With its president making it the first country to recognize bitcoin as legal tender, and inviting miners to set up shop among its volcanoes, El Salvador is currently at the epicenter of the Bitcoin universe. And even though these developments are relatively new, an embrace of BTC has been demonstrably underway in the country’s everyday use of bitcoin as a financial rail.
“Monthly bitcoin transfers of under $1,000 — a proxy for money sent to the country from Salvadorans working abroad — totalled $1.7 million in May compared to $424,000 a year earlier,” according to data from blockchain analysis firm Chainalysis, shared exclusively with Reuters. “Such transfers hit a peak of $2.5 million in March, though a comparison with the previous year was unavailable.”
Projects like Bitcoin Beach, a circular bitcoin economy established in the country’s El Zonte community, have already demonstrated how people in El Salvador can benefit from using bitcoin for everyday purchases. And the recent moves this month from its president will doubtlessly increase the use of Bitcoin on a state level. But this growing trend in smaller bitcoin transfers demonstrates that Salvadorans are finding Bitcoin as a critical tool for international remittances, upon which they are significantly dependent.
“El Salvador is heavily reliant on remittances,” per Reuters. “In 2019, transfers using traditional money totalled nearly $6 billion — around a fifth of GDP — one of the highest ratios in the world.”
If the technical infrastructure needed to facilitate bitcoin transactions is established, BTC can be an incredibly efficient method for sending and receiving remittances. It is free from the third parties and regulators that can hamper or collect fees on such payments and with additional layers like the Lightning Network, transactions can be near-instantaneous and incredibly cheap.
Lightning Network payments platform Strike launched for customers in El Salvador in March and quickly became one of the most downloaded apps in the country.
Dr. Rettler is an assistant professor of Philosophy at the University of Wyoming.
In this essay, I want to clarify and respond to a prevalent assertion regarding bitcoin — that “bitcoin has no intrinsic value.” Two preliminary things to note. First, this is not used merely as a normatively neutral descriptive statement; it’s stated as a criticism. It usually appears in the following kind of argument, often with premises elided: it’s bad to lack intrinsic value. Bitcoin lacks intrinsic value. So bitcoin is bad. Or maybe: it’s not worth investing in things that lack intrinsic value. Bitcoin lacks intrinsic value. So, it’s not worth investing in bitcoin.
Second, “intrinsic value” has a particular meaning here — one that’s used in investing. Owning bitcoin is often put in contrast to owning stock in a company that produces a good or service. In virtue of the company producing a good or service and receiving money for the good or service, stock in that company is said to have intrinsic value. Methods of calculation of the intrinsic value of a stock usually involve calculating the value of the assets the company has and/or the expected future earnings. Bitcoin is not a company and produces no goods or services — so it lacks intrinsic value. So goes the criticism.
I don’t want to argue that bitcoin has intrinsic value. And I don’t want to argue that this usage of “intrinsic value” is illegitimate. People can use terms however they want, as long as they explain what they mean when they’re using them.
Instead, I want to offer a different way of thinking about intrinsic value — one that we’ve inherited from Aristotle, Kant, and Mill. This way of thinking about intrinsic value will guide us as we consider what kind of value bitcoin does have, and what gives it that value.
On the traditional way of thinking about intrinsic value, the intrinsic value of a thing is the value that it has in itself — that is, not in relation to anything else. That is, after all, what the word “intrinsic” means. The contrast is extrinsic value, which is the value a thing has in virtue of its relation to other things. It’s easy to think about the extrinsic value a thing has, because you can think of the value it has for you. For example, a bicycle has extrinsic value because it gets me from place to place. Wine has extrinsic value because it tastes good. Money has extrinsic value because we can use it to buy other things. Extrinsic value is easy. It’s much more difficult to determine whether something has value intrinsically.
