"Gold was valued as a pretty thing/art medium before it came into use as a currency."
You make a good point.
"Some folks really really want bitcoins to be a commodites because of their ideological disposition, but in reality they're nothing more than bits 'n bytes representing ledger balances."
No, they're commodities all right. The "bits 'n bytes" thing makes no difference. By that logic, you could say that electronic documents are not "commodities", even though they outSOLD paper books last year. But of course they (and Bitcoin) ARE commodities in every economic sense of the term: they are tangible goods (in a rough sense... I can put them on my cell phone and take them with me), they have costs of production, they can be sold on the free market, they can be traded. There isn't a single economic sense I am aware of in which they are NOT commodities.
"That said, I agree that Jane Q. Public's distinction between Worth/Value and Price is a bit broken, or at least, one-sided"
That's because that is NOT the distinction I was making. "Intrinsic value" is not a "worth". Nor is it a "value" in the usual sense of the term. In actual calculation, it is a COST.
I didn't say anything was "worth" its intrinsic value. What I said was: in a rational free market, prices tend to gravitate toward the intrinsic value. But it is not the "value" or "worth" of anything. It is not the subjective "value" you attach to something, nor is it the market price. It has nothing at all to with the former, and it has nothing directly to do with the latter.
It's just an abstract economic concept related to markets. With a name that should probably be different because it causes so much confusion.
"Here's one economic definition of intrinsic value:"
Neither of the definitions you give are the "intrinsic value" I was referring to.
The first one is not in the context of macroeconomics. It is a business definition. The second definition is the concept of a "value" that some good "intrinsically" has, which again is not the same thing. The "intrinsic value" to which I referred is neither of those things. It is an abstract economic concept. Technically, it is a cost.
I have explained this many times already, but I'll do it again: the term "intrinsic value" is unfortunate because strictly speaking, it does not reflect the "value" of something either to a producer or a buyer. The "value" of a loaf of bread may be different for you than it is for me. That's entirely subjective, and a different concept. Similarly, "intrinsic value" is not something that is "intrinsic" to the product in the usual sense of the term. It has to do with outside factors that aren't inherent or "intrinsic" to the product at all.
The point I'm making here is that it is not what it sounds like it should be. It is not a "value" in the usual sense, and it is not "intrinsic" in the usual sense. But I did not make the name up. It is right there in my macro econ book.
"What you actually can do at home is confirm Bitcoin transactions, which reinforces transaction history against double-spends."
NO. You can actually "create" Bitcoins at home by "mining" them. (If you want to get technical, you are actually discovering them, but it's called mining.) This is NOT the same as confirming transactions. I know... I've mined some.
"The whole idea of Bitcoins having "intrinsic value" is about the same as claiming miles or newton seconds have an intrinsic value. They are simply arbitrary units of measurement in a distributed ledger system. Bitcoins have no identity, they're simply a unit of magnitude."
NO again. That's not what "intrinsic value" means. It isn't some "value" that you attach to something. It is a specific quantity that can be precisely calculated. It has nothing to do with a Bitcoin's "value" to you, and it has nothing to do with market price. Economically speaking, it is a COST.
"i could make turd sculptures at home too - that doesn't mean they have any intrinsic value."
Like so many others, you are confusing the idea of "intrinsic value" with some "value" to you which is "intrinsic" to the good. But that's not what it means.
Look... I admit the name is somewhat unfortunate but I didn't make it up. Replace "intrinsic value" with "cost of goods sold" and you will be close enough to probably get the point.
"I think you've picked an unusual name for it by calling it economic value and implicitly claiming everything else was not economic value"
That isn't what I did.
"Intrinsic value" is a technical term. It has a specific definition. It is not the "value" that some consumer thinks it "intrinsically" possesses. That is a completely different thing.
I did not say that one is economics and the other is not. I said that "intrinsic value" is a clearly defined economic term, while consumer views of "value" are ambiguous and not clearly defined.
It is defined as cost of production + cost of distribution. You can call that "cost of production plus cost of distribution", and it is pretty close to cost of goods sold, but "intrinsic value" gives it a name, and I did not make that name up.
Further, I examined New York and Seattle closely, at current sea level and at 1m (the reasonable max we can expect by 2100 according to the IPCC). It made only minuscule changes around the fringes in each city.
