Bitcoin Intrinsic Value Definition – Bitcoin Magazine: Bitcoin News, Articles, Charts, and Guides

Dr. Rettler is an assistant professor of Philosophy at the University of Wyoming.

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

Second, “intrinsic value” has a particular meaning here — one that’s 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 — so it lacks intrinsic value. So goes the criticism.

I don’t want to argue that bitcoin has intrinsic value. And I don’t want to argue that this usage of “intrinsic value” is illegitimate. People can use terms however they want, as long as they explain what they mean when they’re using them.

Instead, I want to offer a different way of thinking about intrinsic value — one that we’ve 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.

On the traditional way of thinking about intrinsic value, the intrinsic value of a thing is the value that it has in itself — that is, not in relation to anything else. That is, after all, what the word “intrinsic” means. The contrast is extrinsic value, which is the value a thing has in virtue of its relation to other things. It’s easy to think about the extrinsic value a thing has, because you can think of the value it has for you. 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’s much more difficult to determine whether something has value intrinsically.

Maybe bitcoin doesn’t 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 — money, customers, employees, products, and so on. Let’s 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…

One way to answer this question of anything is to ask, why is that thing 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’t 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’s valuable because it brings about something of value — connection to information and connection to loved ones. If it didn’t do that, it wouldn’t be valuable. So, it’s valuable, but not intrinsically valuable. But even being connected to information and loved ones seems not to be intrinsically valuable, because we can answer “why is being connected to information good?” with “it gives us knowledge” and “it helps us navigate the world” and we can answer “why is being connected to loved ones good?” with “it makes them happy and it makes me happy.” If those are right, then being connected to information and loved ones is not intrinsically valuable — it’s valuable in virtue of making us happy.

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 “why is happiness valuable?” it’s hard or maybe even impossible to answer. You might even assume that the person who asked didn’t know what happiness was. You’d be tempted to say, “It just is. It’s valuable for its own sake.” Another reason is that “It makes me happy” is (when true) always a good answer to “Why is X valuable?” — and we don’t feel the need to follow up with “why is being happy valuable?” A third reason is that it seems plausible that everything else in the world — Apple stock, iPhones, bitcoin, friendship, love, etc — 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…).

There is, of course, the further question of what happiness is. That’s much harder to say. Some say pleasure, some say a flourishing life, some say the life of a mind in accord with reason… We won’t get any more into that. There are also people who think there are other things that have intrinsic value — maybe friendship, maybe people, maybe God… There are many candidates. I don’t intend to settle the question here; what’s important to note is that neither bitcoin nor any other investment would have intrinsic value on any of these theories. I’ll proceed on the assumption that it’s 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.

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