"Mathemetics"

Is this the regurgitative didactic method I keep hearing about?

Ah yes, sorry, fixed. Meant to spell "mathememetics" correctly.

Mathememetics, the study of the spread of ideas that seem rigorous, but aren’t.

The value of something is simply what other people are willing to pay for it.

The issue is the aggregation of such a volatile concept such that entire markets can be based on such pricing model.

That way lies the enablement of massive fraud.

The marginal revolution is dead. Long live the marginal revolution!

You're conflating price and value. I'm going to repost a comment I made a month ago.

https://news.ycombinator.com/item?id=32857769

> It's important to note that price, the last traded price, and value are all distinct concepts. The last traded price is the only one of these we can measure ahead of time, so we often use it as a metanym for these other concepts. ...

> When the oil futures went negative, it wasn't the case that the value of oil was negative - this was about the structure of the market and the sorts of positions people were caught in when the pandemic hit. We continued to consume oil throughout the pandemic, and so I'd say we continued to value it.

> Another example would be, if a rancher has a lot of cow poop, they might pay a farmer to take it away. You could say that the cow poop has a negative price on it. But the farmer is going to make use of it as fertilizer; from the farmer's perspective, this is a commodity that has value.

> It's true though that there are a million theories of value and it's impossible to say what something's value is definitively, you can only make a decision about what is value is to you.

I'd expand that you actually have to define what value means to you, relative to the context in which the discussion is taking place. You'll likely find yourself considering value from different perspectives in different situations; I find myself doing so.

> You're conflating price and value.

The negotiated final price is the value.

> When the oil futures went negative, it wasn't the case that the value of oil was negative

The value of the futures is different than the value of the oil itself. Besides, the end result of a future is taking delivery. Most futures contract buyers have no intention of taking delivery, and have no way to take delivery. That explains the negative value of those futures.

> I'd expand that you actually have to define what value means to you, relative to the context in which the discussion is taking place. You'll likely find yourself considering value from different perspectives in different situations

That doesn't change at all the fact that the value is determined by what someone is willing to pay for it. That value is different for different people, as you say.

What I meant was, the definition of value is different for different people, as well as yourself in different situations. The magnitude of that value will also differ, of course.

You're free to define value to always be price, it's a matter of opinion and by my own logic it's a valid thing to do, but separating the two concepts makes things much clearer when market effects distort the price of something who's value doesn't seem to have changed.

Yes, every item has different value to every person.

> market effects distort the price of something who's value doesn't seem to have changed.

This is still making the mistake that value is independent of what people are freely willing to pay for it.

This is just a very narrow frame to view these concepts from. It's not per say wrong, it's a useful model much of the time, but it's silly to insist that it is the only way to look at things and will needlessly cut off useful avenues of analysis. For instance, things can have value, even if they are never a part of a transaction. My work ethic has economic value to me, and if I were to lose it my income would be reduced by 100%, but it's impossible for me to sell it because it is impossible for anyone else to possess it; it's price is undefined. Similarly, no one has ever paid the algae and plants to produce oxygen, and no one has ever paid the sun to shine. But without these ecosystem services, the GDP of the world would be reduced by 100%.

If these examples are too abstract for your taste, there are many other examples. No one pays for volunteer work (by definition), but there's lots of volunteer work that, if people stopped doing it, our society would grind to a halt. One example is open source software; most of the work which goes into it is unpaid, yet our industry cannot function without it. Another is parenting; most people aren't compensated for having & raising children - indeed, it costs them huge amounts of money - but there is no economy without people performing this function.

I submit there are more things in the economy than are dreamt of in this philosophy.

> No one pays for volunteer work (by definition), but there's lots of volunteer work that, if people stopped doing it, our society would grind to a halt. One example is open source software;

I contribute every day to Open Source software. The "pay" I get is not in terms of salary, there are many other benefits.

Unless you're telling me that you can quote me a price to buy those benefits off of you, then I think you've just accepted my premise.

I have here a pencil. My buddy is willing to give me $100 for it, so its value is $100, right? But I'll sell it to you for only $50. Bargain!

If your buddy throws in a an option to sell for 1 pencil at $100, then you've got a deal!