I should also note that the choice of colors is such that many coastal areas (including the Seattle-area coastline) appear to be already underwater at current sea level, when they clearly are not.
So regardless of its accuracy, that page is pretty obviousy intended to scare people.
Regulation leads to regulatory capture, which leads not to communism, but to oligarchy. There has been no real implementation of "communism" anytime, anywhere.
Both of those are true. BUT... there is improper regulation and proper regulation.
In countries where backbone is (by government regulation) required to be shared (and NOT for free), it has actually led to greater competition and lower prices than in the United States.
Regulation may be a necessary evil. But incompetent or misguided regulation (as we have now in the U.S.) is just plain evil.
"The landscape has changed. And some people want to be optimistic about it. "
Give me a break. The MS "landscape" hasn't change a f*ing bit, except that their UI designing seem to be far more incompetent than in the late 90s.
As discusses here on Slashdot just the other day, Microsoft is trying to get political over OOXML again with the government in the UK.
If that's a "changed landscape", I'm a baboon.
They still try to muscle, bully, and bullshit their way into your pocketbook. They still do just about everything they can to get around any real competition in the market.
I'd like to be optimistic, too. I just don't see much of anything to be optimistic about. Except maybe Internet Explorer. After a decade and a half (or maybe more), they're finally starting to work with (and catch up to) standards, rather than trying to dictate those standards and stifle progress. But... 15 years is an awful long time to read the writing that has been on the wall the entire time.
Right there on the first page it also says it calls for a mechanism for the person making the request to provde consent for the "trusted" proxy to, well, be a proxy.
Granted, there could be problems with people consenting when they shouldn't. There might also be problems with essentially coerced "consent", as in a situation where that is the only avenue for accessing that resource. But those are different problems than that of someone just inserting themselves in as a man-in-the-middle.
"Except surveys of climate (and related) scientists have been done as well, and they show very similar numbers."
Really? Which ones were those? The only surveys I am aware of were the surveys by Oreskes, Cook, Anderegg, and
the one I linked to in my previous comment. I have already addressed the first three elsewhere. Of all the surveys done, the only one I am aware of that actually asked the professionals in the field what they actually thought, was that one in my previous post.
If you know of any besides those 4, I would be happy to take a look at them.
"It has no intrinsic value, you can not eat/burn it, use it as a brick to build a house from or as an ingredient to an electronic device or any other real world thing you can take into your hands.
Perhaps you should read up about the term intrinsic."
And perhaps you should read up on economics, or at least just look up the phrase "intrinsic value" in an economic context.
I'm not saying that out of "intellectual violence", I'm making a genuine suggestion for improving your knowledge of the subject.
And the reason I'm doing so is because you are still getting it wrong. Your subjective ideas of "value" have NOTHING to do with the economic concept of "intrinsic value". The former is ambiguous; people have different subjective ideas of value. The latter is a clearly-defined quantity in the field of economics.
So I'm saying this with the intent to be constructive and helpful, not "violent": go look up intrinsic value. But note that while it is called something else by different schools of free-market economics, every one of them does make use of the concept.
"While a commodity can be used as currency, commodities always have uses outside of their value as currencies."
Always? Well, it's true that gold, when it was both a commodity and a currency, had other uses. But until very recently, from a historical perspective, the only other use it had was art. And even then, it was only valued as art because it was effectively money; other less-expensive substances also had as much shine.
"Using the term: 'read something about macro economics, and then come back to me' is a form of the anti pattern Intellectual Violence. Read up about it, then come back to me;)"
Baldly stating
"Nothing has intrinsic value."
as GP did, to an explanation of intrinsic value is also "intellectual violence". Why should I not reply in kind? I reserve the right to defend myself from verbal violence, using verbal violence myself if necessary.
Speaking of which, you demonstrate the same kind of behavior by making argumentative but unsubstantive comments like:
"Certainly not. What has the "intrinsic value" of a fresh baked bread (it can be eaten) to do with its value? Or what has the 'intrinsic value' of a piece of coal (which can be burned, and thats it) to do with supply and demand on coal and hence its price?"
Amusing. You ask me to explain something I've already explained. So please tell me which this is: trolling, or just a failure to understand? If it is failure to understand, then it's fine. If not, then it's just another example of the kind of "violence" you mentioned.
