RE: Is Bitcoin a Fiat Currency? | Does Bitcoin Have Intrinsic Value?
To answer your question, we must first define what exactly is intrinsic value.
Intrinsic value would mean ignoring the current trading price (I.e supply/demand, hype and speculation), to determine what the underlying value of Bitcoin is.
I personally choose to think that everyone's definition of what constitutes as part of a product's intrinsic value is different. Something that may constitute as an intrinsic value to me, might not appear the same to you.
Having said that, the following are my list of what constitutes as intrinsic value in the case of BTC:
Decentralized – Government would not be able to control the prices/production of BTC
Limited Quantity – There is only going to be an eventual 21 million BTC that will ever be produced, after which no further BTC can be mined.
Easy to transfer/transport – Imagine transporting/transferring gold compared to that of BTC.
Permissionless - No need to obtain approval, a transaction would be carried out immediately with a click of a button.
Identity – Identity of people who mine their own BTC can theoretically be kept a secret.
This is just my 2 cents on the intrinsic value of BTCs. There may be other points that others would point out, or disagree with me on.
I completely agree, when people complain about bitcoin's lack of Intrinsic Value. But the scale of economies are so large, that simply providing the value of sending transatctions without a central authorizing power is value enough.
I understand it's not the best crypto but even older products can still be used to solve a problem.
For this reason, bitcoin can go to any price point and still be justified by the forces of supply and demand. Yes it will be subject to reduced supply as the competitors take bitcoin's marketshare
Well I like to think about intrinsic cost! So gold has an underlying cost for mining, refining, manufacturing to create the items we have intrinsic value for. So it has cost because of work done then limit of supply creating demand therefor ever increasing value as long as interested.
I agree with your intrinsic value assessment, but you need to include the cost/investment of miners supporting the network.
An Antminer s7 should mine 1BTC worth in a little under 3 months (under the new difficulty). It consumes 1.2kW of electricity. Three months is 2,160 hours.
Multiply 2,160 hours times 1.2kW times the cost of electricity in kWh.
Electricity costs vary widely per kilowatt hour. Country-wide averages are in the range of 8¢ to 41¢, but can be much higher or lower.
Bear in mind, this is not including the costs of the miner itself ($850), Internet, air conditioning (it's a 1200w heater), your time, etc.
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