Either you're being manipulative, or just don't get that there's a market for your pencil, and it's not just your buddy, so his role in establishing the price is much less important than you present.

Of course, all of this is about price, not value.

By far the most valuable substance in the world is oxygen, without which everyone here would be dead within moments, and yet (nearly) nobody here has ever paid a single cent for it (apologies to scuba divers).

The value is determined by, as usual, the Law of Supply & Demand. The supply of oxygen far exceeds the demand, so the value is zero.

Walter, I want to believe you're a smart guy, please tell me you're not actually this obtuse.

Some human desires are more predictable. You can ground out some value in basic human needs: food, clothing, shelter. They imply land value (for example, agricultural land) and energy usage (heat, transport, production) though not in a straightforward way. And various security measures can be valuable because any of the above could be taken away.

This doesn't imply stable prices, though. Far from it!

While I fully agree with your point, the next time I see some collective delusion of a pyramid scheme I’ll buy in early.

It doesn’t matter that there’s no logic to it, as long as enough people share the same delusion it becomes self-propagating.

This is what makes marks so unremarkable.

How do you know if things are early though? Some go longer than others, so you can see some quack getting attention and buy in - just in time to be the last fool as everyone else realizes it is garbage. Or it can continue to go up - you have no way to know.

For myself, personally - that's an easy metric...

By the time I hear about something, it's too late.

There are ten, if not hundreds, failed pyramid schemes for every one on which you could make money. The schemes are not made for you. The way to earn money off of pyramid schemes is to create one.

Whether bitcoin is just a pyramid scheme or not, only time will tell. I don't believe so, but I'm not an economist, so who am I to say :).

I bought some cryptocurrencies on Coinbase about a year ago. Today I figured was as good a time as any to cash out. My net loss was about 70%.

I'm fortunate that this was a small amount relative to my net worth to count as a fun "experiment" and not a significant chunk of the money I need to survive.

Based on this N=1 experiment, I now feel justified in suggesting more profitable and environmentally friendly endeavors, such as lighting half your money on fire.

Check back at this comment in 3 years.

If my grandparents know about it it's too late

That's no better then buying all lottery tickets you can get your hands on.

The trick is to stick with things where the odds are affected by humans being irrational.

At least, I hope it is, I haven’t actually started that strategy.

Until it doesn't, but your point is correct. Otherwise known as the greater fool theory (usually of stock investing, but applicable anywhere fools are found). Assuming you can enter and exit with a profit, you win. Next game...

> Value ... grounds out in human desires

You wouldn't believe how rare it is for me to meet someone who agrees with this. I'm in leadership at a web3 company and I need to reiterate this point over and over again. NFTs don't have intrinsic value OR arbitrary value. ERC20s don't have intrinsic value OR arbitrary value. If it doesn't tie back into user psychology, it's not worth anything.

Interesting historical note is that one of Freud's original metaphors for understanding the nature of desire was the unconscious "investor" or "capitalist" who outlays affective charge to the conscious "entrepreneur", who relates to objects. This is known in the literature as Freud's "economic metaphor", which I've found immensely helpful in my own understanding.

>You wouldn't believe how rare it is for me to meet someone who agrees with this. I'm in leadership at a web3 company and I need to reiterate this point over and over again. NFTs don't have intrinsic value OR arbitrary value. ERC20s don't have intrinsic value OR arbitrary value. If it doesn't tie back into user psychology, it's not worth anything.

I came to a similar conclusion: The sole criterion for the viability of a currency is acceptance in trade.

This simple truism explains every currency that "works" and every one that didn't all at once.

It can be a terrible currency, but if it's generally accepted in trade, too bad. Governments can mandate it, but that won't always save it. Just look at Zimbabwe dollars. They were official. And all but worthless. USD is accepted worldwide, even though its based on less than even a shitcoin, and 90% of it doesn't physically exist according to the Fed themselves.

> USD is accepted worldwide, even though its based on less than even a shitcoin

The full faith and credit of the the United States government is pretty solid.

> and 90% of it doesn't physically exist according to the Fed themselves.

That's how debt works

What does "The full faith and credit of the the United States government" mean? You can't redeem dollars bills for anything from the govt as far as I know.

