this post was submitted on 23 Mar 2024
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Common Sense

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Imagine you own some paintings made by an extremely talented artist. The artist has just died. You are sure that the value of his work will increase by a factor of 10 or 20 in future years.

Do you go on the internet and tell everyone to buy all the paintings, sketches, and doodles this guy ever made?

Or do you quietly look for ways to get ownership of as many of these limited items as you can before the price inevitably rises?

Exactly. That man's art work has intrinsic value.

Not so long ago there were people going on TV telling everyone that Beanie Babies are an awesome investment. They really hyped up the value of these limited edition items. Each one unique and irreplaceable.

The difference is that people who invested in Beanie Babies needed to stoke demand for the product. Without that demand the pieces of nylon cloth had zero value. Instead of quietly hoarding as many of the things as they could, for the lowest possible prices, they worked very hard to get others to also buy up as many as possible.

Beanie Babies have no intrinsic value.

There's a hard limit on the number of Bitcoin that can be made. If Bitcoin Maniacs really believed that their crypto had intrinsic value, they'd be praying for low prices for as long as possible. They'd very quietly try to get their hands on as much of the limited number of coins as they could before people realized how incredible this asset is.

but they don't do that. They do the opposite. They are super enthusiastic cheerleaders. They endlessly talk about how great an investment it is. They never shut up about how much everyone can benefit by buying now. They desperately need others to believe that the long strings of characters they have encrypted somewhere in digital storage have value.

Is that Beanie Baby worth $10,000? Only if someone is willing to pay that much for it. Just like Beanie Babies, Bitcoin has zero intrinsic value. It's price on the open market will fall to zero as soon as people stop believing in its value.

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[–] [email protected] 1 points 7 months ago

The process is quite easy when you get down to it: nothing has intrinsic value. Just because a painting is technically good and the artist is dead doesn't make it valuable. Gold only has it's value because enough people believe it is valuable, sure it has some technological, medical, industrial uses but not enough to justify it's special status. Things have a cost to make, but that doesn't mean you are due a profit on it. Plutonium requires a good deal of labour from a good sized country with a significant technological base to make and I doubt you could pay most people to take it off your hands.

This is why speculating on new art is so random, and why art forgery is a thing. There is no real way to determine which up-and-coming artist is going to be a historical figure until they are. How many TV talent show winners stay relevant?