A subjective concept of "value" to a consumer or end-user has nothing to do with intrinsic value. They are two completely different things. Intrinsic value is a specific and clearly-defined economic concept. It is a number that can be precisely calculated. If, of course, you have the relevant information about costs and so on.
If you want to know what it has to do with supply and demand, please see my replies to others above.
"Supply and demand does not define its price, the price is defined by how much Apple can get away with."
That's because it's not a free market. Only one company makes iPhones.
On the other hand, it's still not a total monopoly because if Apple charged too much, people would just buy an Android phone, or an Ubuntu phone, or a Firefox phone. In fact, many people have... leaving Apple with far less than half the market now.
So... nice try, but arguing that supply-and-demand doesn't work for a semi-monopoly is pretty much a non-argument.
"Very good points you bring up. However I'm not sure it applies to currency. For example, the "intrinsic value" of a 100 dollar bill is far below $100, yet it still retains that value. "
Dollars are fiat currency. In economic terms, they have no intrinsic value. In fact that's part of the definition of a fiat currency.
Bitcoins, unlike dollars, are a commodity. You can literally create them at home. That is why they have an intrinsic value, and why economically speaking they are different from dollars.
But the market is treating as though they were the same. In part because a lot of people don't understand that difference.
"Water is extremely valuable, but we have so much, the marginal value of producing another glass of drinking water is pretty low."
Again you are confusing subjective "value", or importance, to economic value. It doesn't work that way. This is the point I was originally making: in economic terms, cost, price and value are all very different things. But aside from that, marginal subjective consumer "value" is yet another thing, unrelated to the kind of "value" I was referring to.
Water is cheap precisely because of the effects I already described: the cost of production is extremely low, and there is ample supply. If it cost a lot to "produce" a glass of water, then that glass of water would cost you a lot. It doesn't get much simpler than that. And it has very little to do with the fact that you need water to drink, or like to live near a lake (your subjective consumer value).
But that gets us right back to why the market in Bitcoin has been irrational. If you tried to sell water on the stock market for $50 a liter (WAY more than it cost you to "produce"), nobody would buy it. Ridiculous, right? So why did they do that for Bitcoin? Answer: because they were being irrational.
Sure, some people are making a killing on Bitcoin. But for every one who does, someone else is either losing money, or will lose money.
But all the while, Bitcoins are getting harder and harder to produce (as they were designed to do), which means the "intrinsic value" is increasing, which means the market price price is ever more closely approaching that intrinsic value.
"That idea of value was nice, in the 19th century. While one can come up with a concept of value, that value is not the same for all actors: Value is not really cost of production, but utility. And we also have to consider marginal value: Water is extremely valuable, but we have so much, the marginal value of producing another glass of drinking water is pretty low."
No, and no.
As I wrote in another reply: "intrinsic value" has a specific meaning. Different schools of economics might call it by different names, but the concept is present in any free-market economics. Without it, supply and demand would not give any kind of rational price signals. Intrinsic value is a clearly defined mathematical concept in economics. What you mean by "value" here is the subjective value of something to a consumer, which is a completely different thing.
Here is why it is an important concept: I produce commodity X. (It doesn't matter whether it's wheat or Bitcoins, the concept is the same.) In order to keep producing X, I must make a profit on it, or I simply won't do it. This is basic human behavior.
In order to make a profit on it, I have to sell it for more than my costs of production + distribution. This is the base amount I have to beat to make a profit.
If I can sell it for a lot more than that amount (which we are calling "intrinsic value"), then a lot more people will start doing it too. Which drives the price back down toward that amount again. If I try to sell it for my costs or less, then I cease to make a profit and I'll stop producing X altogether.
That's why it's called intrinsic value. It's a value that the market naturally drives the price toward. (IF, that is, it's a rational free market.)
But when a commodity starts selling at a price that is completely detached from any rational valuation, you get bubbles. That is what has been happening with bitcoin.
It might satisfy the "value" that a consumer subjectively attaches to it, but in rational markets that price will always gravitate toward the intrinsic value (but never quite reach it). When it doesn't, trouble is on the way.
"Intrinsic value" is magical thinking to begin with."
Then you'd better tell all the economists, because they aren't aware of this.
Without a concept of intrinsic value (even though some schools of economics might call it something else), there can be no such thing as supply and demand. As I say: the name may be different, but without the basic concept of intrinsic value not one of their hallowed economic curves will work.