Maybe bitcoin doesn’t have intrinsic value in the sense that investors use the term. But might it have intrinsic value on this understanding of intrinsic value? And if not, does it differ in this respect from stocks and precious metals? We can start to get a handle on this question by asking: on this classic understanding of intrinsic value, do stocks of companies have value in themselves? No. They are valuable only to the extent that the company and the workers are valuable. Then we can ask: do companies have value in themselves? Even here the answer is no. They are all valuable in virtue of their relations to other things — money, customers, employees, products, and so on. Let’s take it even one step further: does anything that any company produces have value in itself? An iPhone, a watch, an airplane, a massage, a tax return, a database, a baseball card…
One way to answer this question of anything is to ask, why is that thing valuable? If you take there to be a sensible answer to that question, then that means that you think there is some further thing in virtue of which the original thing is valuable. And so you think that the thing isn’t intrinsically valuable. For example, we can ask why an iPhone is valuable. An iPhone is valuable perhaps in part because it connects us to information and loved ones. So, it’s valuable because it brings about something of value — connection to information and connection to loved ones. If it didn’t do that, it wouldn’t be valuable. So, it’s valuable, but not intrinsically valuable. But even being connected to information and loved ones seems not to be intrinsically valuable, because we can answer “why is being connected to information good?” with “it gives us knowledge” and “it helps us navigate the world” and we can answer “why is being connected to loved ones good?” with “it makes them happy and it makes me happy.” If those are right, then being connected to information and loved ones is not intrinsically valuable — it’s valuable in virtue of making us happy.
In fact, many philosophers think that the only thing that has intrinsic value is happiness. There are a few reasons for this. One reason is that if you ask “why is happiness valuable?” it’s hard or maybe even impossible to answer. You might even assume that the person who asked didn’t know what happiness was. You’d be tempted to say, “It just is. It’s valuable for its own sake.” Another reason is that “It makes me happy” is (when true) always a good answer to “Why is X valuable?” — and we don’t feel the need to follow up with “why is being happy valuable?” A third reason is that it seems plausible that everything else in the world — Apple stock, iPhones, bitcoin, friendship, love, etc — is pursued to the extent that it can bring happiness (or bring something that brings happiness, or bring something that brings something that brings happiness, or…).
There is, of course, the further question of what happiness is. That’s much harder to say. Some say pleasure, some say a flourishing life, some say the life of a mind in accord with reason… We won’t get any more into that. There are also people who think there are other things that have intrinsic value — maybe friendship, maybe people, maybe God… There are many candidates. I don’t intend to settle the question here; what’s important to note is that neither bitcoin nor any other investment would have intrinsic value on any of these theories. I’ll proceed on the assumption that it’s just happiness, but you can add to the list anything else you think has value independent of everything outside it and is pursued for its own sake.
So, happiness and maybe some other things have intrinsic value, and everything else is pursued to the extent that it brings happiness either directly or indirectly.
Bitcoin, then, is not intrinsically valuable. But that doesn’t mean it’s not valuable. In fact, bitcoin shares these features with every concrete material object, and many immaterial things as well — if the above is correct, everything except happiness. So it’s no criticism of bitcoin to say that it doesn’t have intrinsic value, since only happiness does.
But is bitcoin valuable? That’s a different question than whether bitcoin is intrinsically valuable, but it’s a no less important one. If bitcoin is valuable, then given that it’s not intrinsically valuable, it’s valuable in relation to other things. In particular, it’s valuable in virtue of its relation to happiness. So, does bitcoin bring people happiness, whether directly or indirectly?
In order to determine that, we should consider the reasons people buy bitcoin. Some people buy it because their local currency is hyperinflating and they lack access to other stores of value, but they have access to bitcoin. (I wrote about this here.) Some people buy bitcoin because their local government censors their transactions, and they can’t buy the things they want with their local currency. Some people buy bitcoin because they want to pay for things digitally but distrust PayPal, Visa, and other huge corporations and they don’t want to give those companies their personal financial information. Some people buy it because they think other people will find it valuable and they’ll be able to sell it for more fiat currency than they bought it for. For all of these people, if you ask them why they are exchanging other things for bitcoin, these people are likely to give a series of answers that ends with saying that they think that having bitcoin is more likely to make them happy than having the other things. And these people number in the millions.
