Is Bitcoin a Fiat Currency? | Does Bitcoin Have Intrinsic Value?


After listening to Peter Schiff's recent appearance on the Joe Rogan Experience Podcast, I thought I'd make a video discussing whether or not Bitcoin is a form of fiat currency.

DISCLAIMER: This is NOT financial advice. I am just offering my opinions. I am not responsible for any investment decisions that you choose to make.

***I am in the process of adding many of my videos from YouTube on to DTube. Apologies for any posts that you've already seen before!

Original date of upload: 28th August 2017


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Bitcoin's price is specualtion just like any other fiat that doesn't have anything to back it up with. The difference with bitcoin vs fiat is that the value is in the freedom to send it to whoever, whereas fiat needs banks or transportation to be moved :) And that is why cryptos will take over completely in the future.

We're in a healthy correction and I look forward to the next impulse. Here's my update on bitcoin:

IMPORTANT COIN UPDATES - BTC, XVG, TRON https://steemit.com/bitcoin/@benkalashnikov/important-coin-updates-btc-xvg-tron

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Fiat is backed up by the fact that a territorial monopoly of violence demands taxes to be paid in it. Also, a monopoly of violence can decree that certain type of economic units have accounting obligation in the fiat backed up by said monopoly of violence. And a monopoly of violence can and often will refuse to help enforce the repayment of a debt if the repayment is attempted in the backed up fiat. The value of fiat follows from those three facts.

A monopoly of violence is capable of single-handedly giving anything value by demanding the same thing, say pebbles of a certain color, in return for not beating you to pulp. This is the fundamental connection between money and violence. Typically monopolies of violence have demanded things that have been somewhat valued in the first place in return for remaining non-violent for the time being thus boosting their value significantly. Such things include gold or salt.

Very true, i agree with your logic here!

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@louisthomas People like Peter Schiff try to put Bitcoin down because they know it could potentially lower the value of USD in the future. It's the same thing as somebody promoting a coin they're heavily invested in!

He's not worried about USD, he's worried about gold--which is the bulk of his holdings.

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I have vote, vote back yes friend

Yes friend

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Speculation speculation speculation

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:

  1. Decentralized – Government would not be able to control the prices/production of BTC

  2. 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.

  3. Easy to transfer/transport – Imagine transporting/transferring gold compared to that of BTC.

  4. Permissionless - No need to obtain approval, a transaction would be carried out immediately with a click of a button.

  5. 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

Which has been happening for a really long time btw
But the market is so bullish right now that bitcoin isnt overtaken yet.

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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Difficult Economic Concept...Explained Simply, Well done.

I happen to agree with you, I can easily see the price of Bitcoin rise to $100,000 per coin. Even though I am on the side of :

Bitcoin doesn't have the amount of intrinsic value to warrant that price, but I agree it has some intrinsic value.

The key here everyone is that everything is denoted in USD. The value of USD will continue to fall and the politicians will say they did a great job rising the prices of assets...especially the Stock Market

If the stock market was measured in terms of DJIA/BTC, It wouldnt be having such a good few years.

Honestly, as much as I like Bitcoin, I don't think it does have a real value. (Yes you can cashout, use it to trade and whatnot) but the price of it is set by us. What do I mean by that? Normally when you buy stocks you're buying "a part of the company" or whatever it is, therefore those stocks have a real value, whereas for Bitcoin you have a virtual token, that could go down back to 0 if everyone tried to sell it at the same time. (Arrived at a point where all Bitcoin is mined obviously)

I respectfully disagree that Bitcoin has no value. Look at your example, and the similarities between BTC and a stock.

  • Owning one BTC is to own 1/21,000,000 of all the BTC that will ever exist, so you do own a measurable part of whatever BTC is. This is like owning a part of a company in a way. The difference is that companies can split stocks, BTC cannot ever have more thant 21,000,000 coins.
  • The stocks have a "real value" only as long as its investors say so, if they all try to sell the stock goes to zero. Look at the dot.com bubble and Pets.com.
  • Also when you say that Bitcoin could go to $0, that is technically true, but practically I think it is improbable bordering on impossible. Because there are already millions of users world wide, and to some of those people it has a function (giving them financial escape from hyper inflation, and opening up options to transmit value in places where banks do not exist).

I know Bitcoin's value might well drop, but to zero is in my view impossible. It might fall as low as $5,500 and that would be terrible for a lot of investors but again, despite all its limitations it still serves a function to some people, and still other people will hold it because they see it can develop and grow and establish more helpful qualities through ongoing software upgrades (privacy, smart contracts, etc).

Check out this link to learn more:
https://en.wikipedia.org/wiki/Pets.com
"Its high public profile during its brief existence made it one of the more noteworthy failures of the dot-com bubble of the early 2000s. US$300 million of investment capital vanished with the company's failure."

Don't listen to shills like peter and joe, and then change how you feel about something! They are paid to influence people into a belief system!

We are waiting for your videos...

Clearly on its face since it is not issued by a government it is not fiat currency. On the other hand it is clearly not a commodity, it's not a physical thing with intrinsic value. You can't eat a bitcoin or smoke it or make anything out of it. so what we have left is "representative currency"

">Representative money is any medium of exchange that represents something of value, but has little or no value of its own (intrinsic value). However, unlike some forms of fiat money (which may not have anything of value backing it), to be a genuine representative money, there must always be something valuable supporting the face value represented."

https://ehttps://en.wikipedia.org/wiki/Representative_moneyn.wikipedia.org/wiki/Representative_money

bitcoin has all the valuable electricity that was used to mine it to give it value but you can't get that electricity back if you turn in your bitcoin.

I never feel comfortable with the intrinsic value argument. I wouldn't say gold has massive "intrinsic value". Yeah, it conducts electricity and is shiny and pretty, but it's main value is in its utility and limited quantity, and bitcoin has both of those, AND adds the value of being able to send it across the world quickly (although not always inexpensively, unfortunately).

Yeah, dollars used to represent gold. But gold doesn't represent anything, you can't trade it in to get back the electricity and gas you used to mine it either. Yet still it holds value.

makes a great paper weight, excellent conductor, that sort of thing like you said it has "utility" and thus intrinsic value. Makes great jewelry and art. Good for making teeth out of. you can't do any of those things with a bitcoin.

yeah but i really don't think those things give it it's main value. Rocks make good paperweights too. Gold's #1 value to humans is it's usefulness as money. That's it's primary utility, which is an intrinsic value too, and far above all its other uses. And Bitcoin has that same primary value in spades.

what other uses does bitcoin have?

...what other uses does it need to have? It does what nothing else can do. That's major intrinsic value.

Gold can't be sent through electrical wires, because it's physical. Bitcoin HAS to be purely digital to do what it does better than gold.

What other uses does a pizza have? Pizza is useful as food when you're hungry. You don't need it for anything else. it has intrinsic value in that it is food. Bitcoin has intrinsic value in that is the first, most proven, purely digital, completely decentralized money. That is value! That is valuable! That is a trait that is needed, that is not fulfilled by any other product. Why do I need it to ALSO be used to fill teeth and make jewelry? I don't personally care that it doesn't have a secondary use.

what is the intrinsic value of a desk lamp? Do use it for anything other than light so you can see? is it not useful or valuable, just because it can't be used for much else? It's utility value is that it makes light. Bitcoin's utility value is that it is money that is not controlled by the govenment, or any one group for that matter, that you don't have to carry in your pocket, yet can still send across the planet quickly.