Valuation & Planned Scarcity in Cryptocurrency

Samantha Standish
Jan 2 · 8 min read

“The symbol is not required to embrace the idea that the symbol represents.”

Stories give form meaning. That’s why symbols can be a powerful means of communication. A shape can tell a story without anyone saying a word whether that shape is a logo or a building or something more esoteric like a color or a sound.

A form without a story to go along with it is a neutral entity. A triangle is a triangle. What gives the triangle meaning to the human mind is the idea that’s attached to that triangle. Nowhere is this relationship between symbols and stories more apparent than in the world of cryptocurrency. Like the dollar or yuen or euro, cryptocurrency is a symbol of human exchange of value. The word “cryptocurrency” is a symbol that represents the idea of a human exchange of value.

Cryptocurrency is a form that represents an idea. Cryptocurrency takes the form of a computing process to represent the idea of human exchange of value. In simple terms, cryptocurrency is a series of actions that act as currency. The software and all of its accessories such as the specific computing protocols and hardware and means of communication is the form. Exchange of value between humans is the idea.

The reason that this is difficult for most people to understand is that with cryptocurrency the form is really the implementation of the idea. Humans are more comfortable with physical objects as symbols because that’s what’s familiar. Humans like objects that they can see and touch to act as their symbols. Cryptocurrency steps outside of those boundaries. You can’t hold cryptocurrency in your hand.

This is purposeful. The cryptocurrency world understands that it doesn’t need the symbol. It knows that an idea can be represented by more than one type of symbol because an idea itself is independent of the symbol that represents it. In other words, ideas aren’t dependent on form. Those individuals that have developed cryptocurrency have taken advantage of that fact to develop a form that better represents the idea of an exchange of value between humans.

This causes some consternation with regular people that want to understand the relationship between the symbol and the idea that the symbol represents. The symbol of cryptocurrency isn’t familiar to them. They don’t see that relationship between the symbol and the idea instantly because they don’t see a physical object. So, they attack cryptocurrency by claiming it’s not valid because it’s not “backed by” anything. They believe this is a sound argument because they see no physical thing backing it up. They don’t understand that this criticism is weak because nothing is “backed by” anything.

Individuals will argue that a currency needs to be “backed by” gold or something that has “intrinsic value” when they haven’t actually examined the idea of intrinsic value itself. People think that intrinsic value is when something has value in and of itself. Food has intrinsic value, they argue, because you can eat it. Or gold and silver have intrinsic value because humans can use gold and silver to make jewelry and technology. However, following this logic, you could argue that everything and nothing has value in and of itself because its subjective to whether the individual finds it useful, whether the individual wants to make jewelry and technology. For this reason, it’s helpful to get a firm grip on this idea of intrinsic value, especially if you want to understand cryptocurrency and not be one of those curmudgeons that criticize things just because you don't understand what you’re looking at.

Intrinsic Value

When you examine it closely, intrinsic value is a story. It’s an idea. Often, it’s an idea based on the misconception that everything is separate, measurable, comparable, and categorizable. But nothing is separate at the quantum level. Therefore, you can say that there’s an intrinsic value, but there’s only one intrinsic value because there’s no separation at the base level of reality. That one intrinsic value applies to everything.

As humans understand the unseparated nature of the quantum world, they understand that a declaration that anything is separate is fundamentally incorrect. You can measure something as a convenience, but you know that this is a shortcut to facilitate human action. Individuation (i.e. “separate” things like people and objects and worlds) exists because of the undivided nature of the context within which all of these things exist. Individuation doesn’t imply separation. It’s evidence of a unified source within which and from which all actions take place.

Because the notion of an unseparated foundation to reality is not universally known at this moment in human history, people declare that things have different intrinsic values. In a dimension that’s fundamentally unified at its base, this is an impossibility. The intrinsic value of everything is the same. You can’t measure unity against itself. It’s one thing. When you’re measuring anything, you’re really measuring an undivided action within basic undividedness.

An ant has the same intrinsic value as a human because they exist from and within an undivided foundation. The same is true in terms of financial symbols. Gold has the same intrinsic value as paper money which has the same intrinsic value as a cryptocurrency. All of these forms are based on the same reality of inherent inseparability. Therefore, you can’t argue that one is inherently more valuable than the other. One may be more valuable to you. It may function more efficiently. You may find it more useful, but the intrinsic value is the same. The nature of the quantum world makes the value the same.

