"Want" has nothing to do with it. If people are willing to pay money for a service, that service is by definition valuable. Many thousands of people are willing to pay money in the form of gas fees to transact on the Ethereum network, so the network must be providing value. Whether you think the endpoints (assets/coins/whatever) themselves have value is irrelevant.

I have a feeling that whatever definition you're using for crypto to say it isn't valuable could also be applied to an awful lot of startups and more generally to current stock market prices...

> If people are willing to pay money for a service, that service is by definition valuable.

This is only true if you define "value" to mean "people are willing to pay money for it."

But that's a useless and circular definition. It's only tolerated because assuming that money is a proxy for value was useful for making crude models in economics.

You're welcome to provide a better definition.

"Value" is providing a benefit that is greater than the cost.

Benefit and cost to whom? If I use your definition and apply it to individuals, that's exactly how money works. If I'm willing to pay for something then it must have more value to me than the money I am paying, otherwise I wouldn't pay for it. So if people are paying for crypto or crypto services then those things must be providing enough benefit to be valuable.

To the parties involved. I think the question is -- what is the value to the party buying cryptocurrency? Outside of gambling, that's not clear to me. Which is not to say there is no value!

> If I'm willing to pay for something then it must have more value to me than the money I am paying, otherwise I wouldn't pay for it.

I disagree. People pay for stuff of no value to them all the time, for various reasons. That someone is willing to pay doesn't automatically mean it has value to them, although it does heavily imply it.

If 1000 people participate in lynchings and pay money to enact them do lynchings have value?

Very comfortable saying that my definition of value is opposed to many companies and startups

To those people? Yes, by definition. You seem to be conflating value to individuals with value to society, which is a massively different thing.

And what utility are they extracting, exactly? It's incorrect to assume that a willingness to pay is always indicative of durable underlying value. See every bubble ever, for example.

The real problem in the world of crypto is that it's gone through many boom and bust cycles without real innovation to match. The future of what crypto could deliver is as speculative now as it was five years ago.

You've redefined general value to "durable underlying value". I'm not even sure what you would consider that to be outside of physical assets. Does GitHub have durable underlying value? I would strongly argue it does not, but it's still valuable because it provides something people find enough use for to pay money.

The question was why the price of crypto is rising so fast. The answer, at least for Ethereum, is that it provides a service that some people value enough to pay for. The fact that philosopher1234 doesn't value those services just means it's very slightly less valuable than it otherwise would be.

“People will pay money for it” is not a useful definition of value. People pay money for assassination or vengeance and many extremely destructive things. What use is there in labeling these things as valuable?

In economics, value is purely subjective. If someone is willing to pay for it, then it has value to that person. To answer OP's simple question of why crypto has a high price, the economic definition is what you need.

You're looking at a more absolute definition of value that has little to do with the price of things. That's a worthwhile discussion as well but has little to do with OP's question.

> If someone is willing to pay for it, then it has value to that person.

My problem with that definition is that it's a tautology, and therefore holds little actual meaning and provides no insight.

"Why is that valuable?" is not a question meaningfully answered by "because people want it". That answer only begs the question. Everything that has value to people only has value because people want it.

Ok then skip the word "value" entirely. People are willing to pay a lot for ETH, because they're willing to pay to issue transactions on the network and that increases the price of the network's currency.

That's not a tautology because it's two different things. If they were only paying for the currency, that could be just a speculative bubble. If the price is based on people paying to issue transactions, that's a price built on actual use.

Economics is not a philosophically-laden exercise.

Economics defines value as that which a rational agent is willing to make a sacrifice for, and the degree to which something is valued by that actor is exactly measured by what they're willing to sacrifice.

Why is this not valuable? Or, rather, what might a better definition entail? A precise formulation isn't required, I'd be happy to see a rough sketch of necessary and/or sufficient conditions.

The problem is that everyone is somewhat irrational. You cannot both exclude irrational behavior from your definition of value and at the same time claim nfts are worth money and thus rational. Im claiming they are irrational and not useful.

