can all predict, to some extent what will happen in the future, but it is never certain.



Brendan Burgess said:


> and then multiply that by a p/e ratio.



This is standard book accounting valuation. Accepted by investors and the broader financial industry. So it carries weight in influencing or determining whether a share price represents good or bad value overall. But it is not conclusive by any means.
For instance, trying to calculate the 'intrinsic' value using this method may produce a result that indicates a fair share price at that time. But if you were aware of impending strike-action by pilots how would you factor that in to such a calculation?



Brendan Burgess said:


> You can challenge my analysis and forecasts



Inherent in that statement is an acceptance that such analysis and forecasts are inconclusive at best, and potentially wide-off the mark at worst.
If your analysis could calculate the true value of anything then there would be nothing to challenge.

E.g 2+2=4.



Brendan Burgess said:


> So that is how to value Ryanair as an investment.



It is _one way _to value Ryanair as an investment. It is not without merit, granted, but it is inconclusive. As such, if Ryanair happened to fly direct to Moscow from London 10 times daily, I may factor in current political tensions and the uncertainty associated it as reasons to sell, what on the face of it, is a fair book price for the share.
On the otherhand I may determine that London and Moscow will resolve their difficulties soon enough and, with Brexit, cut a trade deal that will see more activity between the two cities, in turn adding value to that share price.

Either way or or, its all subjective.



Brendan Burgess said:


> You can't apply any of that, or no one has applied it, to Bitcoin. So as an investment, it's worth zero.



Simply because you cannot apply a book accounting p/e ratio doesnt mean you cant value something, put a price on it.
Ditto my record collection in the attic, Da Vinci paintings of Christ, vintage Ferraris etc, etc.


----------



## Brendan Burgess

newtothis said:


> Wandering a bit from the point initially raised?



Agree fully, so I have deleted the posts about what Bitcoiners detest about centralised currencies. 

It would be helpful for everyone if people read the thread title and stuck to that, rather than discuss every issue in every thread. 

If you respond to the intrinsic value point but then make an off-topic point, the entire post will be deleted. 

Brendan


----------



## Firefly

tecate said:


> You're suggesting that the only USP that crypto has is that it appeals to the criminal fraternity?
> 
> Criminals have used cash for years - lets not throw the baby out with the bathwater.



It comes down to proportionality.

Criminal activity accounts for a much higher proportion of total transactions by revenue in Bitcoin versus those with FIAT, I would imagine.

However....

_Bitcoin is losing favor with cybercrooks, a Congressional hearing on terrorism financing was told Thursday.

Hackers are increasingly moving to Ethereum and other more moderately priced forms of cryptocurrency as Bitcoin has become too volatile for their tastes._

https://www.forbes.com/sites/tedknu...n-losing-favor-with-cybercrooks/#39eb397e4960

This will in turn lead to more drops in the price of Bitcoin.....


----------



## tecate

Firefly said:


> It comes down to proportionality.
> Criminal activity accounts for a much higher proportion of total transactions by revenue in Bitcoin versus those with FIAT, I would imagine.
> _Hackers are increasingly moving to Ethereum and other more moderately priced forms of cryptocurrency as Bitcoin has become too volatile for their tastes.  _This will in turn lead to more drops in the price of Bitcoin.....


Yes, I take your proportionality argument on board.  We don't have numbers but I'd guess that's likely at this early developmental stage. 
How significant remains to be seen. However, if criminals are less likely to use btc, there's a reason for it.  Presumably, regulation is creeping in.  Lightning Network has just been launched.  Progress will be slow - but there's every reason to believe that btc can start to build again in terms of a transactional currency. 
Having said all that, sure - I take your point that taking illicit use out of the equation may have an effect on btc pricing.

Circling back, we're saying then that btc gets its value from its usefulness.  If that's the case - and it can pick up in terms of regular transactional use - then it will maintain value.  If not, the project will fail..


----------



## Firefly

tecate said:


> Yes, I take your proportionality argument on board.  We don't have numbers but I'd guess that's likely at this early developmental stage.
> How significant remains to be seen.



With respect I think it's a lot more than "likely". 

