There is no such thing as "intrinsic value". All value is perception and subjective. Complicated arguments may enhance perceived value in others but keep in mind the subjective nature.<p>Once confidence collapses, "intrinsic value" flees out the door.
The next period of history could be defined as the post nation-state era, and of all the supranational technologies and institutions that will make this so, bitcoin could be the most important.<p>I'm talking about the ability of governments to restrict the activity of citizens and also to fund themselves from said activity.
This is an excellent article explaining very well the Byzantine general's problem and how bitcoin provides a solution.<p>However, even if I agree with the answer, I don't agree with its "jump to the conclusion".<p>Here is my take on that:<p>Whether one's believes in decentralization or in centralization, another of bitcoin core assets is that it is not deflationary for prices.<p>All currencies have price deflation built it, for some macroeconomic reasons about motivating agents that I don't fully understand yet. It could be a good thing for economic growth, or it may not be. Let's leave that issue aside.<p>The important thing is that Bitcoin doesn't. Being convertible with other currencies means its value can only rise (following the definition of deflation!)<p>So the only question is whether the rise in relative value - bitcoin inflation - will be faster than the fall of the goods prices' in the other currencies.<p>And that's where the decentralization part plays its role and the article gives the right answer : if you believe in decentralization and in parties acting in their own best interests, it will be faster.<p>If you believe in centralization and people acting for the others best interest, it won't be faster.<p>Bitcoin is a fun experiment on human behaviour :-)<p>In the end, bitcoin value will still rise - if only because it provides a way to escape from the deflationary currencies. The only question is how fast.<p>There <i>are</i> negative interest government bonds being sold right now - IIRC, Germany and France do that.<p>Why one would make sure to take a fall when a conversion in bit coin means that the value can be preserved?<p>The question of whether it is a good thing for economic growth remains. It doesn't seems to be.<p>I don't have bitcoin wealth. I wish I did because it seems like a very good placement at the moment.
Maybe I'm mistaken, but I think the specific value of 12 in this example is an error from using an original description at <a href="http://www.mail-archive.com/cryptography@metzdowd.com/msg09997.html" rel="nofollow">http://www.mail-archive.com/cryptography@metzdowd.com/msg099...</a> — the original description uses the value of 2 hours (<i>12</i> * 10 minutes), whereas Paul's does not.
Even from the comments and my own understanding is Bitcoin acts more like an asset. It be very tough to run an economic cycle using it. Imagine someone ordering a truckload of clothing and promising salaries to the workers but by the time it's ready, value of Bitcoin would go up, hence that person will receive less Bitcoins unless specified. The buyer i.e. holder of Bitcoin will always try to delay payment, so they will have to pay less amount.
The problem with this article is that in the very second sentence, the author switches from discussing bitcoins themselves to discussing the bitcoin monetary system as a whole. <i>Of course</i> the whole system has intrinsic value, but that is a separate issue from whether or not the currency itself has intrinsic value. In fact, it is generally <i>necessary</i> for a non-commodity currency not to have significant intrinsic value.