With Bitcoins the value is only set by an artificial demand. There is nothing left over, if demand stops. You can't eat a Bitcoin. There is no limitation on creating new cryptocurrencies. It is like the million dollar homepage. It was once valued with a million dollars but I doubt, anyone would pay any significant amount for those pixels now. Why? Well, yes, there is only one million dollar homepage, but if there was any demand, you could create a similar page for a few dollars of effort.
Exchange rate volatility is problematic. My solution is mainly to have more Bitcoin than I'd ever use, unless its value crashed. That works for me because I accumulated most of it years ago, and I'm too paranoid to cash out.
Otherwise, I'd need to distribute among multiple resources that were relatively stable, or didn't move together.
>My solution is mainly to have more Bitcoin than I'd ever use
In other words, you're hoarding.
But not mainly in a speculative way. Fundamentally, there's no safe way to move enough to matter without raising flags. As in, "where did that money come from"? I really don't want to go there.
No currency "has value". For dollars, it's the US government.
Bitcoin has value for three main reasons: 1) it can be used to buy stuff online, and can be anonymized; 2) it's not controlled by governments; and 3) it's a popular speculative asset.
The first two aren't about novelty. Sure, if something else comes along that does those things better, people will shift. But none of the existing alternatives has managed that yet.
The third does have a huge novelty component. And personally, I wish that all the bloody speculators would just piss off. But whatever, I can live with them. And free money is cool too.
do you seriously not see the circular nature of your argument?
there is no "intrinsic value", there is only price at which a buyer meets a seller.
the whole idea of "intrinsic value" is that it is not tied to "needs and wants", because "needs and wants" is just another way of saying "market" and on a market there is only speculative value.
"intrinsic value" as a concept is used to derive valuation of a company based on it's assets, liabilities, etc - fundamentals, as opposed to market capitalization. taking the concept of intrinsic value out this context is meaningless because nothing in the universe has intrinsic value.
You are saying that there are no infinite buyers and sellers, you are right but there are no infinite bitcoins too.
You are taking an example of beef cause you thing it has intrinsic value but let me tell you that in some states in India if they find you eating beef, they will even punish you for that.
Everything's value is relative based on the usage, and usage creates demand.
As conclusion, if community of libertarian will grow, Bitcoin's value will rise because demand will rise, if not, it is likely to fail.
But nothing is black and white, people will take sides and we will always have haters and lovers. There will always be enough bitcoin to serve people they want to use and not enough for the value to become zero.
“Value” is measured by what someone paid. Nothing more, nothing less. If I buy an apple from you for $5, that means both of us valued the apple at $5. The end.
To understand how meaningless the notion of intrinsic value is, ask yourself what the intrinsic value of water is? Drinking it? Bathing with it? Swimming in it? Cooking with it? Watering a garden with it? Washing a car with it?
Different people value water for different uses at different times for different amounts... there is no dollar value intrinsic to the water itself.
Water for washing your car or watering your garden is relatively cheap, drinking water is not. Because for drinking water you need to get a cleaner source or spending effort to clean it. In many regions, tap water is perfect drinking water (and usually relatively expensive) in other regions not. Bottled water is yet more expensive because of the effort of bottling and transporting the bottled water. Of course you have effects like expensive French bottled water in the US, but that nonwithstanding bottled water is more expensive than tap water which is more expensive than river water.
When someone says "this thing is valued at $5" it means someone traded or is willing to trade $5 for that thing. It doesn't have anything to do with what you can use that thing for.
Yes, water is "valuable" as something to drink. That has little to do with what someone paid for some water.
The Federal Reserve doens't simply print notes and drive them over to the banks. There's an asset exchange that takes place.
A 1000 tonnes mountain of cow poo has near zero intrinsic value (perhaps even negative because it's a biohazard; people and government(s) are gonna get pissed and tell you to clean it up). That does not mean it didn't cost anything to create it, it was probably somewhat expensive to set up.
