One of the more common, and more simply refuted, objections to Bitcoin.
“Bitcoin is just magic Internet money.”
“You can’t do anything with Bitcoin; it’s not tangible.”
“Bitcoin isn’t backed by anything.”
“Bitcoin has no intrinsic value.”
If you’ve been into Bitcoin for any length of time, you’ve heard these critiques before.
If you’re new to Bitcoin, these might be some of the thoughts you are having.
The good news is that there is a relatively simple retort to the “Bitcoin-has-no-intrinsic-value” crowd:
“What about gold,” you might ask, “since gold has been used as money and can be used in electronics and as jewelry? That is what makes it valuable.”
But what makes gold good money (no central issuer, relative scarcity, etc.) is not necessarily what makes it good for industrial uses (conductivity, corrosion resistance) or jewelry (aesthetically desirable). There are attributes that overlap (durability), sure, but they are independently useful per use case.
In other words, gold could become entirely useless in electronics and fall out of favor with 100% of humans as a form of fashion and still serve as good money, albeit with several drawbacks.
“How about food, water, and air? Those all certainly have intrinsic value.”
Well, food isn’t of much value to somebody that has just finished an enormous meal or is fasting. An extra bit of water isn’t helpful to someone experiencing a flood. And air isn’t useful to a competitive free diver swimming at 100 meters below the water’s surface.
It may be a morbid thought, but a person on the brink of taking their own life values none of these three “essential” elements.
The reality is that value is assigned by individuals at the margin.
So, why is Bitcoin valuable?
Well, it’s not valuable to everyone. It’s valuable to people who appreciate Bitcoin’s unique properties relative to other forms of money.
If you like money that can be printed and devalued at will, is used to bailout large companies at the expense of others, requires multiple third-parties to transact with, is created out of thin air to fund endless wars, requires permission from banks or regulators to be used, guarantees your cost of living will continue to increase, is easily surveilled, necessitates that you blindly speculate on myriad asset classes just to beat inflation, and can be manipulated by a small handful of unelected central bankers…
…then maybe you should value our current monetary system and the dollars, Euros, and yen that prop it up.
On the other hand, if you like money that can’t be frozen by your government, can travel with you anywhere, is unconfiscatable, is absolutely scarce, can’t be debased or devalued by a central bank, can be sent across the world in a couple of minutes without an intermediary, requires no permission to be used, and can be secured without the use of a third-party…
…then maybe you should assign some value to Bitcoin.
If you think the dollar will live on as the global reserve currency forever - despite the rise of the BRICS, the systematic devaluation of each unit, and the tenuous foundation upon which global order rests today - then Bitcoin probably isn’t for you.
Otherwise, it is at a minimum an insurance policy you should consider. Best case, it is the monetary revolution this world needs to enter into a new age of prosperity.
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