Bitcoin’s Intrinsic Value
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Bitcoin is one of those trading assets with attractive profit potential. However, many people wonder whether Bitcoin has intrinsic value or not? There is still much to debate.
It is not easy for crypto novices to understand how and why a cryptocurrency like Bitcoin (BTC) has value. Bitcoin is a digital currency, not backed by any physical assets, and the concept of mining can be very confusing. In a sense, mining creates a new bitcoin. However, in reality, to successfully mine, we have to invest much money.
Before exploring Bitcoin’s intrinsic value, we need to have a solid understanding of what intrinsic value is and what intrinsic value forms.
What is intrinsic value, and what forms does it take?
According to modern economic philosophy, the intrinsic value of any asset is derived from how people perceive that asset.
For example, rice has no value; It is worth it because people need to eat it. It depends on people, specifically on the needs of people to use, wholly decided by people.
We feel Bitcoin has no intrinsic value because most of us do not understand the intrinsic value.
Intrinsic value comes in two forms. The first form is the use-value, the second form is the admitted value.
- Use value: rice to eat, house to live in, clothes to wear
- Admitted value: referred to as the promise of an individual or organization, government collectively referred to as a particular community, promised in exchange for use-value for us
For example, we take gold or fiat money. Does its value exist below the use-value or the admitted value?
If we were to hold a suitcase of money on a deserted island, what would we do with it? It can only be used to light a fire because the nature of paper money is to exist as an admitted value. That is the promise of a government willing to exchange that paper money for our use.
So is gold. Although some say gold has practical uses, such as making electronic components, making jewelry. However, we all understand that the value of gold does not lie there because only about 5% of gold is used for needs such as jewelry, electronic components.
The real value of gold lies in its perceived value. We can bring gold to anywhere in the world where people and communities are willing to exchange gold for food, clothing, and housing.
Things like gold and fiat money have been around for a long time, so attached to life that we mistakenly think they have a use-value. We can easily exchange gold, valuable fiat money everywhere.
Does Bitcoin have intrinsic value?
The value of Bitcoin is a subjective topic with many differing opinions. What is more important is why people appreciate it in the first place. Let us dig deeper into some of the characteristics that make Bitcoin valuable.
The Admitted Value of Bitcoin
To know if Bitcoin has an admitted value, we need to determine when an asset has an admitted value.
Admitted values are only valid when we live and interact in a community that acknowledges that value. Suppose we lost in a distant land. The tribes have never known the civilization that uses gold. Gold will become worthless in exchange for wild game meat, rice.
That admitted value depends on whether we are in a large enough community, safe enough to be worth using.
With Bitcoin, this community has formed all over the world and is genuinely secure. We can take Bitcoin anywhere; Any country can convert to USD and from USD to buy other things.
Why does Bitcoin have an increasingly strong admitted value?
Bitcoin, a cryptocurrency created and issued by a character with the nickname Satoshi Nakomoto. His goal was to create a system that would allow buyers and sellers to transact directly without having to gain trust. The community increasingly admitted Bitcoin by the following values.
The utility value of Bitcoin
One of the main benefits of Bitcoin is its ability to quickly transfer large amounts of value around the world without the need for intermediaries. While the cost of sending a small amount of BTC can be relatively expensive due to fees, it can also send millions of dollars on the cheap. Although not the only network to do this, Bitcoin is still the largest, most secure, and most popular network.