"Nothing has intrinsic value. Individuals decide how much value things have for themselves."
Go read just about any current textbook on macroeconomics. Then get back to me.
The concept of "intrinsic value" is central to the whole idea of "supply and demand". In a free market, it works. We have a couple of thousand years of history to prove it.
"... more people will start producing them because there's good profit to be had."... And THAT makes the price come back down toward the "intrinsic value", because of supply and demand.
And this is only true because of Bitcoin's dual nature: it is not just a currency, like fiat dollars, but also a commodity that can be produced at home.
Which is why I say the market for Bitcoin is completely irrational. There is no economic reason for it to bounce all over the place. Investors are being stupid.
See, this is a big problem that many people don't understand: the difference between "worth" (or "value") and price. They are not the same things, and that is what has ruined Bitcoin.
Economically, the intrinsic value of something is approximately: the cost of production + the cost of distribution. Bitcoin was intended to be basically free to distribute. So the intrinsic worth should be approximately the cost of production. (Plus a tiny bit... it's not exact.)
The reason this is called the "value", is because if the price goes much higher than this, more people will start producing them because there's good profit to be had. If the price drops below that point, people will stop producing them because there's no profit to be had. Make sense?
Unfortunately, today's stock market all too often ignores value and goes by price alone. That is how bubbles form: the price of something gets outrageously inflated, completely aside from any value. When actual supply-and-demand rear their heads, and the commodity is suddenly associated with that value again, as it eventually must... everybody who bought at that inflated price lose a lot of money.
This all comes down to one basic point: the current stock market is often irrational, because it has gotten to a point where it completely ignores actual value of something and goes by price alone. This is irrational and leads to all kinds of problems.
So, keep in mind: if you invest in a cryptocurrency (or anything else, for that matter) at a price that is far above it's "intrinsic value", be careful. You might make money if you know what you're doing, but you could also become the victim of the bubble and lose your shorts at any time.
"Essentially all scientific papers that it is possible to tell whether or not they support the consensus view unambiguously support the consensus view. That's what has been shown."
Yes, that is what was shown. But it doesn't mean anything. The only useful thing that shows is that doing a survey of the published papers on the subject does not give you an accurate picture of how many people think what.
See, the PROBLEM here is that these surveys claim to show that there is a "consensus" on greenhouse gas warming. But they don't actually show that. What they show is that people who have been publishing papers about greenhouse warming agree about greenhouse warming. Well, duh. Who'da thunk it? What they don't show is the overall scientific opinion about greenhouse gas warming... even though that's what they are pretending to show.
I will repeat what I wrote in an earlier reply above: the only way to know what people in that field of study actually think about greenhouse gas warming is to ask them. And that's what THIS STUDY did. The result? 52%. Hardly overwhelming and probably different from half by not much more than the standard error.
"79% of the AMS study participants self-identify as non-publishers of climate papers. link. That bears about the same weight as a slashdot poll on the subject. I rest my case."
Go ahead and let it rest, since you have no case.
THIS survey has nothing to do with the OTHER surveys. Those OTHER surveys were statistically invalid. Get it?
Let's get this very clear: regardless of what you think of this survey, those other surveys did not show what they purported to show: that there was an overwhelming scientific "consensus" on greenhouse gas warming. That was my point. My point was NOT about what publishers of climate papers think about climate science (except to the extent that those surveys were wrong), but rather about whether scientists, or even just climatologists and meteorologist, overwhelmingly agree with greenhouse gas warming. It's not about publishing, it's about consensus, and there is none.
But since you brought this up: the Cook survey sent out 10,000 survey forms, and based their results on only 75 of the responses... all of whom, it turned out, were known to them. THIS survey shows over 1200 people who are actively involved in the field. Given that, which survey do you think is more statistically valid?
I ask the question rhetorically, because you don't seem to have gotten my point about the statistics in the first place.
Slashdot Mirror
"Gold was valued as a pretty thing/art medium before it came into use as a currency."
You make a good point.
"Some folks really really want bitcoins to be a commodites because of their ideological disposition, but in reality they're nothing more than bits 'n bytes representing ledger balances."
