Who Gives Bitcoin its Value?
“Users give value to frozen concentrated orange juice”
I, the user, am a sovereign individual. All evaluations are in my, and other users, control and we determine that which is and is not valuable. There are no forces which act upon us by which this evaluation is determined. We deign to value frozen concentrated orange juice, and that act, alone, is what gives frozen concentrated orange juice its value…
This is nonsense.
Value is an ordinal placement in a prioritized list of ends. You give value to your ends when you place them in that list. Goods, however, are not ends. Frozen concentrated orange juice is a means. It is up to you to determine if it’s capable of meeting one of your ends better than, say, frozen concentrated grape juice. This ability to meet ends is called utility, but to determine which means you employ, you weigh the objective costs and utility of the alternatives.
By choosing frozen concentrated orange juice, you are not giving it value. You are recognizing it’s utility in meeting your end. It’s utility was created by the farmer who grew the orange tree and harvested it, and by the factory which transformed it into a shaped can that you can put into your freezer, and by the trucker who drove it from the factory to your grocery store. Each one of these steps is adding utility.
This addition of utility is called adding value (a misnomer). You, the user, do not give frozen concentrated orange juice value. That act is performed by the producers of frozen concentrated orange juice. Users are appraisers of how well goods meet ends given costs and utility, but are not producers. The addition of other users, and a network of users trading frozen concentrated orange juice does not change the fact that the utility is still created by the producers.
The ability of frozen concentrated orange juice to be traded efficiently is a property created by the producers. A network using frozen concentrated orange juice as a medium of exchange is merely a collective appraisal of the utility of frozen concentrated orange juice in meeting the aggregated ends emerging from individual ends being pursued by individuals.
You, the user, might object.
“But doesn’t increasing the network’s size increase it’s utility by adding additional liquidity for users who accept frozen concentrated orange juice?”
Sure, and I suppose an atom sucked into a black hole increases the gravitational pull of the black hole, but the production of additional gravitational pull would still be a property of the black hole (or planets to a lesser extent) pulling more mass into itself. Likewise, the increased exchange utility of an increasing network size would still be produced by the producers of frozen concentrated orange juice.
“But don’t users validate the stock exchange and ensure the ruleset, providing added utility to Frozen Concentrated Orange Juice traders in the form of security?”
Hmm… Weird. That doesn’t actually happen. I don’t know why you would bring that up. But suppose that were the case. It would be a terrible idea, and it would never last, and it would be nearly useless for most people to do so.
If only another commodity were created with a better ability to meet users ends by, say, being easy to transport, not requiring the user to store in freezing units, and having more widely applicable ends it could meet… That would likely draw a large amount of users into recognizing its exchange utility over frozen concentrated orange juice, would be a great benefit for everyone involved, and would be laudable creation of value on the part of the producers. But this is the internet. Some people create value, and others…