You can only buy bonds from the government in dollars, the government only pays interest on those bonds in dollars, and the bonds are only redeemed for dollars when they mature.

'Intrinsic value' is an oxymoron. 'Value' is a social construct.

The conclusion I came to is that "intrinsic value" is fundamentally an extroverted (object-oriented) rather than introverted (subject-oriented) concept, to use Jungian terminology. In other words, the subject projects their psychological evaluation "into" the object. The path to reconciling the two usages of language is to scope the subject, e.g.:

- to human beings (subject), food (object) has "intrinsic" value

- to Americans, US dollars have "intrinsic" value

- to Redditors, karma has "intrinsic" value

etc

Interesting aside -- this is also how falling in love works (overvaluation of the object via the subject's projection of value).

> observing that my kid's doodles are scarce but not valuable is not a cute tweet; it is a complete and utter demolishing of the argument.

Scarcity is not quantity. Its the relationship between supply and demand. In your scenario, supply (1 kid doodling) meets demand (1 person wants them), so the value doesnt move from 0 (which is how much you would pay for the doodles).

That’s the previous commenter’s point, isn’t it? The crypto advocates claim that crypto has intrinsic value simply because of its scarcity (supply-side only). The commenter’s rebuttal is that if this were true, their kid’s doodles would be extremely valuable, yet they are not because only the parent treasures them (demand-side).

With gold, one can come up with a plausible story for the demand side of the argument that it has intrinsic value: gold’s combination of beauty and scarcity has made it a potent status symbol across many eras and cultures (not to mention its industrial uses).

With crypto, it’s much harder to imagine what the demand side of the story is. There’s a finite supply of Bitcoin, and people demand it because… well, it’s not because they can pay for anything with it. They mostly seem to demand it because they believe someone else will pay them more for it in the future. And what do we call it when an asset has nothing going for it besides that hope?

I’m still waiting for a compelling story about why demand for Bitcoin or any other cryptocurrency will persist beyond the current vogue, which is driven by the notion that “it’s gonna be huge in the future”. How long can people keep the faith, and what happens to demand if and when they stop?

I have contended that the only use for cryptocurrency which provides value for people is for anonymous transactions for which cash is not an option or a poor option. The only cryptocurrency that can do this that I know of is Monero. Therefore Monero will have lasting value. Whether you can make money speculating on it is dubious, which is probably why not many people do.

* Note: I am speaking regarding the markets I know; I cannot say anything regarding economies suffering rapid inflation or which lack access to banking

Except that holding Monero is of rather less clear value. Sure, the ability to take $100, turn it into Monero, and turn it back into almost $100 that cannot be trivially traced to the original $100 is of some value. But this value is there for people who have no particular interest in Monero-the—asset. They want Monero-the-mixer.

If I put $100 into Monero and hold it, I’m betting that Monero is still worth something in the future. That’s a risky bet. For example, the Treasury department could sanction Monero. Or the next great mixer could come along and supplant Monero, making my old Monero mostly useless.

The whole point of currency is to use it. If you are buying a currency to hold on to it, then it is a terrible currency and there is a disincentive to use it as one, thus making it useful only for speculation. I know that there was a pivot when people realized Bitcoin and Ether are not practical for their purported use as currencies, where they are now claimed to 'hold value', but that is ridiculous. They were designed to be currencies and they suck at it. You can make up any reason you want, but if you want a cryptocurrency that has value as a currency then in my view Monero is an example of one, because it has a valued use case.

ON the international currency market, one traditional role of the US dollar is exactly "store value". You trade your currencies on the FX market during your day, and comes close to "close of your trading", you exchange all your positions for US dollars, to keep in store for your quiet period. Comes the following day, you trade out your dollars for other currencies. Then the cycle continues.

Does this mean that the US dollar is a terrible currency? No. If another currency meets the same stability criterion, it can (and probably is) used as a short-to-medium term value store.

I don't really see any crypto-currency work well, they're thinly traded, so there's a lot of inherent volatility in the pricing. It is also getting increasingly harder to exchange crypto-currencies for more traditional currencies.

> ON the international currency market, one traditional role of the US dollar is exactly "store value".

