Discussion on Physical Mechanics of Valuing Cryptocurrencies

Point 1 :

"they are breaking the unit of Bitcoin into Satoshis, haha, so much for limited supply"

Response 1 :

I'm not sure that you understand math. Shifting the unit of gold from ounces to nanograms would do nothing to the value of gold. The physical supply is the same.

Likewise the physical supply of Bitcoin is constrained. 

Of course the choice to value Bitcoin is binary, such as the choice to value gold, or maize. The population of investors could instantly choose to value either at near zero - the only reason they don't is due to booked accounts receivable which they don't want to give up.

There are no intrinsically valuable things on earth, not meat, not minds, not feelings, not love, not family, not friendship ... each of these is given meaning by some idiot. Some idiots happen to have have BTC / USD / gold / maize accounts receivable, and that's why those things have value. LOL

Point 2 :

"there is no PHYSICAL limitation"

Response 2 :

Physical supply is limited by a machine, and the use of the machine is by consensus of users.

The users can choose to use a different machine, but as long as they use this one, supply is limited. 

Surely you understand the nuance, or, you don't actually know how the machine operates

Point 3 :

"the physical machine limits a NON-PHYSICAL SUBSTANCE ; NFTs are an example of a NON-PHYSICAL SUBSTANCE and we have seen that market crash"

Response 3.1 :

An NFT is a pointer to something that isn't meant to be used as a unit of currency. Those are like traditional trading cards, we know exactly how those markets work, so let's not get distracted here.

Reponse 3.2. :

3.2.1.

The USD is basically a tool for the communication of value. It is a contract regarding the supply of USD, and the ability of anyone else to use USD as a meaningful denominator of other contracts i.e. payments. The USD has no intrinsic value, it is based on a promise of supply limitations. ( The notion that it is based on the promise of repayment is a strawman, because repayment is only meaningful in the context of the promise of limited supply. )

In the paragraph above, you can swap in any state currency. 

Imagine if NGOs like the Methodist church printed their own currency, MCD, you could swap that into the paragraph above for USD. The only reason you would trust MCD less is because MCD is a lesser known entity, and fundamentally you have no control over MCD or USD money supply.

3.2.2.

Now imagine there was a technology to limit XYZ currency supply. The methods of 1. decentralised ledgers, 2. cryptographic hashing, basically combine to give you a bank where anyone can check money supply at any time ... the moment money supply changes, every holder of the currency may know it quickly and cheaply. This is the ONLY technological advancement that has been introduced. ( Only  a small lie, for the purpose of this point. ) If they don't like the rules of the bank, they can start their own bank ad infinitum, which is called a netsplit, and you can refer to BCH vs BTC for example.

The fact that people would go long BTCUSD simply tells you how little faith they have in the US government's promises of limited supply. 

The fact that people go long BTCBCH, and the difference in market cap of BTCUSD vs BCHUSD, tells you something else, which is non-trivial.

---

Further banter :

Well you say, 'if there is a rock, and rocks build houses, and people want houses, so rocks have present value, anything else is speculation', that's a valid lens. 

Symmetrically, I say, 'if there's a rock, and some clown in jersey wants to trade it for a wooden house, so rocks have value, anything else is speculation', that's a valid lens too.

The only difference is you put faith in the imagery in your head, and I put faith in the imagery in mine. Digging down to the fundamentals of what people do in their heads, is probably beyond the scope of a comment thread on LinkedIn. :)

Further banter :

we could go into anthropic principles, and life goals, and the architecture of political influence begining with the grassroots and ending with the state. But, to what end? In a comment thread like this, there's little room for specifics. If people disagree and want to drill into fundamentals, those are long and deep conversations.

In my own life, I'm basically a hermit. I live on military rations, repair my clothes, and drive a 20-year-old car, and budget everything around a minimum wage job. But I keep tabs on fashion, food, cars, and macroeconomics because other people care about them.

So nearly nothing in life depends on what I value it as. Mostly economics is about other people's values. :)

So the value of X is whatever I can get paid for X right now. Everything ELSE is speculation. The intrinsic value NOW is what it is now. The intrinsic value in the FUTURE is speculation.