When people talk about intrinsic value, what they’re really talking about is what individuals value. They’re talking about preferences. Preferences aren’t uniform. Preferences vary. To see how this plays out, you can look at something that many people believe has intrinsic value like food. People argue that the essentials of life have intrinsic value because “everyone” finds them useful, but this isn’t the case. Food has no more intrinsic value than anything else, and even its use to humans varies. Some people value food, and some people don’t want to be alive anymore and don’t value food. They’ll stop eating because they no longer find value in what food represents. Food is no more or less valuable than anything else that exists. Humans find it more or less valuable according to their interests and explorations.

This applies to currency as well. Value is relative to the individual, and what people value varies. Another way to say this is value is what people say it is. Whatever people value becomes valuable to them.

Currency Doesn’t Need To Be “Backed”

Someone that knows nothing about cryptocurrency will argue that cryptocurrency has no value because “it’s not backed by anything.” This argument fails because all things are what they are and aren’t “backed by” anything. For example, the dollar isn’t “backed by” anything. It never was “backed by” anything even when it was “backed by” gold because gold wasn’t “backed by” anything itself. Gold had value because people said it had value. Gold was “backed by” the decision of humans to find gold valuable. This is nothing other than a form (gold) with a story attached to it (“Gold has value”).

People will argue that the ability to use gold in the real world to make things gives it value, but this is illogical because use can’t give. Use can’t tell stories. Use can’t define things. Use isn’t human. Humans give. Humans label. Humans define. Humans attach meaning to things. Humans can define anything as valuable. It doesn’t even have to be useful for a human to define it as valuable. What’s more, no matter what it is, no matter how useless it is, it still has the same intrinsic value as everything because it’s undivided from everything at the base level of reality.

People have much greater latitude to create structures that serve them than they’ve believed possible because they can value more than what they’ve been taught to believe they can value. In a way, humans are growing more sophisticated. Humans don’t need a physical object to represent value anymore. They’re smart enough to recognize that the idea of human exchange of value doesn’t require a symbol. You can skip the symbol (or do a modified version of the symbol) and instead implement the underlying idea itself directly.

This is what cryptocurrency does. It gives a polite nod to the symbol by calling the currency a “token” or a “coin” and then gets on with the job of implementing a structured idea of human exchange of value. It realizes that you can get a more effective and efficient system if you design it. It acknowledges that humanity no longer needs training wheels to exchange value, person to person. What it needs is a planned structure to facilitate that exchange.

Hyperinflation & Planned Scarcity

At present, the monetary system can fly out of control because it allows for the influx of unrestricted amounts of currency into the system. It’s not a transparent system with planned inflation so the system can devolve into hyperinflation where money loses its value. This isn’t a condition of reality. This is a choice, and it can be cured.

Cryptocurrency offers an alternative by being a transparent system of planned scarcity. You can’t just “print more money” and flood the system and diffuse the value of the currency. There’s a structure in place that regulates the exact amount of currency that will ever be in the system, how that currency gets into the system, and how that currency moves around the system. What’s more, on the major cryptocurrency blockchains like Bitcoin, DigiByte, Litecoin, Bitcoin Cash, etc. what’s happening in the system itself is visible. Anyone can access the blockchain and see what’s going on. This gives it much greater accountability than the present financial system.

Each cryptocurrency has different rules about what it does. The ones that are designed to replace the current monetary system contain planned scarcity. Only so much of that currency will ever exist. This guards against things like the dilution of the value of your money. Other cryptocurrencies are designed to do other things (such as Ethereum, for example) and may not “hold the value” of the currency in the same way because it generates greater amounts of the currency. The cryptocurrency ecosystem isn’t authoritarian. There’s tremendous freedom here which means there’s great creativity. Because of that, it can get complicated. Nevertheless, the benefits of learning about this new form of currency far outweigh the complications.

If you take away one thing from this essay then let it be the following. The human race is ready for cryptocurrency. It doesn’t need to be coddled by second-rate systems that don’t serve the needs of everyone. The human race now has choice. It can choose to value cryptocurrency in the same way that it chose to value the system that’s currently failing. All it takes is the decision to do so.

Humans no longer need the symbol of currency to implement the idea of currency. We can cut to the chase and choose to implement the idea directly. Because of this, we’re not bound by any particular symbol or the idea that the symbol represents. We can invent new symbols and ideas that better serve us. Cryptocurrency is one such better idea.

Coinmonks

Samantha Standish

Written by

I’m a writer. I focus on the why behind the what. www.samanthastandish.com.

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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