It is undisputed that gold represents a value in itself. But how does this actually apply to Bitcoin (BTC), often referred to as digital gold? This almost philosophical discussion is conducted under the keyword “intrinsic”.
In the real economy, goods, materials and comparable components can have a value in themselves that does not depend solely on how people perceive or use the product. Philosophy calls this principle “intrinsic” – and the cryptoscene likes to puzzle about which status actually describes Bitcoin (BTC) appropriately. A gladly led comparison is gold. The precious metal is rare, has been used for centuries as a direct means of payment (gold coins) and has been anchored in civilization even longer, for example as a material for jewelry and relics. Gold may call itself “intrinsic”, even after the function as a hedge for fiat currencies at central banks was largely abandoned. Bitcoin, on the other hand, came out of nowhere and is based on a theory. Is BTC nevertheless “intrinsic” and has a sustainable value in itself?
Some experts think they have good arguments for an intrinsic Bitcoin:
- BTC’s network (block chain) functions worldwide, has no failures, and hundreds of millions of US dollars are transferred or stored on it every day. This network alone should already prove the intrinsic character of Bitcoin.
- Large amounts of energy are expended on Bitcoin and its blockhain, and energy is intrinsic. This also speaks for Bitcoin’s intrinsic values.
- Bitcoin is rare, the maximum amount being limited to 21 million BTC. As with gold, this points in the direction of intrinsic.
- Bitcoin is an outstanding example for the application of cryptography. Anyone who does not believe in cryptography, which is an indispensable part of the modern world, does not believe in Bitcoin either. This should be further evidence of Bitcoin as intrinsic.
Other theorists counter these arguments with cash, i.e. Fiat currencies. The value of euros or US dollars, for example, is clearly not based on the value of the paper on which banknotes are printed. Rarity alone is not proof of intrinsic value, because no one would attribute this attribute to a Schalke 04 Bundesliga championship, for example, even though such championships are very rare. Cryptography as a unique selling point is not good for Bitcoin, because cryptography has long since proven its usefulness in applications such as messenger services and elsewhere. That leaves network and energy consumption, which basically also applies to the Internet, supply chains, traffic and more.
Conclusion: The value of Bitcoin arises as with money through social consensus
As mentioned at the beginning: The discussion about the intrinsic Bitcoin is a rather philosophical one and therefore at best very limited relevant. One will be able to agree with Bitcoin rather on the comparison with Fiat, whose value results from the confidence of the society. The euro has value because citizens are sure that they can buy or pay for stable goods, services and more. Bitcoin has also achieved this status and thus proved its value. Whether BTC will achieve the significance of gold in the medium and long term is another question. But to these prognoses attach themselves to the price development of Bitcoin quite and to point completely from the hand are arguments for “internal values” of Bitcoin therefore probably also not.
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