Clearly many people think bitcoin is valuable. They reveal this by exchanging things like their government-backed currencies for bitcoin. Some people think index funds and Apple stock are valuable. They reveal this by exchanging things such as government-backed currencies for index funds and Apple stock. But like bitcoin, index funds and Apple don’t have intrinsic value. Rather, their value depends solely on what people are willing to pay for them, which is based on their features. In that respect, they’re just like *gasp* bitcoin!
So, bitcoin — like everything except happiness — has no intrinsic value. Bitcoin’s value is determined by how it brings about happiness for the people who use it. Just like pretty much everything else.
This is a guest post by Dr. Bradley Ritter. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
Greetings President Muhammadu Buhari,
The hope of Nigeria lies within this generation. I am proudly a Nigerian descendant living in America and am a proponent of Bitcoin. I write to urge the Nigerian government to pursue economic independence and financial sovereignty by pursuing a national Bitcoin standard. Soon every nation will be faced with this decision, but those who seize the present moment proactively as we have just witnessed in El Salvador, will enjoy significant advantages globally for generations to come.
It is no secret that the current global economic environment is worrisome and unsustainable. Sadly, the fate of the Nigerian economy is in the hands of global central bankers who do not represent the best interests of the Nigerian people. Despite the challenges we face, the resilience of Nigerians continues to inspire. The Nigerian society enjoys more favorable conditions than many of its neighbors. However, even greater opportunity awaits with the adoption of national action in favor of a Bitcoin standard.
The tone of this letter is meant to convey urgency both in terms of the forthcoming economic despair and the limited window to act on this opportunity with fierce boldness and strong leadership. While the challenges of COVID-19 and increased global unrest continue to instill fear in the hearts and minds of citizens everywhere, Nigerians can claim international greatness by rising to the occasion that our unique times require.
Nations such as Iran, Russia, China and Kenya have been reportedly mining or otherwise utilizing bitcoin, often as a means to circumvent U.S. sanctions which prevent them from full participation in the global financial system. Other nations like Barbados, Singapore and Malta have moved to become “bitcoin friendly” in an effort to attract wealth and human capital through migration. And this week, El Salvador became the world’s first nation to require merchants to accept bitcoin as legal tender. I’m proposing an equally aggressive approach to national Bitcoin adoption which would significantly bolster every sector of the Nigerian economy and revitalize the spirit of every Nigerian domestically and abroad.
Bitcoin is not controlled, managed or operated by any single entity. It is an innovation that will surpass the automobile or the internet in terms of its impact on humanity. Nigeria does not need to ask for permission from any other nation nor acquire a license nor secure a trade agreement from any corporation to reshape its economy with Bitcoin. All that is required is a vision for a new future and an allocation of its own national resources to pursue a Bitcoin standard.
The primary reason for urgently pursuing and executing a national plan for adoption is the finite supply of bitcoin. There will only ever be 21 million bitcoin in circulation. This hard cap on the supply makes bitcoin even more verifiably finite than gold. As this simple yet unique property of scarcity becomes more widely understood, the economic laws of supply and demand will create a global frenzy to acquire as much bitcoin as possible, before it’s too late. This momentum for acquiring bitcoin is already underway throughout the world and it is rapidly accelerating. In recent months, continued economic turmoil and uncertainty has created increased curiosity in
bitcoin. Multiple institutional investors have announced sizable bitcoin allocations in their portfolios, some citing it as a hedge against a weakening U.S. dollar.
The Nigerian government, along with every other government in the world, has a once in a generation opportunity to claim global prominence by rising to the occasion. Many other politicians in Latin America have signalled their intention to pursue similar moves as El Salvador. In leading the next global financial shift, Nigeria can create prosperity for its citizens in a manner that requires no bloodshed, no election and no resistance. Such a proposition may seem too good to be true, and these ambitions certainly require thorough investigation, scrutiny and debate. Conversely, a delay in pursuing a national plan for bitcoin adoption will risk a scenario where Nigeria is left behind and its citizens excluded from the possibility of significant wealth creation and preservation. As world leaders become more aware of the chance to make history, pursuit of bitcoin will be widespread. We offer our full support, a willingness to voluntarily consult and commitment to activate every resource available to us in order to see Nigeria pursue a Bitcoin standard.