I think this sums it up nicely for me:

_"Coupled with Bitcoin’s popularity among ransomware extortionists and all manner of other cybercriminals, we must now face a chilling realization: the underlying value of Bitcoin really has little if nothing to do with its artificial scarcity or popularity as a medium of speculation.

On the contrary – the only reason Bitcoin has value to anyone is because of the underlying value as a medium of exchange for lawbreakers. *If we could flip a switch and eliminate all illegal uses of Bitcoin, there would be nothing left of the cybercurrency."*_

https://www.forbes.com/sites/jasonb...ood-diamonds-of-the-digital-era/#5941bdd7492a


----------



## TheBigShort

I really do think the criminal element with crypto and bitcoin in particular is way, way overplayed.
To my mind, the whole purpose of financial criminal behaviour is to make money - namely, cash.
So if someone forces me to transfer over my bitcoin to their wallet it will have zero impact on the btc price. If the purpose of forcing me to transfer is to simply hold btc then the impact on the price is zero.
But if the purpose of forcing me to transfer bitcoin is to cash it in and get €€€'s, then this criminal behaviour will reduce bitcoins price.

If the purpose of buying btc is to launder money, pushing up the price, then cashing in that btc will reduce the price in equal measure.

As mentioned in the forbes article above;
_
"He explained their identities can be exposed when they convert Bitcoin into cash."

- _a downward pressure on the price
_
"Some crooks are posting pictures of expensive cars they are buying on social media, Ablon and Lewis said."

- _unless the crooks are buying cars for btc, then they are cashing in (downward price pressure).

I really dont see how criminal activity is having such a impact on upward price pressure of btc if ultimately the purpose of criminal behaviour is to enrich oneself with material goods and services, and for that - cash is king!
_
_


----------



## tecate

Firefly said:


> With respect I think it's a lot more than "likely".


Proportionally - yes ...i'm quite happy to go with more than just likely.  However, we really don't know - nor do Forbes ...nobody knows for sure.  We don't have numbers.

However, it does seem like the proportion has dropped from what it was some years ago (again, no numbers - but some of it stands to reason).  Despite the protests here, it had been grinding out a modest yet sustained uptick in use for transactional purposes.  That hit a setback when it hit a scaling issue - with tx times and fees going through the roof.  We now have Lightning Network, Shnorr signatures, Segwit, etc. - so my expectation is that we should see more progress on this once again.  If we don't, bitcoin will fail.

I don't think any of us really like speculative transactional activity but nonetheless, that's going to account for a bigger proportion of overall transactions over the past 6 months.

In the context of this discussion, again you're saying that use case is what is relevant.  If you're saying that illicit activity accounts for a large proportion of overall activity to the point, that remains to be seen but for arguments sake lets say you are right.

At the end of the day, bitcoins future lies elsewhere.  A switch by all those involved in illicit activity to another medium may set the price back.  So long as bitcoin comes through as a transactional medium for ordinary people (or at least tech savvy people to begin with), then it doesn't matter.

Long story short, I'm not going to argue with you - but we're probably on the periphery of the topic here in terms of what fundamentally gives bitcoin value as opposed to euro, dollar, yen, gbp, etc.


----------



## Duke of Marmalade

There is nothing at all natural about retail transactions in bitcoin at this point of time.  It is the community trying desperately to give it a use case, or simply flaunting their Shortie Syndrome.  Until there are people whose earnings are in bitcoin it will never be a natural retail currency.

For it to have a genuine transactional use case it will need to be better than the natural currency of the transactor at achieving some objective.  Speed of transfer has been mentioned.  I suggest that this of only real value to speculators who need to act quickly to exploit arbs.  Secrecy has also been mentioned though this would seem to be mainly a requirement of our criminal brethren and sisters.  Store of value against the inevitable inflation of fiat - certainly not today and IMHO never, as to be a store of value requires the value to be intrinsic.

There seems to be little doubt that current activity is overwhelmingly speculative.  But speculation cannot of itself be a long term use case.