Irrational in what sense? I can, indeed, claim that NFTs have value to even a purely rational actor, if I'm allowed to ascribe self-determination to that actor.

Particularly, I think it's important to delineate whether 'rationality' allows for arbitrary actions, decisions, and desires. I do include these qualities in my notion of rationality, so long as the actor can rationalize the phenomena to themselves (even if this rationalization is based on nothing more than their ability to do so).

Given this notion of value and rationality, yes: I can very easily allow for NFTs ('useless' though they are) having value.

Do you mean 'rational' in terms of 'every action or desire is reducible to some unknown deductive logic'? In which case, I agree that everyone is somewhat irrational and furthermore that nobody could ever be rational. 'Rational' in the game theory sense? In which case, I see no reason to say that everyone is irrational instead of allowing for the mathematical notion imperfectly capturing reality.

If everyone is buying NFTs because they believe the price is going to go up, and they tell themselves that the reason the price is going up is because NFTs are useful, but in reality NFTs are not, that is irrational. So it allows them to have monetary value while contributing nothing useful to the economy, and in fact causing people harm.

It is possible NFTs do have value in the sense of being good, but them being priced highly does not give us useful signal there.

That's not irrational in the sense of there lacking inherent reasoning or rationalization, it's just a poor deduction. If you mean that rational agents are incapable of flawed reasoning, then I agree that humans are somewhat irrational (and further that no human could ever be rational).

I suppose my biggest gripe is this: how do you construct a notion of rationality which allows for some people to be perfectly rational sometimes, imperfectly rational at other times, and others to be rational never, while allowing for real flaws in reasoning and the absence of perfect information? (this is, to me, a rough sketch of some necessary/sufficient conditions)

I think irrational is something like retaining a false belief despite it being clear that it is false. It’s got something to do with holding on to a point of view despite its inadequacy.

Then much of science is irrational; what about those times where it's understood that a belief is false, but it also holds the most explanative power of all other considered beliefs?

And, again, the notion that something is 'clearly false' at some point presupposes perfect information about the context within which the belief is held.

We have a whole economic system where price is a response to demand and scarcity. Most of economic output has no fundamental relation to the basics of survival, as to purely exist to satisfy whimsical desires.

Yes, and that is not ideal, nor evidence of value.

If someone was willing to pay for it, it had value to them. That's value.

If I want to murder people does murdering people have value?

The net value to society is likely negative since the impact on the target is large, and a society that allowed such things may see time horizons constrict.

You raise some good points, though. I personally am probably coming with an unspoken understanding that 'given that something fits into a legal and moral structure, and we accept a certain definition of using something by choice as value' then paying more for that thing implies more value. Facebook is probably a good example of something in the grey area, connecting people has value, but generating demand is questionable, spreading misinformation is likely a large net negative.

Monetary value reflects demand, but demand does not always reflect utility or goodness. There is a demand for atrocity.

The construction “NFTs are highly priced, thus they are desired, thus they are good” is full of holes. If I have a phobia of spiders, and a corresponding desire to eradicate them, does it follow that eradicating spiders is good? If I got my wish, I and the rest of the world would be worse off for it, but my desire exists none the less.

It can definitely have value. That's why bounties exist (or imagine a market for someone to assassinate Hitler).

I think there's a conflation of value and value in a particular moral dimension here.

If the original comment was saying “crypto has value because people are willing to pay for it” that is tautological. There is a conflation, but it’s a motte and Bailey.

Fair point. Not everything happening on smart contract platforms is good and some of it may even be bad.

The post was asking if value is created and I think that my argument that the market price of doing things in the ecosystem having a real world cost translates to it having value is correct. There are plenty of insanely wasteful and horrible companies that create real value in the world.

It may have real value, but people paying money for it doesn’t prove that. Genocide requires a lot of money, so is it valuable?

A quarter of a million Afghan civilians died at war in the last 20 years due to a sham war predicated on phony evidence. This alone should tell you that all sorts of horrible atrocities are valuable.

Crypto still looks and smells like a huge sham, tho, so I’m inclined to agree with your other points.