Misunderstanding Intrinsic Value
The notion that something must possess intrinsic value to function as money stems from a fundamental misunderstanding of how value is determined.
Subjectivity of Value 🎭
Value is Subjective:
Individual Preferences: Value is like beauty — it’s in the eye of the beholder! 👁️💎 According to Austrian economics, value comes from how much we want something, not from any magical properties it might have.
Ludwig von Mises: This economics wizard 🧙♂️ said that the value of anything, including money, depends on how well it satisfies our desires. So, value is subjective, just like how you might love pineapple on pizza 🍍🍕, but your friend thinks it’s an abomination!
Utility Over Intrinsic Value 💡
Money’s Primary Role:
Medium of Exchange: Money’s main job is to help us trade stuff. It doesn’t need to do anything else. Gold might look fancy and have some industrial uses, but it got famous because it was good at being money 💰✨.
Attributes of Bitcoin 🪙
Scarcity:
Limited Supply: Bitcoin has a fixed supply of 21 million coins. That’s like having only one perfect slice of pizza 🍕 at a party — everyone wants it because there’s not enough to go around!
Security:
Decentralization: Bitcoin’s security comes from its decentralized nature. It’s like a neighborhood watch 🕵️♀️ that doesn’t need a boss, making sure everything stays safe and sound.
Utility and Demand:
Effective Medium of Exchange: Bitcoin’s cool features like security, decentralization, and limited supply give it utility. It’s like the Swiss Army knife of money 🛠️ — useful in many ways!
Historical and Modern Perspectives 📜📱
Historical Examples:
Various Forms of Money: Throughout history, people have used everything from shells 🐚 to beads 📿 as money. These items were chosen for their ability to make trade easier, not because they had intrinsic value.
Modern Digital Money:
Challenge to Traditional Notions: Bitcoin is the rebel (thanks Samantha LaDuc) of the money world 🕶️😎. It challenges old ideas about needing to be physical or have intrinsic value.
Conclusion 🎉
The belief that money must have intrinsic value is a misconception. Value is subjective, based on the utility provided to individuals. Bitcoin, despite lacking traditional intrinsic value, has attributes such as scarcity, security, and decentralization, making it an effective and valuable medium of exchange and store of value. This demonstrates that intrinsic value is not a necessary criterion for money.