I note that Lightening Network has come to fruition.  I think it was _fpalb _who said that this would be a game changer.  Possibly that is true in terms of infrastructure but the zero impact on the price of this development suggests to me that the majority of the speculators are not in the least interested in fundamentals.  To them this is a game of supply and demand devoid of any connect to use values or anything else.


----------



## tecate

Duke of Marmalade said:


> .. as to be a store of value requires the value to be intrinsic.


I'll just deal with this snippet seeing as we're just supposed to be addressing Intrinsic value.

People keep savings in FIAT - both short and long term.  However it has no Intrinsic value or at least no moreso than crypto.


----------



## newtothis

Sunny said:


> Well, I am afraid you are wrong. You are getting confused between price and value and quoting dictionaries doesn't really add anything.



I've just been reading through the various posts in this thread, and this one - in response to a point I'd made - just lept out. I'm the one getting confused??? Because I refer to what the word actually means? But aparently, what words mean doesn't actually matter.....



Sunny said:


> If Brendan says Bitcoin has no value, he might be wrong.


 No might about it - he is wrong. The only case where he would be right is if trading in Bitcoin, or using Bitcoin to buy goods and services stopped and nobody was willing to exchange other items of value for it. That hasn't happened (yet): if it ever does, its value will then be zero.

The term "intrinsic value" is used to refer to the idea that something has a value in-and-of-itself, and in particular is applied to something that can generate cash such as a company share. However, it's of no relevance to Bitcoin. Whether Bitcoin is a currency or not is irrelevant to this point; a Picasso painting for example has the same attributes: it's something that can be bought and sold and hence has a value attached to it. It has no "intrinsic value" however, as again you'll be a long time waiting for any cash to magically appear from it.


----------



## newtothis

Just an additional thought: is it possible to place Bitcoin on deposit and earn interest? (This is a genuine question: I don't know the answer). If it is, then it would have some intrinsic value. However, I suspect it isn't, if only because of the volatility in its price.


----------



## TheBigShort

Duke of Marmalade said:


> Until there are people whose earnings are in bitcoin it will never be a natural retail currency.



So you are open to the notion that it could be a 'natural retail currency'.
This is distinct from you thinking it will ever be. 
On par perhaps with Warwickshire becoming All-Ireland hurling champions, perhaps?


----------



## RichInSpirit

TheBigShort said:


> On par perhaps with Warwickshire becoming All-Ireland hurling champions, perhaps?



No inconceivable in my opinion


----------



## Negotiator

Brendan Burgess said:


> In theory, I can issue a Burgess Coin



I don't think any of us would argue about the value of this Crypto if it ever hit the market!


----------



## TheBigShort

Firefly said:


> Coupled with Bitcoin’s popularity among ransomware extortionists and all manner of other cybercriminals, we must now face a chilling realization:



Here are two sample articles from arguably a reputable financial news site that when you examine the contents of the articles, you may feel as I do that they are somewhat exaggerated, inconsistent, disjointed, contradictory and with just a touch of a self-interested agenda. 
All in all, its hard to this stuff about bitcoin criminality too seriously when so much of it is clearly bogus.

https://www.bloomberg.com/news/arti...ies-pain-for-some-as-ransom-demands-skyrocket

https://www.bloomberg.com/news/arti...itcoin-wallets-have-been-emptied-analysts-say


----------



## ant dee

newtothis said:


> Just an additional thought: is it possible to place Bitcoin on deposit and earn interest? (This is a genuine question: I don't know the answer). If it is, then it would have some intrinsic value. However, I suspect it isn't, if only because of the volatility in its price.



Oh there are quite a few places, if you count margin funding, though I wouldn't get excited about that. 
Little to none in terms of insurance.


----------



## cremeegg

TheBigShort said:


> That's because value is subjective.



Absolutely not.

Value is real and objective. Price is the result of subjective assessments of value.

A meal has the value that it will feed me for the day. That may be priced at €1, €10, or €50.

A euro represents a claim on the output of the Euro zone economies. That may be priced at the cost of a meal, one tenth of a meal or one fiftieth of a meal. It may be diluted by QE, it may be devalued by inflation or recession, it may increase in value due to a booming economy. In each case it remains a claim on the output of the Euro zone. The value of a Euro is real and objective, the price of a Euro which involves quantifying that value may be subjective.


