I just gave you my definition of intrinsic value and explained exactly why the dollar has intrinsic value according to that definition. If you want to argue that what I said was wrong, you can either prove my definition is contradictory or useless, or you can prove the dollar doesn't fit the definition that I gave. Simply stating 'no currency has intrinsic value' suggests to me you didn't read, or didn't comprehend, my comment.
>If we went back to the days where I'd trade you 2 bags of rice for a fish, those things have value and other use.
Yes, so according to the definition of 'intrinsic value' that I gave, they have intrinsic value.
>If the world decided the USD was useless tomorrow, does "backed" mean you walk up to Capitol Hill and they will give you something in exchange for your dollars? Unlikely IMO.
'Backed' means the IRS is going to accept dollars in exchange for not prosecuting you for non-payment of taxes. That is the crucial point. People value not being prosecuted for non-payment of taxes. The state of being free from being prosecuted has 'intrinsic value' to people. The IRS, at least as of right now, guarantees people that if they pay the IRS the dollars the IRS says they owe the IRS, they will be free from being prosecuted for non-payment of taxes. If the IRS stopped taking dollars in exchange for guaranteeing people freedom from prosecution for non-payment of taxes, then dollars would cease to be backed by the US government. It is certainly true that not all people (like people living in foreign countries) have to worry about being prosecuted by the IRS in the first place. But there are millions upon millions of people who do have to worry about being prosecuted by the IRS. There are enough to establish that the dollar is backed by freedom from being prosecuted for non-payment of taxes.
So are they giving you something in exchange for your dollars? That depends on how you look at it. Either they're giving you freedom from prosecution in exchange for your dollars, or they're not taking your freedom from prosecution away from you. Whichever way you look at it, the argument is the same. To the extent that you believe the US government will continue to accept dollars in exchange for not prosecuting people for non-payment of taxes, you believe the dollar is backed by the US government.
>It's backed by debt that the Fed just creates out of thin air.
What does it mean for something to be backed by debt? Am I guaranteed to be able to buy the debt someone owes someone else with my dollars, like when banks sell mortgages to other banks?
'Intrinsic value' meaning 'objective value' is a useless concept because all value is subjective.
What I think people generally mean when they say 'intrinsic value', especially when talking about currencies, is something more like 'having some uses other than to simply trade away again to someone else, or perhaps being backed by something which has intrinsic value'.
Dollars have intrinsic value according to that definition, because they are backed by the fact that there are many people who must give the US government dollars in order to avoid being prosecuted for non-payment of taxes. That's where taxes come in. Without taxes, and perhaps some other things like legal tender laws, dollars would have no 'intrinsic value' according to this definition, just like BTC.
Both USD and BTC could still have value, even if they don't have 'intrinsic value' according to that definition.
In exchange for not having transfer fees, you get no protection against fraud or theft. Not such a great 'advantage' for the average person, is it? Oh, I know, you can use escrow and other services to guard against that. But guess what? They're not free!
>If your argument is that I'd have to convert bitcoin to dollars in order to pay taxes, that's a nonargument.
It's not a 'nonargument'. It's true, and very relevant.
>I am sure they would take Bitcoin directly if pressed.
That's speculation. You have no reason to believe they'd accept bitcoin. As of right now, they do not. That's all we have to go on.
>Just ask the FBI, who is now in possession of the largest bitcoin cache on the planet... I suppose you think they're just going to erase all of them because, you know, they're not "backed" by anything?
Is there a reason for making this absurd strawman? Where has anyone ever suggested that people should erase their bitcoins because they're not backed by anything?
>You're still confusing the burden to pay taxes under the penalty of law in one particular country with value.
Let's say I'm a schoolyard bully. An honest one. I hand out slips of paper that say "Keep your lunch". If I tell you I want your lunch, and you give me a "Keep your lunch" ticket, you get to keep your lunch that day. If you don't have one, or don't want to give me your "Keep your lunch" ticket, I take your lunch. Clearly if you believe I'm capable of taking your lunch, that slip is going to have value for you. Agreed?
Now let's say you're three grades above me, so you aren't worried about me taking your lunch. But there are still plenty of people who are worried about me taking their lunch because they're smaller than me. That ticket still has value for them. You know you can trade it to them, and they'll take it. Therefore it has value for you, even though you have no direct use for it. The fact that I am willing to take that ticket in exchange for not taking someone's lunch backs the value of that ticket, even if you yourself don't need the ticket to stop me from taking your lunch. You can trade it to others who will use it for that purpose. Now do you understand?
>But I don't care. I paid in Bitcoin.