No, they're commodities all right. The "bits 'n bytes" thing makes no difference. By that logic, you could say that electronic documents are not "commodities", even though they outSOLD paper books last year. But of course they (and Bitcoin) ARE commodities in every economic sense of the term: they are tangible goods (in a rough sense... I can put them on my cell phone and take them with me), they have costs of production, they can be sold on the free market, they can be traded. There isn't a single economic sense I am aware of in which they are NOT commodities.
"That said, I agree that Jane Q. Public's distinction between Worth/Value and Price is a bit broken, or at least, one-sided"
That's because that is NOT the distinction I was making. "Intrinsic value" is not a "worth". Nor is it a "value" in the usual sense of the term. In actual calculation, it is a COST.
I didn't say anything was "worth" its intrinsic value. What I said was: in a rational free market, prices tend to gravitate toward the intrinsic value. But it is not the "value" or "worth" of anything. It is not the subjective "value" you attach to something, nor is it the market price. It has nothing at all to with the former, and it has nothing directly to do with the latter.
It's just an abstract economic concept related to markets. With a name that should probably be different because it causes so much confusion.
"Here's one economic definition of intrinsic value:"
Neither of the definitions you give are the "intrinsic value" I was referring to.
The first one is not in the context of macroeconomics. It is a business definition. The second definition is the concept of a "value" that some good "intrinsically" has, which again is not the same thing. The "intrinsic value" to which I referred is neither of those things. It is an abstract economic concept. Technically, it is a cost.
I have explained this many times already, but I'll do it again: the term "intrinsic value" is unfortunate because strictly speaking, it does not reflect the "value" of something either to a producer or a buyer. The "value" of a loaf of bread may be different for you than it is for me. That's entirely subjective, and a different concept. Similarly, "intrinsic value" is not something that is "intrinsic" to the product in the usual sense of the term. It has to do with outside factors that aren't inherent or "intrinsic" to the product at all.
The point I'm making here is that it is not what it sounds like it should be. It is not a "value" in the usual sense, and it is not "intrinsic" in the usual sense. But I did not make the name up. It is right there in my macro econ book.
"What you actually can do at home is confirm Bitcoin transactions, which reinforces transaction history against double-spends."
NO. You can actually "create" Bitcoins at home by "mining" them. (If you want to get technical, you are actually discovering them, but it's called mining.) This is NOT the same as confirming transactions. I know... I've mined some.
"The whole idea of Bitcoins having "intrinsic value" is about the same as claiming miles or newton seconds have an intrinsic value. They are simply arbitrary units of measurement in a distributed ledger system. Bitcoins have no identity, they're simply a unit of magnitude."
NO again. That's not what "intrinsic value" means. It isn't some "value" that you attach to something. It is a specific quantity that can be precisely calculated. It has nothing to do with a Bitcoin's "value" to you, and it has nothing to do with market price. Economically speaking, it is a COST.
"i could make turd sculptures at home too - that doesn't mean they have any intrinsic value."
Like so many others, you are confusing the idea of "intrinsic value" with some "value" to you which is "intrinsic" to the good. But that's not what it means.
Look... I admit the name is somewhat unfortunate but I didn't make it up. Replace "intrinsic value" with "cost of goods sold" and you will be close enough to probably get the point.
"I think you've picked an unusual name for it by calling it economic value and implicitly claiming everything else was not economic value"
That isn't what I did.
"Intrinsic value" is a technical term. It has a specific definition. It is not the "value" that some consumer thinks it "intrinsically" possesses. That is a completely different thing.
I did not say that one is economics and the other is not. I said that "intrinsic value" is a clearly defined economic term, while consumer views of "value" are ambiguous and not clearly defined.
It is defined as cost of production + cost of distribution. You can call that "cost of production plus cost of distribution", and it is pretty close to cost of goods sold, but "intrinsic value" gives it a name, and I did not make that name up.
"Well, that would actually make more sense than the 500m that the link points to."
If you go to the home page of that site, and navigate to the sea-level-rise page with no url parameters specified, it starts at 100m sea-level rise by default. The page linked here is exactly as it appears from simply clicking on the "raise seal level" link on the site.
Further, I examined New York and Seattle closely, at current sea level and at 1m (the reasonable max we can expect by 2100 according to the IPCC). It made only minuscule changes around the fringes in each city.
I should also note that the choice of colors is such that many coastal areas (including the Seattle-area coastline) appear to be already underwater at current sea level, when they clearly are not.
So regardless of its accuracy, that page is pretty obviousy intended to scare people.