----------



## jman0war

That is referring to the Labour Theory of Value. But that is rubbish because just because people commit esources to produce something does not mean anybody else thinks it has any value


----------



## Gus1970

Duke of Marmalade said:


> Until there are people whose earnings are in bitcoin it will never be a natural retail currency



People have been doing work for bitcoin since 2011


----------



## newtothis

Brendan Burgess said:


> Why are you holding onto something which is worth nothing, which you could sell for $16,000?



Yet again, my mind is well and truly boggled.

In my world, if I can sell something for $16,000 then that’s what it’s worth.

I might hold the opinion that it is a tad overvalued (to the tune of $16,000, even), but that’s just my opinion, not an objective fact, which is what you keep seem to be presenting it as.

I'll ask again: what do you mean when you use the terms "value" and "worth"?


----------



## newtothis

Brendan Burgess said:


> I think it would be unfair to take this thread off topic by answering it yet again.  Discussed in detail in this thread.
> 
> *Bitcoin has subjective value - intrinsic value is irrelevant*



But that's the point: you didn't answer the question (other than quote Lews Carroll), and you go on to make the same claims in this thread too. I note you didn't answer this time either (what's that: 4 or 5 times now?). So, at the risk of boring everyone, I'll ask again: what *do* you mean when you say "value" or "worth"?


----------



## cremeegg

newtothis said:


> But that's the point: you didn't answer the question (other than quote Lews Carroll), and you go on to make the same claims in this thread too. I note you didn't answer this time either (what's that: 4 or 5 times now?). So, at the risk of boring everyone, I'll ask again: what *do* you mean when you say "value" or "worth"?



Oh give it a rest. I think its perfectly clear that Brendans think bitcoin is worthless, because it has no asset backing. You don't have to agree with that view or even think its relevant, but it has been explained ad nauseam.


----------



## TheBigShort

cremeegg said:


> Oh give it a rest. I think its perfectly clear that Brendans think bitcoin is worthless, because it has no asset backing. You don't have to agree with that view or even think its relevant, but it has been explained ad nauseam.



It is currently backed by the equivalent of $150bn.


----------



## cremeegg

TheBigShort said:


> It is currently backed by the equivalent of $150bn.



That comment is a revelation, it explains a multitude.


----------



## TheBigShort

cremeegg said:


> That comment is a revelation, it explains a multitude.



Yes, that it is has value.


----------



## newtothis

cremeegg said:


> Oh give it a rest.


Ah, but I'm not the one claiming something for the 467th time, or whatever it is, just the one pointing out it's not true.....


cremeegg said:


> Brendans think bitcoin is worthless, because it has no asset backing


First time I've heard this as the explanation: just out of interest, what assets back other currencies?


----------



## Brendan Burgess

Bitcoin has a price of $9,000 today
Bitcoin is worth nothing. 
Bitcoin has no value. 

There is a huge difference between price and value. And price and worth.  

I see no difference between value and worth but if you want to define them to create a difference that it fine.  

The key point is that misguided people are paying $9,000 for something whose price will eventually be zero.  If you want to play with words and say that it is worth $9,000 because someone else will pay $9,000, you are only fooling yourself. 



newtothis said:


> First time I've heard this as the explanation: just out of interest, what assets back other currencies?



That is not my explanation at all.

As I have pointed out repeatedly, those who claim that Bitcoin has a value greater than 0 must show why it has that financial value and how it is estimated. No one has done that anywhere. 

It's not up to atheists to prove that Gods do not exist. Those who believe in Gods must prove that they exist. 
If someone thinks that a bag of air has value, then they must show how that value is calculated. 


Brendan


----------



## newtothis

Brendan Burgess said:


> The key point is that misguided people are paying $9,000 for something whose price will eventually be zero.  If you want to play with words and say that it is worth $9,000 because someone else will pay $9,000, you are only fooling yourself.



Firstly, the price *may* eventually be zero, not *will* eventually be zero. Interesting you brought up religion, a defining characteristic of which is faith that something is true, regardless of any evidence..

