Bitcoin cannot be used, it can only be exchanged

People regularly confuse use value for exchange value. Here’s some examples of actually using something.

Things with use value:
Milk – You can drink it
House – Live in it
Smartphone – Chat with friends and browse the web
Clothes – You wear it

Things without use value:
Fiat money – Nothing,  it’s just a medium of exchange
Bitcoin – Nothing (and it’s barely used as a medium of exchange anymore)

Like Bitcoin, fiat money has no use value. It other words, fiat money has no intrinsic value. Take the US dollar. The dollar bill itself cannot be used for anything. And a $1 bill has the exact same use value as a $100 bill; both zero. They’re just rectangles of paper. You can’t use it as a Post-It because it’s already covered with print. In fact, you wouldn’t even want to wipe your ass with it. The only thing you can do with a Dollar is exchange it for a good or service. And that’s fine. Because currency does not need intrinsic value for it to lend itself to being a medium of exchange.

Finally, a rule of thumb to assess this: To see if something has use value, simply ask yourself this: “Would people still want to buy it if they could never ever sell it?” For many things, the answer is yes. Think of houses, paintings, chairs, televisions, and even dividend stocks.. But if the answer is no, then it probably has no use value, and people are mostly buying it for its exchange value.

So in a nutshell; do not confuse use value for exchange value. Thank you.

June 27, 2022

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