Regulation leads to regulatory capture, which leads not to communism, but to oligarchy. There has been no real implementation of "communism" anytime, anywhere.
Both of those are true. BUT... there is improper regulation and proper regulation.
In countries where backbone is (by government regulation) required to be shared (and NOT for free), it has actually led to greater competition and lower prices than in the United States.
Regulation may be a necessary evil. But incompetent or misguided regulation (as we have now in the U.S.) is just plain evil.
"The landscape has changed. And some people want to be optimistic about it. "
Give me a break. The MS "landscape" hasn't change a f*ing bit, except that their UI designing seem to be far more incompetent than in the late 90s.
As discusses here on Slashdot just the other day, Microsoft is trying to get political over OOXML again with the government in the UK.
If that's a "changed landscape", I'm a baboon.
They still try to muscle, bully, and bullshit their way into your pocketbook. They still do just about everything they can to get around any real competition in the market.
I'd like to be optimistic, too. I just don't see much of anything to be optimistic about. Except maybe Internet Explorer. After a decade and a half (or maybe more), they're finally starting to work with (and catch up to) standards, rather than trying to dictate those standards and stifle progress. But... 15 years is an awful long time to read the writing that has been on the wall the entire time.
"someone didn't RTFM!"
And apparently that someone was not alone.
Right there on the first page it also says it calls for a mechanism for the person making the request to provde consent for the "trusted" proxy to, well, be a proxy.
Granted, there could be problems with people consenting when they shouldn't. There might also be problems with essentially coerced "consent", as in a situation where that is the only avenue for accessing that resource. But those are different problems than that of someone just inserting themselves in as a man-in-the-middle.
"Except surveys of climate (and related) scientists have been done as well, and they show very similar numbers."
Really? Which ones were those? The only surveys I am aware of were the surveys by Oreskes, Cook, Anderegg, and the one I linked to in my previous comment. I have already addressed the first three elsewhere. Of all the surveys done, the only one I am aware of that actually asked the professionals in the field what they actually thought, was that one in my previous post.
If you know of any besides those 4, I would be happy to take a look at them.
"It has no intrinsic value, you can not eat/burn it, use it as a brick to build a house from or as an ingredient to an electronic device or any other real world thing you can take into your hands. Perhaps you should read up about the term intrinsic."
And perhaps you should read up on economics, or at least just look up the phrase "intrinsic value" in an economic context.
I'm not saying that out of "intellectual violence", I'm making a genuine suggestion for improving your knowledge of the subject.
And the reason I'm doing so is because you are still getting it wrong. Your subjective ideas of "value" have NOTHING to do with the economic concept of "intrinsic value". The former is ambiguous; people have different subjective ideas of value. The latter is a clearly-defined quantity in the field of economics.
So I'm saying this with the intent to be constructive and helpful, not "violent": go look up intrinsic value. But note that while it is called something else by different schools of free-market economics, every one of them does make use of the concept.
"While a commodity can be used as currency, commodities always have uses outside of their value as currencies."
Always? Well, it's true that gold, when it was both a commodity and a currency, had other uses. But until very recently, from a historical perspective, the only other use it had was art. And even then, it was only valued as art because it was effectively money; other less-expensive substances also had as much shine.
"Using the term: 'read something about macro economics, and then come back to me' is a form of the anti pattern Intellectual Violence. Read up about it, then come back to me ;)"
Baldly stating
"Nothing has intrinsic value."
as GP did, to an explanation of intrinsic value is also "intellectual violence". Why should I not reply in kind? I reserve the right to defend myself from verbal violence, using verbal violence myself if necessary.
Speaking of which, you demonstrate the same kind of behavior by making argumentative but unsubstantive comments like:
"Certainly not. What has the "intrinsic value" of a fresh baked bread (it can be eaten) to do with its value? Or what has the 'intrinsic value' of a piece of coal (which can be burned, and thats it) to do with supply and demand on coal and hence its price?"
Amusing. You ask me to explain something I've already explained. So please tell me which this is: trolling, or just a failure to understand? If it is failure to understand, then it's fine. If not, then it's just another example of the kind of "violence" you mentioned.
A subjective concept of "value" to a consumer or end-user has nothing to do with intrinsic value. They are two completely different things. Intrinsic value is a specific and clearly-defined economic concept. It is a number that can be precisely calculated. If, of course, you have the relevant information about costs and so on.
