The definition of intrinsic value.
It is necessary to specify at once that stands behind the term "internal cost". As part of this article, we propose to focus on the traditional definition, which can be found in Wikipedia, in the article on the theory of intrinsic value.
The theory of intrinsic value (or the theory of objective value) is any theory of value in Economics, according to which the value of an object, goods or services is intrinsic, in other words, contained in the object itself. Most of these theories consider the process of production of the object, as well as the costs associated with this process, as a measure of the internal value of the object.
What are the internal properties characteristic of bitcoin? What properties make it valuable?
Some experts, among others, Warren Buffett, are still in the delusion that only what can be touched, tasted, or seen can have an intrinsic value. It should be asked how such experts explain the phenomenon of inheritance, subject to invisible genes, radio frequency spectra; and whether, according to their views, bacteria, viruses, as well as such invisible technological advances as software and broadband Internet?
There is another opinion: that only gold and silver are the main measure of the internal value, largely due to the traditional evaluation of their value. However, for a person who is starving, loaf of bread contains more internal value, as it is able to save his life. For a starving person, it really does not matter that gold has been used by mankind for 6,000 years, and a loaf of bread can not last longer than one month.
There are two undeniable advantages of precious metals: traditional value and actual utility. By and large, from gold not so much benefit, as from silver content. Based on this premise alone, we can conclude that silver is more valuable than gold.
The value of gold nowadays is promoted by those who own it, and therefore, it is of vital interest that the rest of the world still believes in the value of gold bars. And yet the value of gold in the eyes of society is steadily declining, as it is gradually displaced from the consciousness of young people around the world. Gold coins modern young people see and use only in virtual games, such as Clash of Clans.
So let's move on to discussing those properties that make Bitcoin unique and innovative. These properties did not exist before him.
People dedicated may notice that some of these properties can be reproduced and duplicated. There is, however, one extremely important factor that distinguishes bitcoin from any other e-currency: the protective shell that has grown around it is a network that does not allow you to hack it or commandeer. Please keep this fact in mind while we talk about other bitcoin properties. The immense abyss separates bitcoin and other electronic currencies. Bitcoin has taken the world by surprise, and any replica, whatever it is, will be automatically perceived by hackers as a living target.
Features of the internal value of Bitcoin
1 - Bitcoin is beyond politics, Nations, religions, or local customs.
These conditions sometimes change from country to country so much that they may seem unacceptable to foreign residents. Even if you are confident that the government is always guided only by good intentions, it should be remembered that any political solution is a double – edged sword. Some drugs are allowed in some States, but prohibited in others, in some countries it is prohibited to sell the Bible. Groups of people impose conditional restrictions on certain acts of consumption, which under the sauce of religion, tradition, dogmas, superstitions are imposed on the majority, and later can also change rapidly. As a rule, projects of such prohibitions emanate from a narrow circle of stakeholders. Often joining the ranks of the "correct" political or religious party, finding the "right" of citizenship automatically updates the part of rights not available to others. All of these games, only the manipulation of perception.
For example, the U.S. government has legally banned gambling virtual games. Is this decision dictated by moral principles? At the same time, many members of the government consider it acceptable to hold state lotteries. The chances to win in such a lottery are significantly lower, and the target audience of such lotteries is the most poorly educated and low – income segments of the population, often subject to alcohol and other addictions and do not have a holistic view of the mathematical probability. There is a saying:"lottery – a special tax for those who can not count." This policy indicates the existence of double standards, which is not too consistent with the concept of high moral principles.
2 - No additional guarantees are required for bitcoin.
It's impossible to fake. In the registry, there is an entry about who owns bitcoin (wallet ID), and information about the validity of bitcoin is publicly available.
Bitcoin does not require a Central focal point. In the presence of any other currency, you have to reckon with the government that issues it, and hope that in the future it intends to maintain its value, and not reprint the money to cover the holes in the budget. You can send bitcoins around the world without having to trust anyone with your payment details, which is impossible in any single state, Bank, credit company or anywhere else.
The system still suffers from volatility, and long-term credibility is in the process of being formed, but when someone performs bitcoin transactions, there are no intermediaries between the sender and the recipient, unless the participation of the Trustees is agreed in advance.
3 - Bitcoin can be transparent.
If you know who the holder of a particular wallet is, you get the ability to track its cash flows. This is not possible with any other currency. A similar function can be used, in particular, to monitor the expenses of your children.
This property of bitcoin as transparency can destroy a whole industry built on fraud related to concealing cash transactions and binary systems of calculations. Such shadows can be implemented with bitcoins in opaque wallets, but other users of the network can use this property of the system as a tool of pressure to insist on the transparency of calculations, when necessary. Auditors may insist on a condition of transparency as a measure of compliance. (And this is far from being a complete list of features provided by this internal bitcoin property.)
4 - Bitcoin can be programmed.