I know you don't care. But they had to buy dollars. Someone has to buy dollars in order to pay your taxes. That's the whole point. Someone has to buy dollars in order to pay your taxes. Someone has to buy dollars in order to pay your taxes. Someone has to buy dollars in order to pay your taxes.
>I doubt dollar "intrinsic value" comes from the fact that you have to pay taxes in it.
The fact that you have to pay taxes in dollars is one of the biggest reasons why people trade in dollars rather than some other random currency.
>It can spiral into a 10000%/year inflation and lose most of its value, and you will still be able to pay taxes with it.
I never said it was the perfect currency. I never said it got 100% of its price from the fact that you can pay taxes in it. You are completely missing the point, and I'm guessing it's because you just don't understand what's going on in this debate.
>In fact, you've been required to pay US taxes in dollars for the last 100 years. It didn't stop the dollar from losing 97% of its value.
What did I say that would lead you to believe this contradicts what I think?
>Again, you're confusing value with some criminal law.
No, you just have no idea what they have to do with each other.
>What? You can't transport something that has no value? Like an empty box?
Do people normally transport things that have no value to them or anyone else?
>Ah, red herring. I was talking about "majority of the world", and you switched back to the Americans, as if that somehow proves that most of the world doesn't give a crap about US criminal codes, which, according to you, somehow back the value of the dollar.
See the first two paragraphs of this reply.
>Which adds to its value, like features of... everything.
It is more akin to a multiplier. If it has value, it makes the value greater. If it has no value, then no one cares how easily it can be transported, because no one wants it to be transported to them.
>We already went over this. Multibillion transportation industry.
The transportation industry is moving things that people value for reasons other than the fact that they can be transported easily. If people didn't already value the things they have shipped, they wouldn't pay to have them shipped. If I had some worthless box of cat excrement, it wouldn't suddenly be worth something because I could cheaply ship it to a foreign country. If I had a worthless unit of cryptocurrency, it wouldn't suddenly be worth something because I could cheaply send it to someone in a foreign country. If no one wants it, they don't care how cheaply I can get it to them. They don't want it. Do you get it?
>All that barrel does is stop counterfeiters and tax evaders. Neither of those things are "intrinsic value".
If anything can be said to have 'intrinsic value', being free from prosecution is surely one of those things. Dollars can buy you freedom from prosecution for non-payment of taxes. That's a lot closer to 'intrinsic value' than anything bitcoin can put up.
>First of all, I can pay taxes in Bitcoin. There's a company that handles it for me.
That company doesn't pay the US government in bitcoin. They just buy dollars on your behalf. Every dollar owed in taxes must be paid in USD.
>Suddenly if I'm not from US, that "intrinsic value" disappears. So much for that dumb definition.
It doesn't 'disappear'. There are still millions upon millions of people who need USD to pay their taxes. That's where the backing comes from. It doesn't matter if not everyone has to pay taxes in USD. Quite a lot do, and they need to buy dollars from other people in order to do so.
>There are multibillion global transportation industries out there, and they don't care what they transport (as long as it's legal).
I'm sure the people that hire them to transport goods value what's being transported.
>People pay them because they provide ease of transportation at a reasonable price per pound.
What point are you trying to make?
>I'd say ease of transportation is much more valuable to the majority of the world than some "freedom from prosecution" by some government that can't touch them.
Freedom from prosecution is pretty important to the people in the US that owe taxes to the US government. But you're comparing apples to oranges.
Ease of transportation is a feature of bitcoin. But ease of transportation does not itself give anything value. You are easily transporting your words to my computer. That doesn't mean they're valuable. Ease of transportation makes bitcoin a more suitable currency than something that is equal in all other ways but is harder to transport. But something having some features that make it suitable as a currency doesn't mean it is actually a good currency.
On the other hand, freedom from prosecution is something you can buy with USD. It's not a feature of the piece of cloth called the USD that you can pay taxes with it. It just happens to be that way. And I would say that a guarantee that your money will be worth something [because people will always have to buy it in order to escape prosecution from non-payment of taxes] is more important than ease of transportation.
>not to mention that there's no freedom from being prosecuted for non-payment of taxes.
What? If I pay my taxes, I won't be prosecuted for non-payment of taxes.
>in that case Bitcoin's intrinsic value is that it's backed by the freedom of storage
Storage of what?
>transfer,
It doesn't matter how easy it is to transfer something to someone else if they don't want it. That thing must be seen as valuable for some other reason for anyone to care how easily it can be transferred.
>global acceptance
Who across the globe is guaranteeing they'll accept a certain number of bitcoins in exchange for a certain amount of something else?