If you want to know what it has to do with supply and demand, please see my replies to others above.
"Supply and demand does not define its price, the price is defined by how much Apple can get away with."
That's because it's not a free market. Only one company makes iPhones.
On the other hand, it's still not a total monopoly because if Apple charged too much, people would just buy an Android phone, or an Ubuntu phone, or a Firefox phone. In fact, many people have... leaving Apple with far less than half the market now.
So... nice try, but arguing that supply-and-demand doesn't work for a semi-monopoly is pretty much a non-argument.
"Very good points you bring up. However I'm not sure it applies to currency. For example, the "intrinsic value" of a 100 dollar bill is far below $100, yet it still retains that value. "
Dollars are fiat currency. In economic terms, they have no intrinsic value. In fact that's part of the definition of a fiat currency.
Bitcoins, unlike dollars, are a commodity. You can literally create them at home. That is why they have an intrinsic value, and why economically speaking they are different from dollars.
But the market is treating as though they were the same. In part because a lot of people don't understand that difference.
"Water is extremely valuable, but we have so much, the marginal value of producing another glass of drinking water is pretty low."
Again you are confusing subjective "value", or importance, to economic value. It doesn't work that way. This is the point I was originally making: in economic terms, cost, price and value are all very different things. But aside from that, marginal subjective consumer "value" is yet another thing, unrelated to the kind of "value" I was referring to.
Water is cheap precisely because of the effects I already described: the cost of production is extremely low, and there is ample supply. If it cost a lot to "produce" a glass of water, then that glass of water would cost you a lot. It doesn't get much simpler than that. And it has very little to do with the fact that you need water to drink, or like to live near a lake (your subjective consumer value).
But that gets us right back to why the market in Bitcoin has been irrational. If you tried to sell water on the stock market for $50 a liter (WAY more than it cost you to "produce"), nobody would buy it. Ridiculous, right? So why did they do that for Bitcoin? Answer: because they were being irrational.
Sure, some people are making a killing on Bitcoin. But for every one who does, someone else is either losing money, or will lose money.
But all the while, Bitcoins are getting harder and harder to produce (as they were designed to do), which means the "intrinsic value" is increasing, which means the market price price is ever more closely approaching that intrinsic value.
"That idea of value was nice, in the 19th century. While one can come up with a concept of value, that value is not the same for all actors: Value is not really cost of production, but utility. And we also have to consider marginal value: Water is extremely valuable, but we have so much, the marginal value of producing another glass of drinking water is pretty low."
No, and no.
As I wrote in another reply: "intrinsic value" has a specific meaning. Different schools of economics might call it by different names, but the concept is present in any free-market economics. Without it, supply and demand would not give any kind of rational price signals. Intrinsic value is a clearly defined mathematical concept in economics. What you mean by "value" here is the subjective value of something to a consumer, which is a completely different thing.
Here is why it is an important concept: I produce commodity X. (It doesn't matter whether it's wheat or Bitcoins, the concept is the same.) In order to keep producing X, I must make a profit on it, or I simply won't do it. This is basic human behavior.
In order to make a profit on it, I have to sell it for more than my costs of production + distribution. This is the base amount I have to beat to make a profit.
If I can sell it for a lot more than that amount (which we are calling "intrinsic value"), then a lot more people will start doing it too. Which drives the price back down toward that amount again. If I try to sell it for my costs or less, then I cease to make a profit and I'll stop producing X altogether.
That's why it's called intrinsic value. It's a value that the market naturally drives the price toward. (IF, that is, it's a rational free market.)
But when a commodity starts selling at a price that is completely detached from any rational valuation, you get bubbles. That is what has been happening with bitcoin.
It might satisfy the "value" that a consumer subjectively attaches to it, but in rational markets that price will always gravitate toward the intrinsic value (but never quite reach it). When it doesn't, trouble is on the way.
"For most stocks, on most days, the price is a more-or-less reasonable approximation of the present value of the share"
I don't disagree. I was saying that bubbles happen when the price becomes completely detached from any kind of realistic valuation.
"Intrinsic value" is magical thinking to begin with."
Then you'd better tell all the economists, because they aren't aware of this.
Without a concept of intrinsic value (even though some schools of economics might call it something else), there can be no such thing as supply and demand. As I say: the name may be different, but without the basic concept of intrinsic value not one of their hallowed economic curves will work.