On top of Bitcoin, it is possible to build a number of services that offer, for example, a limited number of options when making consumer spending. You can also set up your wallet to activate only when you purchase a specific set of items. Imagine that your child, a College student, can buy books from the bookstore, but can't buy beer. Or, with the help of the GPS system in your mobile, you can give your children access to the wallet, but by programming it to buy only in certain stores.
5 - Bitcoin can be configured to multi-sign.
The wallets containing the currency can be set to unlock with more than one digital signature. This feature will bring disappointment to hackers and thieves. Try to customize this feature for your grandparents. Multi-signature is an integral part of Bitcoin technology.
6 - Does not require any permission.
With bitcoin, you can easily pay online without having to have a Bank account, credit history, identification and prior permissions. Only prepaid credit cards of some banks may possess some of these features, but only in locations and countries that accept these credit cards. The list of such settlements in countries outside the United States, in fact, is very small due to fraud in networks. Technically, the only limitation for Bitcoin is a lack of awareness among sellers of goods and services. However, given the natural law of least resistance, these obstacles will gradually disappear as more sellers and producers become aware of the scale of potential savings when dealing with Bitcoin. The network effect will continue to do its job.
7 - Bitcoin can store irrevocable and dated transaction records.
Absolute clarity and clear sequence of events in the records of your transactions are available to you via blockchain. The identity of the owner and the fact of purchase can be confirmed without the participation of a third party. A proven and reliable accounting register cannot be changed,and this is done intentionally, given the entire volume of Internet attacks, which, however, become less common as the network grows.
8 - The Bitcoin system prevents the theft of personal information.
Bitcoin is not a debt receipt, settlements with it do not demand the credit. Bitcoin payment is made in full payment, not a "promise to pay". In addition, this payment system can indirectly help reduce the number of fraudulent fraud associated with identity theft. In the Bitcoin system, the seller simply does not need your Bank details and personal data, which could later be stolen from him.
9 - Bitcoin easily overcomes the boundaries.
He is stronger than governments trying to control capital flows. Such governments try to keep their own citizens financially captive by prohibiting the movement of capital beyond their borders. Ask any citizen of any country devastated by hyperinflation if it matters. Is it possible that it will ever be important for the United States? If you foresee the day when people in crowds will be getting rid of their dollars, what currency do you think they'll all look at?Ask the Argentines.
10 - The same currency can be used at any point of the globe.
Since all money is stored in the global register, all you need is a key and Internet access. And the key can be memorized, written on a piece of paper or even saved on a microphotos in the size of a dot at the end of the sentence. Some of the old adherents of gold bars claim that with the help of bitcoins you will not bribe the guards or border guards, if you suddenly have to leave in a hurry. Well, as the gold helps with crossing the border, we remember the sad case of Ostap Bender... However, in the near future, all the guards will be phones with Internet access, which means... bitcoin and it is very handy.
11 - Bitcoin transactions are not dependent on local banking rules, laws and restrictions.
US residents often look at the world through pink glasses and do not consider this aspect important, but what about the owners of 150 other types of currencies in countries with meager achievements in the economy? What other currency is in the same free float as bitcoin? Will the rest of the world outside the US believe in this freedom? Is it hard for you to imagine that the properties of bitcoin have the same intrinsic value for the inhabitants of countries with poor economic conditions? In India alone, there will be a billion people living in total corruption and dreaming of a mechanism that would allow the system to escape its control. In their situation, I guess they do not care for what he thinks is some sort of American expert on the question of rose-colored glasses and intrinsic value.
12 - Bitcoin can be used to fight corruption.
If the inhabitants of any country will unite and demand from the government transparent financing schemes, they can use bitcoin to track cash flows, as the state uses the mechanisms at its disposal to control the population. In today's world, money is corrupt. In the world of the future, perhaps, everything will be the opposite. Imagine that 86% of the world's population will finally agree that corruption is bad, and any tool is valuable in combating it.
13 - Bitcoin can be programmed to settle contracts without the participation of third parties.
You can program bitcoin for certain transactions related to the date, proof of ownership, death, and a variety of other factors that are automatically launched without the participation of third parties, subject to the terms of the contract.
Bitcoin system can be used for record keeping, asset accounting, confirmation of ownership rights.
The owner of the individual key to bitcoin, by default, is its owner. In addition, bitcoin can be used as a source of information about copyright holders, copyright holders, and intellectual property owners, which is unchanged, is beyond the boundaries and local laws. In reality, these data are actually the only reliable source of property information. Worldwide often only the immediate possession of the currency is sufficient evidence of ownership rights over it. Can the functions and properties of any other currency remain relevant if there is no physical equivalent?
14 - There are no age restrictions in the Bitcoin system.
In order to make a payment, a Bank account is required in the modern world. A Bank account may only be assigned to an individual upon reaching the age of majority (18 in most countries). In the Bitcoin system there is no lower age limit. Imagine how many people under 18 have a mobile phone and the need to make purchases without having your credit card or account. Visionary entrepreneurs have already recognized the internal purchasing power of this target group.