I do know that 'store of value' is the term I used, but it is in reference to the people who hold Bitcoins in expectation of rising price, and the fact that they would claim it 'stores value' while being extremely volitile is indicative of their lack of understanding or their lack of honesty in representing their motives.

People who shelter their dollars overnight are most likely not expecting a return on it.

> ON the international currency market, one traditional role of the US dollar is exactly "store value". You trade your currencies on the FX market during your day, and comes close to "close of your trading", you exchange all your positions for US dollars, to keep in store for your quiet period.

Come again? The international currency market doesn’t really close overnight, and the people who store value in USD are generally Americans or other people or entities who generally store value as USD.

And that latter part is the whole point. When you save up for retirement, or plan your business, or prepare a balance sheet, or plan for a college education, everything is denominated in dollars (or your local currency).

If you want to store money for any future use, you want an asset that has a somewhat predictable return relative to the dollar. If you are a drug dealer who collected $1M (in USD or its equivalent in Bitcoin, Monero, casino chips, whatever), you may well launder or mix it through something else, but your goal is to end up with approximately $1M for when you want to buy more wholesale drugs, pay employees, buy a fancy yacht, etc. Storing $1M as Monero is making a huge bet that it will still be worth $1M when it’s needed.

> The whole point of currency is to use it. If you are buying a currency to hold on to it, then it is a terrible currency and there is a disincentive to use it as one, thus making it useful only for speculation.

Tell that to anyone who saves money for any purpose. They may not literally hold USD in their private Fed account or as cash under a pillow, but they are nonetheless storing dollars (as bonds, money markets, savings accounts, etc).

I think you misunderstood my point. Holding on to currency and expecting it to increase in value is terrible for the economy because it stops economic activity. People don't buy dollars because they will be worth more later -- they buy them because if they need to they can use them. Also, bonds are not dollars, they are bonds.

Bitcoin is the first (and most stable) theoretically unseizable currency. You can store bitcoin in your brain, get persecuted by your national government for criticizing their actions, travel across a border, get kidnapped, offer up a decoy wallet, get released 3 years later, wander into a town with an internet cafe, and theoretically, you could have access to your funds within hours, without the consent of or dependence on any other centralized entity.

Is this a fantasy that few if any people will ever utilize? Sure.

Is it also super cool? I think so.

I think the main demand of bitcoin is "money that isn't subject to federal reserve policy". No fiat currency in the world is effectively accomplishing that today.

(Note: I had to stop using brainwallets three bubbles ago because I had recurring nightmares of getting a brain injury and losing access to my funds. Don't recommend it.)

>Bitcoin is the first (and most stable) theoretically unseizable currency

This is an absolute farce. Maybe talk to us when there are no longer reports of being able to easily scam someone out of all of their money with a non-reversable transaction just by sending them an image with a script in it.

Emphasis on the "theoretically", I think.

Name a currency that scammers don't get fools to part with.

At least with fiat currency you have a chance of getting the transaction reversed! Most people will not trust a currency where this is not possible, or at least they will hold it with a centralized trusted custodian who can offer transaction reversal—which defeats the purpose!

That isn't a property of fiat currency, that's a property of the bank/credit card you use.

Someone could make a service with delayed settlement that is denominated with Bitcoin, and it would work just the same.

If you pay someone with a $100 bill, your only recourse is to ask for them to return it: the same as Bitcoin.

Sure, but there’s no way for the delayed settlement mechanism to handle fuzzy real-world judgment calls (such as a dispute about whether a service was rendered or not) without resorting to a centralized oracle of some sort—and then you’ve broken trustlessness and may as well have avoided blockchain altogether and saved yourself the transaction fees.

> Bitcoin is the first (and most stable) theoretically unseizable currency.

Bitcoin is subject to federal policy as much as anything is: as much as secret Swiss bank accounts.

You imply evasion works. But that certainly doesn't mean it is federally legal, legal with the IRS, or legal for whatever other reasons. You have the risk of serious consequences if you are caught breaking the laws that apply to you.

Your argument implies that you can break the law without getting caught, but we already have surprising crypto counterexamples against that.

