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Bitcoin Has No Intrinsic Value — and That’s Great.

Conner Brown
May 8, 2019 · 9 min read

Inside the Mind of a Skeptic

Intrinsic value is an old idea. Even Aristotle wrote about the importance of money being “intrinsically useful and easily applicable to the purposes of life, for example, iron, silver, and the like.” It’s no wonder that this idea has persisted — commodity value has been essential to humankind for thousands of years and is directly evident to the layman.

Appeals to History

Many skeptics denounce Bitcoin’s lack of intrinsic value simply because they are accustomed to stores of value doubling as commodities. Put simply — they are living in the past. Many have made this argument about previous technological improvements by wrongly assuming that previous trends would hold true.

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Figure One: Glass Beads formerly used as money among tribes in Oklahoma.

Appeals to Authority

Today, many who voice concerns about intrinsic commodity value trace their arguments to Austrian economists such as Menger, Mises, and Rothbard. These writers strongly emphasize the importance of money and its impacts on society. For them, commodity value and money have been inseparable since their earliest writings. One of Menger’s seminal works, On the Origins of Money, begins by describing money as “the fact of certain commodities becoming universally acceptable media of exchange” (p. 1). Mises later built upon this understanding. In The Theory of Money and Credit, Mises writes, “we may give the name commodity money to that sort of money that is at the same time a commercial commodity; and the name fiat money to money that comprises things with a special legal qualification” (p. 61).

Solving the Hard Money Paradox

In fact, if the skeptics had done their homework, they would realize that Mises was a Bitcoiner at heart as well. He recognized the problems inherent in commodity money but saw gold as the best of bad choices. In The Theory of Money and Credit, Mises laments that even a monetary system based on gold is still subject to “considerable disadvantages” regarding “not only the fluctuations in the supply of money and the demand for it, but also fluctuations in the conditions of production of the metal and variations in the industrial demand for it” (p. 238).

Bitcoin as the Key to Unlocking Captured Utility

In our present day, it just so happens that the best stores of value are also those that have some element of utility as a commodity. The key distinction here is that gold, real estate, or any form of commodity money, is not a store of value because of its utility as a commodity, but despite that utility!

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Figure Two: A map of San Francisco’s local zoning laws.
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Even securing the network would be cheaper, with higher quality ASICs!

Final Thoughts

Instead of locking up useful resources to store wealth, Bitcoin gives humans the ability to store wealth free from the opportunity cost inherent in storing commodities. This global, permanent, and accessible store of wealth is forming a solid bedrock for future economies around the world. As funds move from other asset classes towards Bitcoin, this newfound supply will create better access for affordable housing, rejuvenated urban environments, higher quality consumer goods, and more.

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Conner Brown

Written by

Bitcoiner at Stanford Law School. Interested in monetary history, Austrian economics, and philosophy.

Coinmonks

Coinmonks

Coinmonks is a non-profit Crypto educational publication. Follow us on Twitter @coinmonks Our other project — https://coincodecap.com

Conner Brown

Written by

Bitcoiner at Stanford Law School. Interested in monetary history, Austrian economics, and philosophy.

Coinmonks

Coinmonks

Coinmonks is a non-profit Crypto educational publication. Follow us on Twitter @coinmonks Our other project — https://coincodecap.com

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