>immunity to being counterfeited
If I generate a random RSA public key and use it to sign some randomly generated blobs of useless bits, do those blobs of bits and their signature have intrinsic value because it's hard to counterfeit them?
>immunity from inflation caused by printing
These things you're listing make bitcoin a more suitable currency than some other arbitrary thing that doesn't have those properties, all else equal. It doesn't mean bitcoin has intrinsic value, as I've defined it, and it certainly doesn't mean bitcoin is a good currency overall.
>If I have a comparable amount of confidence in my snail tail guy as I do in the USG's hunger for USD, then snail tails are suddenly "intrinsically valuable"?
According to the definition I gave, yes. If you're thinking of 'instrinsic value' as meaning 'absolute value', then yes it's just as absurd to say snail tails have intrinsic value as it is to say anything else has intrinsic value. It certainly sounds absurd to say "snail tails have intrinsic value" for any definition of "intrinsic value", but then, it's absurd to be as certain some guy is going to trade snail tails for water as you are that dollars will buy you freedom from prosecution for non-payment of taxes.
>but your definition just seems confusing at best, and perhaps even useless (though if it's useful to you, then have at it).
Ya, I have no idea if it's useful or not. There are certainly people who are suspicious of using goods as currencies if they don't have 'intrinsic value', according to that definition. I don't know if that suspicion is well placed or not, but it is there.
The degree to which you believe the guy will make good on his promise to always buy snail tails in exchange for water is the degree to which you believe snail tails are backed by water. We can be pretty sure the US government will generally make good on its promise to take US dollars in exchange for not prosecuting you for non-payment of taxes.
>I reject your definition of "intrinsic value". Sounds sorta' like "regular value" to me.
I don't like the term 'intrinsic value' at all, since it sounds like it's suggesting some type of absolute value, which I don't think very many people (at least, not the ones having these conversations) really believe exists. I think the way they mean it is more in line with the way I defined it, to distinguish between something some people buy for its own sake versus something people only buy so they can trade it away to someone else, who is in turn only buying it so he can again trade it away. The latter still clearly has value to those people who take it in trade, and 'intrinsic value' is a convenient term to distinguish between the two.
If we take 'intrinsic value' to mean 'having some use other than to simply trade away again to someone else, or being backed by something with intrinsic value', then the dollar has intrinsic value in that it is backed by freedom from being prosecuted by the US government for non-payment of taxes.
The point is that consumers are still able to bid down prices despite having no choice but to participate in the market. Individual sellers still have to convince individual buyers to buy their products, and to do so they have to price their goods competitively. It doesn't matter that there is no alternative to participating in the food market because there are alternatives within the food market.
I just gave you my definition of intrinsic value and explained exactly why the dollar has intrinsic value according to that definition. If you want to argue that what I said was wrong, you can either prove my definition is contradictory or useless, or you can prove the dollar doesn't fit the definition that I gave. Simply stating 'no currency has intrinsic value' suggests to me you didn't read, or didn't comprehend, my comment.
>If we went back to the days where I'd trade you 2 bags of rice for a fish, those things have value and other use.
Yes, so according to the definition of 'intrinsic value' that I gave, they have intrinsic value.
>If the world decided the USD was useless tomorrow, does "backed" mean you walk up to Capitol Hill and they will give you something in exchange for your dollars? Unlikely IMO.
'Backed' means the IRS is going to accept dollars in exchange for not prosecuting you for non-payment of taxes. That is the crucial point. People value not being prosecuted for non-payment of taxes. The state of being free from being prosecuted has 'intrinsic value' to people. The IRS, at least as of right now, guarantees people that if they pay the IRS the dollars the IRS says they owe the IRS, they will be free from being prosecuted for non-payment of taxes. If the IRS stopped taking dollars in exchange for guaranteeing people freedom from prosecution for non-payment of taxes, then dollars would cease to be backed by the US government. It is certainly true that not all people (like people living in foreign countries) have to worry about being prosecuted by the IRS in the first place. But there are millions upon millions of people who do have to worry about being prosecuted by the IRS. There are enough to establish that the dollar is backed by freedom from being prosecuted for non-payment of taxes.
So are they giving you something in exchange for your dollars? That depends on how you look at it. Either they're giving you freedom from prosecution in exchange for your dollars, or they're not taking your freedom from prosecution away from you. Whichever way you look at it, the argument is the same. To the extent that you believe the US government will continue to accept dollars in exchange for not prosecuting people for non-payment of taxes, you believe the dollar is backed by the US government.
>It's backed by debt that the Fed just creates out of thin air.
What does it mean for something to be backed by debt? Am I guaranteed to be able to buy the debt someone owes someone else with my dollars, like when banks sell mortgages to other banks?