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Traditional Media
It is the same every time. As soon as Bitcoin makes moves, whether up or down, the news will run an article about it. The traditional media is, of course, more in the direction of "The bubble is about to burst", and by maintaining this approach you will also see reactions from people in the same trend under every article. I think one of the most common reactions is "But Bitcoin has no intrinsic value". Admittedly, when I first heard about Bitcoin, you could put me in that group that would shout that out. Even more, when I first heard of Bitcoin, which was very early on through an offer where I could have bought 1 Bitcoin for 10 euros, I was super proud of myself for not having fallen for this latest scam. Of course, I had no idea what I had very proudly said “NO” to. And as always with these things, I too often thought: "Oh, if only...". Unfortunately, I can't turn back time, I can only try to prevent this from happening to me a second time. And that brings me back to the comments I read under news articles about Bitcoin. Every time I read "Bitcoin has no intrinsic value", I can't help but laugh.
Discussing what Intrinsic Value is
It appears to be, and will remain, one of the most fundamental discussion points surrounding Bitcoin. But it also raises questions for many other people. It is an invitation to discuss what actually "Intrinsic value" is. What does this mean, and what makes Bitcoin different?
So let's start by defining the term "Intrinsic Value". I assume that everyone reading here is very familiar with what this term means. But in case there's any reader out there who doesn't know this, "Intrinsic value" refers to the true, built-in value of something, regardless of what people think of it. You can think of "Intrinsic Value" as the core value, the real usefulness that something has, completely disregarding people's personal opinions. For example, you can find an old, hideous painting in a thrift store that, after research, turns out to be a real Rembrandt. At that point, the intrinsic value of this painting is that it is a masterpiece by a famous artist. Even if everyone thinks it's ugly, that's subjective and not important.
What Bitcoin NOT is
Now we take a look at Bitcoin. Bitcoin SEEMS is completely at odds with this traditional view of intrinsic value. Bitcoin is not a business, so it has no tangible assets or revenue streams that make traditional financial analysis possible. Bitcoin is also not a house you can live in, where your home competes with the rest of the homes in your country through sustainability and other interventions. Bitcoin is "just" a piece of code! So, how can we claim that Bitcoin has any intrinsic value, and if we do claim that, where does that intrinsic value of Bitcoin come from?
The Understanding Of Money As A Social Phenomenon
An interesting question, but an even more interesting answer. The Intrinsic Value of Bitcoin lies in the understanding of money as a social phenomenon. Bitcoin is money no matter how you look at it. It is a digital medium of exchange used and recognized by people all over the world. When the very first form of money was used it also needed the trust and acceptance of people to get its value, and that is exactly how Bitcoin also gets its value. By building people's trust and acceptance.
Why Bitcoin Is Different
We all know why Bitcoin is different from traditional fiat money. Bitcoin is scarce, durable, divisible, storable, fungible and borderless. Bitcoin has all the characteristics of good money. These properties are anchored in the Bitcoin code and contribute to its value.
More importantly, Bitcoin's value is not determined by any central authority. Bitcoin's value is determined by supply and demand on the open market. The latter means that you can see from the price of Bitcoin that there is a worldwide demand for a good, safe, decentralized alternative to money that cannot be manipulated or devalued by third parties.
Meaning Of Intrinsic Value Redefined
So let me now return to the concept of "Intrinsic Value" and its meaning. We have established this meaning. And should we now conclude that Bitcoin indeed has no "Intrinsic Value"? I think we need to think differently. It's how you're going to look at "Intrinsic Value". It's a kind of redefinition.
For people in crypto, Bitcoin does have intrinsic value. Bitcoin has the potential to transform the monetary system, Bitcoin can promote financial inclusion, and Bitcoin puts individuals in control of their money. And this value may not be measured in traditional financial terms, but this seems to me to be worth more than anything. Millions of people cannot have a bank account but can access money through Bitcoin (crypto).
Store Of Value
Today, Bitcoin is often used as a store of value. And in a world of rising inflation and monetary turbulence, having that option is extremely valuable. Bitcoin, unlike traditional currencies, is not susceptible to the whims of central banks and governments. This makes Bitcoin a great alternative that is immune to inflation and depreciation.
While our dollars and euros become less valuable every day due to the daily running of the money press and the associated inflation, Bitcoin retains its value due to its limited supply and the growing demand for a decentralized and unchangeable monetary system.
There Will Always Be Non-Believers
There will always be people who insist that Bitcoin has no intrinsic value. But I believe that Bitcoin's value goes much deeper than analytics can ever capture. The true value of Bitcoin lies in the power of the people who believe in the future of decentralized money and its ability to change the world.
Of course, I have no idea what the future will bring. I have never mastered seeing the future in a crystal ball, ...