It's not playing with words to say that it is worth $9,000 because someone else will pay $9,000, it's what the word actually means: I won't bore you with quoting the dictionary yet again.

When the proof is there for all to see what value is placed on something, I rather think it's up to you to prove it's worth something else. Either that, or clarify what you mean by the terms value and worth, though you seem determined not to.



Brendan Burgess said:


> those who claim that Bitcoin has a value greater than 0 must show why it has that financial value and how it is estimated


As I said before, no estimation needed: the value is there for all to see in the market price, same as anything else that's traded.


----------



## TheBigShort

Brendan Burgess said:


> those who claim that Bitcoin has a value greater than 0 must show why it has that financial value and how it is estimated. No one has done that anywhere.



Bitcoin has a greater financial value than 0 because its intrinsic value is its ability to hold and transfer a persons own money outside of the centrally planned monetary system.
The price set on that value is determined between buyers and sellers in a market, through demand and supply - exactly like any other price set on any other product or service. Currently that price is around $9,000 per full unit of bitcoin.  Whether that is good or poor value is for each to decide.
Personally, I dont know if it represents good or poor value, as I cannot predict for certain what the future holds. However, I estimate that bitcoin will be around for quite sometime yet (effectively until some other crypto overtakes it) and that it holds potential to go to a price a lot higher, primarily, but not exclusively, because of the level of fraud and corruption inherent in the monetary system.
To what extent its price will rise is very hard to determine, particularly with its known volatility.
But you have asked for a financial estimation, now you have one, albeit inconclusive, but probably not much different to financial estimations for gold and silver.


----------



## tecate

In fairness, I take Brendan's point on price vs. worth/value.  If only I had the same level of warnings during the celtic tiger!  Current price doesn't necessarily represent true value/worth.

That said, I'm still keeping an open mind as to where that will all end up ...as it could go either way. i.e. I certainly don't think it will be worth 'nothing' - it should be worth a few euro/dollars, etc at the very least.  However, I don't discount the fact that it could hit close to rock bottom.

If Tether wasn't an issue and price hit sub-5k, I'd certainly take a look at the circumstances at the time.  Of course, that would be totally (and highly) speculative if I were to opt in.  All theoretical as I can't see Tether being dealt with anytime soon unfortunately (which is a shame - as it's simply wrong and a blight on the whole crypto space).


----------



## TheBigShort

Brendan Burgess said:


> It's not up to atheists to prove that Gods do not exist. Those who believe in Gods must prove that they exist.
> If someone thinks that a bag of air has value, then they must show how that value is calculated.



You keep bringing up religion as a basis upon which to show that bitcoin has no value.
This despite, it having been pointed out to you, that religion does have value. Believing in the invisible man in sky who watches over you all day everyday holds value. It holds a spiritual value for billions of people who are prepared to sustain that spiritual value through financial contributions. Even though God is all-knowing, all-powerful and all-conquering, he just cant handle his finances.

So religion, Christianity, Judaism, Islam, Hindu, etc...etc...holds huge value. 

Similarily, the euro holds value, not because it is backed by any assets, but because it is administered by an over-arching authority called the ECB which has been ceeded legal authority by 18 nation states to manage our currency. At any given time, faith in that currency could collapse. Faith in the ability of debtors to pay what they owe could be lost, the euro could collapse to zero value and we move on to using something else as money.


----------



## Brendan Burgess

TheBigShort said:


> This despite, it having been pointed out to you, that religion does have value.



What on earth are you on about? Where have I discussed the value or the non-value of religion?  Please provide a link to the post. 

Brendan


----------



## TheBigShort

Brendan Burgess said:


> What on earth are you on about? Where have I discussed the value or the non-value of religion?  Please provide a link to the post.
> 
> Brendan



You have frequently referenced 'creationist' held beliefs as indicators of how clever people do stupid things, and in turn to show how bitcoin is worth nothing.
You have now referenced God;



Brendan Burgess said:


> It's not up to atheists to prove that Gods do not exist. Those who believe in Gods must prove that they exist.



...who tends to manifest in various guises through various religions.

