{"id":16116,"date":"2021-06-13T17:00:00","date_gmt":"2021-06-13T17:00:00","guid":{"rendered":"http:\/\/ci0285682b20002502"},"modified":"2021-06-13T17:00:00","modified_gmt":"2021-06-13T17:00:00","slug":"bitcoin-intrinsic-value-definition","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/bitcoin-intrinsic-value-definition","title":{"rendered":"Another Way To Think About Bitcoin\u2019s Value"},"content":{"rendered":"
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Dr. Rettler is an assistant professor of Philosophy at the University of Wyoming.<\/em><\/p>\n

In this essay, I want to clarify and respond to a prevalent assertion regarding bitcoin \u2014 that \u201cbitcoin has no intrinsic value<\/a>.\u201d Two preliminary things to note. First, this is not used merely as a normatively neutral descriptive statement; it\u2019s stated as a criticism. It usually appears in the following kind of argument, often with premises elided: it\u2019s bad to lack intrinsic value. Bitcoin lacks intrinsic value. So bitcoin is bad. Or maybe: it\u2019s not worth investing in things that lack intrinsic value. Bitcoin lacks intrinsic value. So, it\u2019s not worth investing in bitcoin.<\/p>\n

Second, \u201cintrinsic value\u201d has a particular meaning here \u2014 one that\u2019s used in investing. Owning bitcoin is often put in contrast to owning stock in a company that produces a good or service. In virtue of the company producing a good or service and receiving money for the good or service, stock in that company is said to have intrinsic value. Methods of calculation of the intrinsic value of a stock usually involve calculating the value of the assets the company has and\/or the expected future earnings. Bitcoin is not a company and produces no goods or services \u2014 so it lacks intrinsic value. So goes the criticism.<\/p>\n

I don\u2019t want to argue that bitcoin has intrinsic value. And I don\u2019t want to argue that this usage of \u201cintrinsic value\u201d is illegitimate. People can use terms however they want, as long as they explain what they mean when they\u2019re using them.<\/p>\n

Instead, I want to offer a different way of thinking about intrinsic value \u2014 one that we\u2019ve inherited from Aristotle, Kant, and Mill. This way of thinking about intrinsic value will guide us as we consider what kind of value bitcoin does have, and what gives it that value.<\/p>\n

On the traditional way of thinking about intrinsic value, the intrinsic value of a thing is the value that it has in itself<\/em> \u2014 that is, not in relation to anything else. That is, after all, what the word \u201cintrinsic\u201d means<\/em>. The contrast is extrinsic<\/em> value, which is the value a thing has in virtue of its relation to other things. It\u2019s easy to think about the extrinsic value a thing has, because you can think of the value it has for you<\/em>. For example, a bicycle has extrinsic value because it gets me from place to place. Wine has extrinsic value because it tastes good. Money has extrinsic value because we can use it to buy other things. Extrinsic value is easy. It\u2019s much more difficult to determine whether something has value intrinsically.<\/p>\n

Maybe bitcoin doesn\u2019t have intrinsic value in the sense that investors use the term. But might it have intrinsic value on this understanding of intrinsic value? And if not, does it differ in this respect from stocks and precious metals? We can start to get a handle on this question by asking: on this classic understanding of intrinsic value, do stocks of companies have value in themselves? No. They are valuable only to the extent that the company and the workers are valuable. Then we can ask: do companies have value in themselves? Even here the answer is no. They are all valuable in virtue of their relations to other things \u2014 money, customers, employees, products, and so on. Let\u2019s take it even one step further: does anything that any company produces have value in itself? An iPhone, a watch, an airplane, a massage, a tax return, a database, a baseball card\u2026<\/p>\n

One way to answer this question of anything is to ask, why is that thing<\/em> valuable? If you take there to be a sensible answer to that question, then that means that you think there is some further thing in virtue of which the original thing is valuable. And so you think that the thing isn\u2019t intrinsically valuable. For example, we can ask why an iPhone is valuable. An iPhone is valuable perhaps in part because it connects us to information and loved ones. So, it\u2019s valuable because it brings about something of value \u2014 connection to information and connection to loved ones. If it didn\u2019t do that, it wouldn\u2019t be valuable. So, it\u2019s valuable, but not intrinsically valuable. But even being connected to information and loved ones seems not to be intrinsically valuable, because we can answer \u201cwhy is being connected to information good?\u201d with \u201cit gives us knowledge\u201d and \u201cit helps us navigate the world\u201d and we can answer \u201cwhy is being connected to loved ones good?\u201d with \u201cit makes them happy and it makes me happy.\u201d If those are right, then being connected to information and loved ones is not intrinsically valuable \u2014 it\u2019s valuable in virtue of making us happy.<\/p>\n