"Nothing has intrinsic value. Individuals decide how much value things have for themselves."
Go read just about any current textbook on macroeconomics. Then get back to me.
The concept of "intrinsic value" is central to the whole idea of "supply and demand". In a free market, it works. We have a couple of thousand years of history to prove it.
"Fiat currency only works as well are all those making use of it agree on its value."
There. FTFY.
Bitcoin is not a fiat currency. It is a commodity. It has an "intrinsic" value, which is not subject to opinion.
Yes, its price has been all over the map. But that's just because of stupid investors. They've been handing the bulk miners the keys to the bank.
I neglected to mention one important step:
... And THAT makes the price come back down toward the "intrinsic value", because of supply and demand.
"... more people will start producing them because there's good profit to be had."
And this is only true because of Bitcoin's dual nature: it is not just a currency, like fiat dollars, but also a commodity that can be produced at home.
Which is why I say the market for Bitcoin is completely irrational. There is no economic reason for it to bounce all over the place. Investors are being stupid.
"How much are they worth? In real money"
See, this is a big problem that many people don't understand: the difference between "worth" (or "value") and price. They are not the same things, and that is what has ruined Bitcoin.
Economically, the intrinsic value of something is approximately: the cost of production + the cost of distribution. Bitcoin was intended to be basically free to distribute. So the intrinsic worth should be approximately the cost of production. (Plus a tiny bit... it's not exact.)
The reason this is called the "value", is because if the price goes much higher than this, more people will start producing them because there's good profit to be had. If the price drops below that point, people will stop producing them because there's no profit to be had. Make sense?
Unfortunately, today's stock market all too often ignores value and goes by price alone. That is how bubbles form: the price of something gets outrageously inflated, completely aside from any value. When actual supply-and-demand rear their heads, and the commodity is suddenly associated with that value again, as it eventually must... everybody who bought at that inflated price lose a lot of money.
This all comes down to one basic point: the current stock market is often irrational, because it has gotten to a point where it completely ignores actual value of something and goes by price alone. This is irrational and leads to all kinds of problems.
So, keep in mind: if you invest in a cryptocurrency (or anything else, for that matter) at a price that is far above it's "intrinsic value", be careful. You might make money if you know what you're doing, but you could also become the victim of the bubble and lose your shorts at any time.
"Essentially all scientific papers that it is possible to tell whether or not they support the consensus view unambiguously support the consensus view. That's what has been shown."
Yes, that is what was shown. But it doesn't mean anything. The only useful thing that shows is that doing a survey of the published papers on the subject does not give you an accurate picture of how many people think what.
See, the PROBLEM here is that these surveys claim to show that there is a "consensus" on greenhouse gas warming. But they don't actually show that. What they show is that people who have been publishing papers about greenhouse warming agree about greenhouse warming. Well, duh. Who'da thunk it? What they don't show is the overall scientific opinion about greenhouse gas warming... even though that's what they are pretending to show.
I will repeat what I wrote in an earlier reply above: the only way to know what people in that field of study actually think about greenhouse gas warming is to ask them. And that's what THIS STUDY did. The result? 52%. Hardly overwhelming and probably different from half by not much more than the standard error.
"79% of the AMS study participants self-identify as non-publishers of climate papers. link. That bears about the same weight as a slashdot poll on the subject. I rest my case."
Go ahead and let it rest, since you have no case.
THIS survey has nothing to do with the OTHER surveys. Those OTHER surveys were statistically invalid. Get it?
Let's get this very clear: regardless of what you think of this survey, those other surveys did not show what they purported to show: that there was an overwhelming scientific "consensus" on greenhouse gas warming. That was my point. My point was NOT about what publishers of climate papers think about climate science (except to the extent that those surveys were wrong), but rather about whether scientists, or even just climatologists and meteorologist, overwhelmingly agree with greenhouse gas warming. It's not about publishing, it's about consensus, and there is none.
But since you brought this up: the Cook survey sent out 10,000 survey forms, and based their results on only 75 of the responses... all of whom, it turned out, were known to them. THIS survey shows over 1200 people who are actively involved in the field. Given that, which survey do you think is more statistically valid?
I ask the question rhetorically, because you don't seem to have gotten my point about the statistics in the first place.