My point is, that your interpretation of what value is, and how it is calculated in monetary terms is very narrow in scope. 
The only calculation you provided it to include EPS and p/e ratios. 
Accepting they are used throughout the financial industry, they by themselves are extremely narrow in scope and non-applicable to calculating the value of bitcoin, or the euro, or dollar for that matter. 

If you want to use a method to calculating the value of bitcoin, use the same method that you could use to calculate the value of gold.
Or in fact, any other method that you wish to use.

In the end, value is the eye of the buyer and seller. Currently that value is reflected in monetary terms through crypto exchanges.


----------



## newtothis

TheBigShort said:


> At any given time, faith in that currency could collapse.



I've already make this point in another way: the value of a €50 note isn't in anything inherent in the piece of paper, it's down to the common acceptance of what its value is: faith, in other words. The piece of paper could be anything that has a limited supply and is difficult to fake, and the evidence is Bitcoin is better on both those counts than traditional currencies. Are limited supply and difficult to fake necessary and sufficient conditions for a currency? Who knows, but probably not as I believe counter examples exist; it looks to me that the only really defining attribute of a currency is that common acceptance one.

I’ve also already made the point that the price volatility of Bitcoin makes it pretty useless as a currency, and its current value (which is not zero!) is based on it having become a speculative investment. As that, it’s pretty much like any other speculative investment: if you think it’s overvalued, then you sell some if you have any or you can bet on it dropping in value, if undervalued, then you can buy some or bet the other way. It’s all down to opinions on what it should be worth and its likely value in the future.


----------



## Duke of Marmalade

newtothis said:


> It’s all down to opinions on what it should be worth and its likely value in the future.


You have hit the nail on the head there.  The current price is purely speculation as to "what it should be worth and its likely value".  Brendan is asking for a rational assessment of what it should be worth and its likely value not the price of current speculation in that regard.


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## Brendan Burgess

TheBigShort said:


> You have frequently referenced 'creationist' held beliefs as indicators of how clever people do stupid things



Sorry Shortied. You attributed a very specific comment to me:



TheBigShort said:


> You keep bringing up religion as a basis upon which to show that bitcoin has no value.





TheBigShort said:


> This despite, it having been pointed out to you, that religion does have value.



You are attributing comments to me that I simply did not make.  As you seem to have difficulty understanding them, let me make them again:

1) A theist must prove that God exists.   In the same way someone who claims that Bitcoin is worth $9,000 must show how they arrive at that figure.   Many theologians have put forward their proofs that God exists.  No one has yet put forward an argument that Bitcoin has any financial value.

It is not up to an atheist to prove that God does not exist.  It's not possible to prove the non-existence of something. Likewise it is not up to the sceptics to prove that Bitcoin has no value.

2) The point about Creationism is that clever people believe stupid things.  Some of the people who believe Bitcoin has value presumably must be clever. I simply can't understand how someone believes in Creationism or how clever people believe that Bitcoin has value.

3) I have made no comment at all on whether religion has value or not. 

Brendan


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## ant dee

Duke of Marmalade said:


> You have hit the nail on the head there.  The current price is purely speculation as to "what it should be worth and its likely value".  Brendan is asking for a rational assessment of what it should be worth and its likely value not the price of current speculation in that regard.


The current price might also be speculating that in the not-so-distant future, Bitcoin will evolve and end up being the 5% of the world's transactions, like you referenced from investopedia in the past.


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## newtothis

Brendan Burgess said:


> 1) A theist must prove that God exists.   In the same way someone who claims that Bitcoin is worth $9,000 must show how they arrive at that figure.


No they don't! That's what the value is! It's determined by the market, not established by some set of rules.


Brendan Burgess said:


> Likewise it is not up to the sceptics to prove that Bitcoin has no value.


 So, let me get this right:

- we have an observable fact: Bitcoin has a value
- it's required for those who believe it has a value to provide evidence that it has that value (i.e. that the observable fact is in fact reality?)
- it's not required for those who believe it has no value to provide any evidence as to why they think that, despite evidence to the contrary (e.g. its current value, its useage as a currency)
- it's not required for anyone to provide proof that anything else has the value it does (any other currency, gold, artwork, you name it).