Also, the market is slowly being split into legitimate trading (via centralised platforms with KYC rules) and illegitimate trading (for stolen bitcoins, or bitcoins tainted by tumbling with illegal bitcoins). As that plays out, it seems likely to become more difficult to actually trade your crypto without some laundering costs and risks.

Keeping a number in your head or hiding some gold in your secret location are the same thing.

A number in your head is portable. So with the exception of the 'border crossing' use case, I agree they are functionally the same thing.

I suspect a lot of more of the 0.1% have gold hidden than many would expect. I've met two eccentric 100 millionaires that advocated for hiding gold as a wealth preservation mechanism. I think this is becoming the primary non-trading use case for Bitcoin - met both of those individuals through conversations about crypto.

> It is completely possible to demolish entire massive argument edifices in 10-20 of the correct words, and the fact that the "other side" has deployed literally hundreds of thousands of words does not make them right if the foundation is rotten.

See also the "Gish gallop" [1], a strategy that relies on spewing out a huge number of specious arguments and half-truths that are each individually time-consuming to refute, and to which the correct response is usually just to refuse to engage with the bullshit.

[1]: https://en.wikipedia.org/wiki/Gish_gallop

I had a Bitcoin fan in his 40s tell me IRL that BTC (not blockchain, mind you) is an improvement over the gene. Something about passing information between generations. I could not follow the argument. Does this mean that all this time, banks have been hoarding details about our deposits, withdrawals, balances, transfers and purchase history that could have been "inherited" by our families. Even worse, banks could have been making the data public so "tech" companies can collect it for free. You cannot make this stuff up.

This sounds related to the observation that one of the powers of human civilization is move evolution out of the DNA genes and into culture. We use electricity not because we have electricity-using genes, but because we have the genes that allow us to support a culture that knows how to use electricity.

However it is beyond me to translate that into the blockchain specifically. This seems like yet another case where in the phrase "distributed ledger", the "ledger" is doing all the work and the "distributed" isn't doing much. And there isn't much work being done either; most of our "culture" isn't in ledgers. Even if you take the broad view that I do that a lot of things like our technology are actually embedded in human relationships ("Hmmm, I remember Bob knows how to solve this problem... ah yes, I bet Sally knows the solution to this... I bet Ramash could hook me up with the right part for this problem...") and things beyond just formal transfer mechanisms like "books" and "classes", ledgers still aren't carrying much of that water.

I remember SCO accusing IBM of doing something similar and IBM responding that they did not, because they could not, refute them.

Refuting bad arguments scales better than some think because arguments can be referenced or copied when they come up again and again, whereas the alternative allows BS to stand unchallenged.

Speaking of which, I should copy this for the next time that comes up.

What if I took away your internet access.

How much is that worth.

Without internet access, "crytpocurrency" is DOA.

Internet access is not scarce but I would bet people hyping computer trends like cryptocurrency on HN might place a very high value on it. It is the medium by which the nonsense (hype) can be spread.

The kid's doodles are valuable... to certain people, such as the kid's grandparents. No internet access, no hype required.

The article as well as your comment (which doesn't even reference what is discussed in the blog post) are perfect examples for how narratives form in this strange new world. None of it has anything to do with NFTs or cryptocurrency except for the name. Everywhere people consume media, be it on Twitter or Amazon, they're bombarded with scams and nonsensical computer-generated content. Those not inclined to dig deeper soon start to believe the fake stuff is what the idea is really about.

There has always been misinformation, but not on this level. Only a few years back, when someone wanted to write a scam book, they still had to actually sit down and write it, no matter how carelessly. Now that this isn't needed anymore, it amazes me that someone would as much as look at - let alone buy and read - books on buzzword topics by random unknown authors. Same goes for the consumption of social media feeds.

If you make up what people say and then argue with them it's pretty easy to win.

The "classic goldbug" insists that gold has properties that are good for a currency (does not degrade, can be divided, does not rely on a trusted third party, has scarcity) and it has been used as currency for a long time in civilisation. I take "intrinsic value" for commodities to mean "has use aside from being a currency", for example gold is used in jewelry (does not tarnish, is soft, is pretty?) and electronics. The non-intrinsic value would be its use as a currency. If a goldbug argues all the value of gold is intrinsic, they are confused because the price of gold would probably be much lower if it had no use as a currency.