15 - If you use bitcoins, it's much harder to keep track of you.
The main attributes of money are always on the ear, but one of the properties is rarely mentioned. Money is the object of observation. Gradually, people are learning more about the attempts of the national security Agency and other government departments to establish oversight over all aspects of citizens ' lives, and sometimes it can be overbearing decision one drunken statesman to ruin at the root of all good intentions, and to revisit the horrors hovering over her.
It is remembered, once one government demanded from all Jews to pass obligatory registration-anything terrible, we will simply write down all of you. That's just these lists then suddenly turned into liquidation. In our time, belonging to a religious or political party, age, place of work, address and more can be found on the basis of payment data. Those of you who believe that there is nothing to fear, because you do not do anything illegal, I advise you to think about how the German Jews felt, making their own registration data in the harmless state register. They also did not commit anything illegal. And this is just one example from history. Does the intrinsic value of bitcoins increase the ability to keep their consumer data and addictions secret? You can imagine what part of the World's population thinks it's increasing.
16 - Bitcoin is like a monetary network.
If you have ever dealt with money transfers between large companies in different countries, you will soon realize like many others how convenient bitcoin is for this. If you imagine Bitcoin as an envelope full of dollars or other currencies, the size of the envelope alone would already be a significant obstacle to transportation. In addition, if it really was a bitcoin envelope to be useful, it would have to be able to increase greatly.
Even the bankers of the Federal Reserve and former Vice President al Gore has long been studied and used bitcoin. There are also venture capitalists who are used to being one step ahead of the rest.
17 - The Bitcoin system can be the basis for a new ecosystem.
Right now, new ecosystems are developing on the basis of the use of a new type of currency (in practice, if not at the level of public policy).
When everywhere there were cities of gold, forming a new ecosystem, but then turned into dust when the gold mine was exhausted. Now remember how deep the mine is, where bitcoin is mined and the depths at which it can be found. Is there a national currency,due to which now there are new ecosystem?
18 - Bitcoin is able to put an end to the age-old history of monetary monopolies.
The levers of control over the mechanism of monetary policy for several centuries hold in their hands a few representatives of very rich families. Bitcoin is able to radically change this situation. Large banks are likely to be able to stay afloat and keep reserves, besides, nothing prevents them from moving to the electronic currency. What other currency has the potential to change the age-old paradigm? Many followers are willing to invest in bitcoin, including for this reason: paradigm shift is becoming possible. Are you aware of other cases where a new currency dictates its rules and threatens to rewrite the financial history from scratch?
19 - The democratization of money.
A recent leak of informant from the world Bank, which reports that the entire network banking infrastructure of the world is controlled by 12 individuals who manage it from the same Central reserve Bank of the USA, had the effect of the bomb.
The social contract, publicity and democratization of money made possible by Bitcoin can change these rules of the game.
20 - Bitcoin allows people who do not have Bank accounts to conduct banking transactions that would otherwise be inaccessible to them.
An experiment with m-Pesa, a less local e-currency, showed that the inhabitants of poor villages were able to significantly improve their living standards by gaining access to standard banking operations, having the opportunity to pay suppliers and open their businesses. Given the high prevalence and versatility of bitcoin, try multiplying this result by 1000. Is there at least one national currency, to achieve the same performance?
21 - Bitcoin is very difficult to steal.
Pickpockets of the future will be greatly puzzled by what to do with bitcoins, which can not be pulled out of the purse or purse. This money has no value without an individual key. Bank cards are also likely to disappear. Is it possible that theft will disappear as a fact? Hackers will also soon face difficult times with wallets that require multi-signature.
22 - Bitcoin represents financial freedom.
For the sum of all the above reasons, bitcoin could also be called the freedom currency. Dictators must hate her. Totalitarian governments will hate it as much as it prevents corruption from allowing the government to flourish. In countries where people's freedom is restricted, the population believes that money exists to serve the country, and ownership is only an illusion, as all savings can be confiscated. When money is put into an account, technically banks take possession of it, and they work for the government and for anyone, but not for you. Court decisions, taxes, inflation – there is always a way to get your money. The Bitcoin system offers protection. You become your own Bank.
I assume that many will want to challenge this list. Others may agree that if at least one of the aspects listed here becomes the opinion of an enlightened majority, the Wikipedia article on the intrinsic value will also apply to Bitcoin. I believe that in a year it will be possible to make a new list of the internal properties of bitcoin, as long as this one, drawing prospects that are now difficult to imagine.
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What a great post. I definitely agree that bitcoin has intrinsic value and the way you laid it out is amazing. So I think one reason people like Buffet says there's no intrinsic value is that it's so hard to come up with an actual, quantifiable value for it. I don't know if it can be done, any thoughts?