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## Brendan Burgess

Hi newtothis 

Your thinking is very muddled.  

The observable fact is that Bitcoin has a price which is $8,500. It's value or worth is zero until someone shows a value to the contrary. 

If you cannot distinguish between value and price, then the rest of your arguments are built of a completely false foundation. 

If you can't distinguish between gold and Bitcoin, then you will not be able to make any reasoned arguments. 

If you can't distinguish between a work of art and Bitcoin, likewise you will not be able to make any progress. 

If you put Bitcoin or the Own Coin or the Marmalade Coin on a par with the dollar or the euro, then you will not make any progress.

Brendan


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## TheBigShort

Brendan Burgess said:


> You are attributing comments to me that I simply did not make.



Brendan, I accept you made no specific remarks to any specific religious organisation and I retract any comments that said you did.



Brendan Burgess said:


> No one has yet put forward an argument that Bitcoin has any financial value.



Plenty have. They have not convinced you that bitcoin has financial value, but that is wholly different to declaring it has no value at all.
Clearly, lots of people consider it to have some value, even if its just speculative value. This is evident in its price fluctuation.



Brendan Burgess said:


> The point about Creationism is that clever people believe stupid things.



To you (and me) it is stupid. That does not mean that therefore it has no value.



Brendan Burgess said:


> I simply can't understand how someone believes in Creationism or how clever people believe that Bitcoin has value.



But what you are saying is that those who share creationist views, that those views have no value? 
I would beg to differ. Creationist baptist churches (a manifestation of those views congregating together) have property, bank accounts etc all of which hold value.


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## TheBigShort

Duke of Marmalade said:


> You have hit the nail on the head there. The current price is purely speculation as to "what it should be worth and its likely value". Brendan is asking for a rational assessment of what it should be worth and its likely value not the price of current speculation in that regard.



Im reading about Dropbox IPO. Apparently this company has never made a profit. Its market value is $10-12bn. 
What is the 'rational assessment' of a loss-making company having a market value of $10-12bn?
Is this price speculative in any way? If so, does that mean its worthless? After all, from what I understand about Dropbox, its just a space for storing and managing files etc.


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## newtothis

Brendan Burgess said:


> Your thinking is very muddled.
> 
> The observable fact is that Bitcoin has a price which is $8,500. It's value or worth is zero until someone shows a value to the contrary.



On the contrary, I think it’s you who has the muddled thinking, to the extent you don’t accept reality. The fact that something is priced at a particular point is by definition the thing that establishes it has a value.



Brendan Burgess said:


> If you cannot distinguish between value and price, then the rest of your arguments are built of a completely false foundation.



Of course I can distinguish between them! I’m using the words according to their meaning. The value of something is amount of money that someone is prepared to pay for it. I might believe that value to be crazy, whether it’s Bitcoin or a Gucci handbag in Brown Thomas, but that’s irrelevant; it doesn’t change the fact that’s what it is worth: if it wasn’t people wouldn’t pay the price they do. My opinion may be different, as yours clearly is, but that’s all it is: an opinion.

What do you think value means? (Sorry, I forgot, you’re refusing to answer that question)



Brendan Burgess said:


> If you can't distinguish between gold and Bitcoin, then you will not be able to make any reasoned arguments.



Of course I can distinguish between them; all I said was the current market for Bitcoin was similar to that for any other speculative investment. My guess is that people who buy gold for an investment don’t either plan to turn it into jewellery or use it to plate something in an industrial setting but are happy to leave it untouched in a bank vault somewhere. That is, they’re not buying it for any practical use, but in the hope its value will increase. Saying an aspect of something is like an aspect of something else is not equating the two.



Brendan Burgess said:


> If you can't distinguish between a work of art and Bitcoin, likewise you will not be able to make any progress.



Same argument: I fear it is you who are failing to make progress.



Brendan Burgess said:


> If you put Bitcoin or the Own Coin or the Marmalade Coin on a par with the dollar or the euro, then you will not make any progress.



I’ve already made the point that you can use anything as a currency provided you can get enough people to accept it as such. You don’t seem to be making any progress in accepting that.


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