Bitcoin-bugs make similar claims to gold, plus it can be sent over the internet and is more scarce than gold. As for intrinsic value for Bitcoin, it doesn't really have one I guess. Or maybe you could make an argument about other things built on top of its blockchain like smart contracts or timestamping services?

In summary, I agree that an argument of value from "pure scarcity" is bad, but I don't think it is a common belief!

>Bitcoin-bugs

Might I suggest: bitbugs.

(Also, "Don't let the bitbugs byte")

It's not just a few goldbugs thinking the intrinsic value is all of the value, it's tons of them that think the intrinsic value provides a solid floor. At this point the currency/speculative/prestige value is almost all of the value of gold. If you had a pile of gold and it dropped down to its intrinsic value, it'd be almost the same as a drop to zero.

> At this point the currency/speculative/prestige value is almost all of the value of gold

It isn't a currency, it has no obvious potential to be a currency and if you own it you are either a government or insulted. At best, only speculative value could be a factor of these 3, and I don't think the serious money that sets the price is speculating - and gold is a terrible market to speculate in, so they probably aren't setting the price as much as going broke.

The value of gold is set by how hard/easy it is to mine.

Scarcity does not directly cause value. Scarcity can fuel speculation and prestige.

Plenty of things are hard to mine yet don't have much value, so nobody tries to mine them. The difficulty/ease of mining can provide a cap on value, but it does not provide a floor. It is not the reason something is expensive.

I'm actually way closer to a goldbug than a cryptocurrency advocate, and generally agree with you with what you said!

But I have definitely encountered goldbugs who just know that gold has intrinsic value, if you ask them what that is, it's just like, intrinsic dude, if you ask them what that even means they just sort of get a blank look on their face (metaphorically, since this is the internet).

Gold is super good at storing what value it has... but it is not intrinsically valuable. If society were to collapse to two people, and one had gold and the other had cows, the one with cows would have little reason to trade for the gold. This is not likely to happen, but is a good mathematical sort of way of considering the question. Food and water have much better "intrinsic" value if you really get down to it... where they go wrong as the basis for an economy is all the other attributes we want money to have.

(Personally as one "way closer to a goldbug", I favor things that are actually used. Gold freaks me out a bit because the world still treats it as very valuable even now, but it isn't actually used for much. I feel much better about things that are used because they are the best solution to some problem; see platinum and palladium for catalytic converters, for instance. On the flip side, the reason why gold isn't used much is precisely that it's considered very valuable; if the value did suddenly collapse because the general agreement about its value deteriorated, there are a lot more things we'd use it industrially for, so that might be enough to keep it valuable.)

A-class critique of the grounding of value.

I will add that there seems to be a substantial correlation between people who are made uncomfortable by the reality of socially-constructed value,

and the social construction of many other "foundational" things, such as "truth" and its relationship to natural language,

which flows naturally into self-delusional "originalism" when it comes to interpreting say the Constitution. Or for that matter the Bible.

which in turn are deeply correlated with autocratic-leaning and socially-conservative politics which favor rigid hierarchies and privilege authority and respect for it, over other values (such as equity, compassion, etc.)

I find it remarkable how many people are made uncomfortable even in otherwise well -educated circles by the premise that in natural language meaning is negotiated and collaborative and requires not absolutes of the universe but rather agents who maintain representations and models of one another's states, beliefs, intentions, etc., against which every utterance is measured and its meaning triangulated.

I guess if you got a degree in EECS rather than say CogSci it's possible to never encounter even anemic instrumental models of this in a pragmatic linguistics class... :/

Actually a child's doodle is immensely valuable.

They also don't understand the basic concept of losses. "It's only a loss if you sell" is alive and well in the Bitcoin space. They'll even argue this if you teach them the difference between realized and unrealized losses.

On the other side of the same coin there is realised and unrealised gains. You only gained something if you sold it at profit.

In general any speculation have been in very weird headspace recent years. Have to see if it continues, but moving forward things might be different.

Sounds like you might become a fan of the Austrian School theory of subjective value and (in the context of Crypto currency) of Mises's regression theorem of money.

https://consultingbyrpm.com/blog/2014/03/on-bitcoin-and-ludw...