Bitcoin and Intrinsic Value

A common argument you’ll hear about Bitcoin is that it has no intrinsic value. I agree with that statement. But I will also make the argument that NOTHING has intrinsic value because there is no such thing. Value is a concept that exists only in the human mind. Things have value because people place value on them. What most people mean by “intrinsic value” is really universal value; things that all people recognize as having value such as food, shelter, water, etc. But even those have value only because they’re valuable to people. There’s nothing intrinsically valuable about anything. I will argue that gold does not have universal value because you can’t sell a 1 oz gold coin for $50 to random people on the street.

Is money a universal human need like food or water? Yes, money is a critical part of human life; as critical as food, water, or shelter. It enables us to trade with each other without having a coincidence of wants. It allows us to save the excess value we generate today, and redeem that value in the future when its needed, even at a different location. It allows us to take a large amount of value, and divide it into smaller units we can use over time. Or it allows us to accumulate small amounts of value over time to redeem for a large amount of value all at once in the future. It allows us manage risks in ways that would not be possible otherwise (e.g. insurance). Civilization would simply not be possible without the concept of money.

If we understand the purpose of money and its historical context, then it becomes easy to see why Bitcoin is revolutionary. Money has historically been used as a lever of power, control, and abuse by governments. Bitcoin is the first decentralized currency with no central authority that is based solely on consensus, and mathematically enforced in a completely neutral way to remove the possibility of abuse.

For the first time in history, we have the ability to send any amount of value, to anyone in the world, instantly, at near zero cost. No one can stop anyone from sending or receiving that value because of its decentralized, peer to peer design. The implications of this can’t be overstated. It is programable money; “smart money” that will allow us to move value efficiently across the globe in ways we can not even imagine today, in the same way the Internet is now used for things no one could have thought of. If you recognize money as a universal need, then it’s not hard to recognize Bitcoin as a superior form of money because of its intrinsic PROPERTIES that make it valuable because it enables people to do things they would not otherwise be able to do.