TD₿: Bitcoin has no intrinsic value: Debunked by Arman the Parman
TL;DR Money has no backing – it’s just valuable as money. What does have backing, is currency.
Hey Bitcoiners,
The other day, I was spending some time at the old folks home near my apartment, talking to some of the residents over there. I like to go there around the holidays in case some of the residents have no family to visit them, but I also do it for selfish reasons. I enjoy talking to older people. I always learn something as they share their wisdom, and I often walk away from those conversations with a new perspective on life.
One such conversation was with a resident I’ll call Charlie. I explained to Charlie that I work in Bitcoin, and he replied, “Bitcoin! What the hell is Bitcoin!?” I then went on to try to explain Bitcoin to an 84-year-old man.
At first, I admit, I thought it was going to be a lost cause. Charlie found it hard to understand how bitcoin was like gold because it wasn’t tangible. He didn’t get how it was real money if you couldn’t hold it in your hand. He chuckled, “It’s not backed by anything real, is it!?”
I went on to explain how gold is not backed by anything either, it’s just money. Gold stands on its own monetary properties, and so does bitcoin. There’s no need to back it. It was at that moment that I might as well have seen a giant lightbulb flash over his bald head.
He said, “Well, it certainly sounds better than paper money! Ever since Nixon, it’s all been funny money!” I replied, “Exactly. You get it!” His mood then changed, and his eyes went to the ground. Charlie solemnly said, “Oh, I get it, Sam. I know it all too well.”
Charlie then went on to tell me an incredible story about how he had been a boy during the Hungarian Hyperinflation of 1946. He explained how he had watched his family’s life savings get destroyed overnight, and how it changed his whole life. He suddenly had to start working at a young age, food was hard to come by, and his father was never the same again. Eventually, his parents decided to leave their homeland for brighter prospects in America.
Charlie had seen firsthand what happens when currency is truly backed by nothing. He had lived to see what happens when currencies die. Ever since then, Charlie said he made sure to live frugally and hold assets that could not be inflated away, like gold.
Charlie said there was one problem with gold though, “I still have gold buried somewhere in my old backyard! I forgot where I put the dang gold!” When he said that, I couldn’t help but think about how difficult it is to transport and store gold, but I let it slide. Charlie was laughing about it, and he told me how he likes to imagine some young kid stumbling upon his small gold fortune one day.
I bring up this story because I found it fascinating that Charlie, at his age, could quickly wrap his head around Bitcoin because he had directly experienced what happens when a currency is not backed by anything, and it gets printed into oblivion. Charlie appreciates sound money principles not because he studied them, but because he has lived through what happens when we stray from them.
Oftentimes, Bitcoin critics will say things like, “Bitcoin isn’t backed by anything.” To me, this reveals that they do not understand what money actually is, nor have they thought about how and why currencies die.
Arman the Parman wrote this great rebuttal piece to the age-old critique that “Bitcoin has no intrinsic value” that’s well worth sharing. (04/26/2022)
It is said that history repeats itself because the lessons of hard times die off with those who experienced them. Charlie is a prime example of an older individual who understands the importance of sound money because he has lived through hard times.
Since 1971, we have been in the era of free-floating fiat currencies backed by nothing. With Bitcoin, the hope is we can move back towards sound money principles so that we can build a society on a solid foundation and avoid hyperinflationary events like the one experienced by Charlie and his family long ago.
Tick tock next block,
Sam Callahan
PS - Call your grandma or grandpa.
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Meme of the Day
Excellent story.
🧡