In fact, many philosophers think that the only thing that has intrinsic value is happiness. There are a few reasons for this. One reason is that if you ask \u201cwhy is happiness valuable?\u201d it\u2019s hard or maybe even impossible to answer. You might even assume that the person who asked didn\u2019t know what happiness was. You\u2019d be tempted to say, \u201cIt just is. It\u2019s valuable for its own sake.\u201d Another reason is that \u201cIt makes me happy\u201d is (when true) always a good answer to \u201cWhy is X valuable?\u201d \u2014 and we don\u2019t feel the need to follow up with \u201cwhy is being happy valuable?\u201d A third reason is that it seems plausible that everything else in the world \u2014 Apple stock, iPhones, bitcoin, friendship, love, etc \u2014 is pursued to the extent that it can bring happiness (or bring something that brings happiness, or bring something that brings something that brings happiness, or\u2026).<\/p>\n

There is, of course, the further question of what happiness is<\/em>. That\u2019s much harder to say. Some say pleasure, some say a flourishing life, some say the life of a mind in accord with reason\u2026 We won\u2019t get any more into that. There are also people who think there are other things that have intrinsic value \u2014 maybe friendship, maybe people, maybe God\u2026 There are many candidates. I don\u2019t intend to settle the question here; what\u2019s important to note is that neither bitcoin nor any other investment would have intrinsic value on any of these theories. I\u2019ll proceed on the assumption that it\u2019s just happiness, but you can add to the list anything else you think has value independent of everything outside it and is pursued for its own sake.<\/p>\n

So, happiness and maybe some other things have intrinsic value, and everything else is pursued to the extent that it brings happiness either directly or indirectly.<\/p>\n

Bitcoin, then, is not intrinsically valuable. But that doesn\u2019t mean it\u2019s not valuable. In fact, bitcoin shares these features with every concrete material object, and many immaterial things as well \u2014 if the above is correct, everything except happiness. So it\u2019s no criticism of bitcoin to say that it doesn\u2019t have intrinsic value, since only happiness does.<\/p>\n

But is bitcoin valuable? That\u2019s a different question than whether bitcoin is intrinsically valuable, but it\u2019s a no less important one. If bitcoin is valuable, then given that it\u2019s not intrinsically valuable, it\u2019s valuable in relation to other things. In particular, it\u2019s valuable in virtue of its relation to happiness. So, does bitcoin bring people happiness, whether directly or indirectly?<\/p>\n

In order to determine that, we should consider the reasons people buy bitcoin. Some people buy it because their local currency is hyperinflating and they lack access to other stores of value, but they have access to bitcoin. (I wrote about this here<\/a>.) Some people buy bitcoin because their local government censors their transactions, and they can’t buy the things they want with their local currency. Some people buy bitcoin because they want to pay for things digitally but distrust PayPal, Visa, and other huge corporations and they don\u2019t want to give those companies their personal financial information. Some people buy it because they think other people will find it valuable and they\u2019ll be able to sell it for more fiat currency than they bought it for. For all of these people, if you ask them why they are exchanging other things for bitcoin, these people are likely to give a series of answers that ends with saying that they think that having bitcoin is more likely to make them happy than having the other things. And these people number in the millions.<\/p>\n

Clearly many people think bitcoin is valuable. They reveal this by exchanging things like their government-backed currencies for bitcoin. Some people think index funds and Apple stock are valuable. They reveal this by exchanging things such as government-backed currencies for index funds and Apple stock. But like bitcoin, index funds and Apple don’t have intrinsic value. Rather, their value depends solely on what people are willing to pay for them, which is based on their features. In that respect, they’re just like *gasp* bitcoin! <\/p>\n

So, bitcoin — like everything except happiness — has no intrinsic value. Bitcoin\u2019s value is determined by how it brings about happiness for the people who use it. Just like pretty much everything else.<\/p>\n

This is a guest post by Dr. Bradley Ritter. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or <\/em>Bitcoin Magazine.<\/p>\n","protected":false},"excerpt":{"rendered":"

One\u2019s opinion on the value of bitcoin depends on one\u2019s definition of value, as it is with anything.<\/p>\n","protected":false},"author":3205,"featured_media":16117,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[1364,1938],"class_list":{"0":"post-16116","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-culture","8":"tag-philosophy","9":"tag-value-of-bitcoin"},"author_data":{"id":3205,"name":"Bradley Rettler","nicename":"bradley-rettler","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/image-7-96x96.png"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/op-ed-debunking-bitcoin-myths-the-intrinsic-value-fallacy.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/16116","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3205"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=16116"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/16116\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/16117"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=16116"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=16116"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=16116"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}