Intrinsic value is entirely about an income stream: it's the discounted (i.e. net present value, NPV) of all future income from the asset. If you sum all that income, and discount to today's dollars, that's what the asset is worth if you want to purchase it today. If you pay more, you're losing money. If you pay less, you got a bargain: http://en.wikipedia.org/wiki/Intrinsic_value_(finance)
Value, as a general concept, is different, and as I said, it's what someone else will pay you for it (or the utility that you personally derive from it, if you have no intention of ever trading it). Gold has no intrinsic value - it doesn't produce anything in/of itself. It has value - i.e. people will pay you for it. But whether they'll pay you more or less than you paid for it yourself is entirely unknown. A lot of gold appears to be held for speculative purposes, and thus "value" is a bit susceptible to the emotional views of the buyers and sellers on the day. Gold isn't used as money anymore, because it fails various tests (e.g. divisibility) - most importantly as a "store of value". The value of gold changes, sometimes substantially, in a single day or week. The general populace isn't willing to wear that exchange rate risk. As a "store of value" isn't not particularly good, because the value of the 1kg of gold you have under your bed might be half (or twice!) what it was a month ago. Either way, I was disputing that there's inherent value in complex cryptographic numbers (aka re the Bitcoin post previously). Since there's no market for these numbers (that I'm aware of), there's no value that's discernable or determinable. Cheers Ken -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Kurt Buff Sent: Friday, 7 March 2014 12:55 PM To: [email protected] Subject: Re: [NTSysADM] OT:Bitcoin Mostly agree, but "value", or even "intrinsic value" isn't about providing an income stream. Precious metals have served as money, along with several other commodities, because they serve as a store of value, and fulfill the other requisites for money (scarcity, durability, divisibility, distinct look and sound, homogeneity through space and time, malleability, and beauty) Bitcoin surely fails on at least a couple of those points. Kurt On Thu, Mar 6, 2014 at 2:39 PM, Ken Schaefer <[email protected]> wrote: > Bitcoin has inherent value because it has “a hard to find number with > certain cryptographic properties”? > > > > Whilst I will grant you that the cryptographic properties are > inherent, I’m not sure you could prove that they have any value. > > > > Is there a decent sized market for the supply and purchase of such numbers? > No. And thus there is no value – value only exists when someone else > is prepared to compensate you providing them with the item in question. > > > > As for gold and silver – are you talking about “intrinsic value”? If > so, then neither gold nor silver has intrinsic value, as they provide no > income. > Investing in gold or silver is entirely a capital gains play – you’re > hoping someone else will take it off your hands for more than you paid for it. > Contrast to a bond or share, where the underlying security provides > you with an income stream because the funds are used to pursue actual > economic activity (obviously subject to the usual risk/reward caveats) > > > > Cheers > > Ken > > > > From: [email protected] > [mailto:[email protected]] > On Behalf Of Ken Cornetet > Sent: Friday, 7 March 2014 9:09 AM > > > To: [email protected] > Subject: RE: [NTSysADM] OT:Bitcoin > > > > No, because Dave has at some point in the past went from doing what he > does best (personal finance) to being an expert on all things > financial. This is a good example. He clearly has done zero research > into bitcoin, and yet he is an expert on it. > > > > Now, I’m not saying bitcoin is a good investment, but I am saying that > Dave clearly doesn’t understand what it is, or what makes it valuable. > In fact, he gets things exactly 180 degrees wrong. Bitcoin’s strengths > are that it doesn’t depend on a government backing it. Like gold or > silver, and unlike paper money, bitcoin has an inherit value (a hard > to find number with certain cryptographic properties). > > > > He also conflates the the failure of MtGox with the bitcoin currency itself. > That’s a bit like saying dollars are junk because some savings and > loans failed during the 70s (which weren’t FDIC insured and real > people lost real money). > > > > From: [email protected] > [mailto:[email protected]] > On Behalf Of Webster > Sent: Thursday, March 06, 2014 2:17 PM > To: [email protected] > Subject: RE: [NTSysADM] OT:Bitcoin > > > > Just because he thinks Bitcoins are a pile of crap and a scam? > > > > > > Webster > > > > From: [email protected] <[email protected]> > on behalf of Ken Cornetet <[email protected]> > > Sent: Thursday, March 6, 2014 12:28 PM > To: [email protected] > Subject: RE: [NTSysADM] OT:Bitcoin > > > > I have great deal of respect for Dave’s financial philosophy and > advice for the most part, but Dave long ago lost the distinction > between his opinions and facts. > > > > From: [email protected] > [mailto:[email protected]] > On Behalf Of Rod Trent > Sent: Thursday, March 06, 2014 12:59 PM > To: [email protected] > Subject: RE: [NTSysADM] OT:Bitcoin > > > > Oh, he does. He says it pretty plainly. > > > > > > From: [email protected] > [mailto:[email protected]] > On Behalf Of Tigran K > Sent: Thursday, March 6, 2014 12:37 PM > To: [email protected] > Subject: Re: [NTSysADM] OT:Bitcoin > > > > He doesn't understand what bitcoin is. > > > > > > On Thu, Mar 6, 2014 at 9:21 AM, Rod Trent <[email protected]> wrote: > > To me…this pretty much explains the whole Bitcoin scam… > > > > http://youtu.be/32l1ht1wlLI > > > > From: [email protected] > [mailto:[email protected]] > On Behalf Of J- P > Sent: Thursday, March 6, 2014 12:02 PM > To: [email protected] > Subject: [NTSysADM] OT:Bitcoin > > > > http://www.pcworld.com/article/2105280/10-questions-on-the-mt-gox-impl > osion.html > > > >
