Quote from: deisik on November 15, 2016, 06:05:02 PM

Quote from: HugoStone on November 15, 2016, 05:23:10 PM

Quote from: deisik on November 15, 2016, 04:59:51 PM

I don't quite understand what you mean to say

It looks like that your point hinges on the assumption that "digital abstraction", the term which you seem to use to describe both fiat currencies and Bitcoin, has no intrinsic value. If that is being the case, I can only say that you are pretty much wrong on this. Money, even in the form of "digital abstraction" as you call it, does have intrinsic value. Just in case, it is called transactional utility which is an inherent quality of money, i.e. something without which money can't exist

Hi. First and foremost, modern money doesn't really exist at all, does it? It's just a number stored as a voltage on a suitable medium

It is irrelevant whether there is a real physical token representing money or it exists only virtually, in the form of digits, or as a magnetic field on some stratum, or whatever. The concept of money is independent of its actual implementation. Gold coins are considered as money only as long as people consider and use them as money...

Otherwise, they are just round chunks of a shiny yellow metal

Quote from: HugoStone on November 15, 2016, 05:23:10 PM

Let me ask you this though: when the money markets determine the value of the dollar (or yen, euro, sterling, etc.) do they determine it on the basis of its "transactional utility"? What proportion of the 'value' of one dollar (or one bitcoin) represents its "transactional utility"? In other words, how is this "transactional utility" itself valued? Put a value on it for me.

Price is what you pay, value is what you get

Market price is determined by the balance of market supply and demand, obviously. Ultimately, the value of money is determined by the amount of goods that a given amount of money can buy. Transactional utility is the price of money itself, the price of the convenience it provides over direct barter. It depends on a few factors such as inflation (depreciation) rate, its universal presence as well as acceptance throughout the world, and things like that. It roughly equals a market interest rate for borrowing money which has a negligible inflation rate, provided there is such a market in the first place. If you want a definite figure, then it is around a few percent per annum in case of major currencies

Quote from: HugoStone on November 15, 2016, 05:23:10 PM

What applies to the dollar, yen, euro or bitcoin must apply equally to all currencies. What is the value of the "transactional utility" of Zimbabwe's currency?

Zimbabwean currency is only called a currency. It is not money since it doesn't function as money (for example, it doesn't keep value)

Hi. I think you're locked in a tautology. If "transactional utility is the price of money itself" then it can only be determined in relation to that which it prices itself by, i.e. its own unit of currency or an equivalent. Assume for a moment that this "transactional utility" amounts to one billion US dollars. What is the 'value' of one billion US dollars independent of the value of one US dollar? What is the 'value' of one US dollar? One and one billion are literally just numbers. They do not have any inherent value in and of themselves, and they certainly doesn't soak up a mysterious quality called 'value' just because we put a symbol in front of them.

You recognise what I'm saying here when you observe that gold coins "...are considered as money only as long as people consider and use them as money..." and if people do not then they are merely "round chunks of a shiny yellow metal". In point of fact, gold coins have always been nothing more or less than round chunks of a shiny yellow metal. Their fundamental 'quality' as round chunks of a shiny yellow metal is not altered by the fact that people prefer to lock them away in vaults rather than throw them into ditches or play tiddlywinks with them.

What I am saying is that what we think of as 'value' and 'price' is just a constantly fluctuating illusion. If we accept that it is an illusion then the question to be asked is why we permit other institutions to determine the nature of that illusion for us, rather than determine it for ourselves.

https://bitcointalk.org/index.php?topic=1678904.0

HS