Nigeria must never carry last,
One of the most exciting moments for me personally at Bitcoin 2021 was getting the chance to interview Dr. Ron Paul. A true pioneer in libertarianism, Dr. Paul is an advocate for so many of the underlying principles present in Bitcoin. It was truly an honor and privilege to get a quick word from him on his thoughts about Bitcoin. Be sure to watch his Bitcoin 2021 speech on YouTube after reading our interview below.
Casey Carrillo: First of all, thank you so much for joining us here, Dr. Ron Paul. We really appreciate you coming. So many of us see you as a hero of ours, so thank you again.
To start off, how were you first introduced to Bitcoin?
Dr. Ron Paul: It was probably indirectly by just reading about it. When it first started, I didn’t hear much about it because I wasn’t into that. Probably just the business stations, magazines, and the freedom movement, they started thinking about it. I think I associate it more with libertarianism, and I don’t think anyone resents me associating Bitcoin with libertarianism, and I made that big point that the answers will come from dealing with the issue of liberty. Liberty is the answer, then all the quirks that have to be worked out, with government and everything else, are much easier when we live in a free society where people are allowed to do what they want.
Carrillo: Absolutely, I think there is a connection between liberty and Bitcoin that can’t be severed. Going off of that, what do you think the impact of permissionless sound money will be on the world in the long term?
Paul: I don’t really know; I know there are a lot of opinions, but I think only time will tell. There are some unpredictables. One would be the government; one would be “what’s the world like?” I think things are going to get worse socially, but how do we react? And if it works that Bitcoin can operate in a parallel manner under the right circumstances, that could be very beneficial. If there was a society that had more respect for liberty, it makes it a lot easier. Then you don’t have to dodge people that are trying to close you down because they don’t want competition. And libertarians should be quite willing to have competition.
Carrillo: How do you think the U.S. could foster better innovation towards Bitcoin, specifically U.S. policymakers?
Paul: While there are others who would know more about that, my idea is very simple; the least amount of government is the best. Just get them out of the way. There will always be risk in things that we do. In new things there will be risk, but the person that’s doing it that benefit, they should also have the same risk That’s why you don’t wanna say, “Let’s have a government commission to set up some rules on how we’re going to allow Bitcoin to expand themselves and where they go.” I don’t like that. I want people who know about the issue to not have any interference from the government.
Carrillo: What makes you most hopeful about what you’re seeing in the Bitcoin community going forward?
Paul: I think the whole idea. I noticed it a lot at this meeting [Bitcoin 2021]. Sometimes if I go to a meeting, I might not throw the word libertarian around and liberty because you know they might be more conservative, or independent, or democrats, but I’m always trying to introduce it. Here, what I found is that in this audience [Bitcoiners] I don’t think I offended anybody by putting the two terms together; Bitcoin as a libertarian idea. Because I think that’s where I heard about it first when libertarians got into computers before. I think the association is very clear that it is perfectly okay. And I think I even ribbed the mayor [Francis Suarez] about it, and he took it very well.
And I don’t know if I spent enough time on it, is that when people do things, you don’t endorse what they’re doing. Like I did with the marijuana. I want it to be legal, but I don’t do it, or I don’t care about that. It’s because people have the right to do it, and they also have the right to deal with the consequences.
Carrillo: I absolutely agree, I really appreciate you taking the time to do this interview with me Dr. Paul, and I appreciate you being here at Bitcoin 2021 with us. Thanks again.
Watch Dr. Ron Paul’s talk at Bitcoin 2021 on YouTube.
This interview with Dhruv Bansal was conducted by myself in an effort to obtain valuable insight into a rather visionary Bitcoiners mind, and I believe my mission was accomplished. Bansal’s answers are profound and thought-provoking, giving us a glimpse into his thoughts on Bitcoin at large. Be sure to check out his talk at Bitcoin 2021 here after reading the edited transcript of our interview below.
Casey Carrillo: Hi everyone, I have here Dhruv Bansal, co-founder and CSO at Unchained Capital.
I was lucky enough to have an email Q and A with Mr. Bansal, and we agreed to sit down here at Bitcoin 2021, where I’ve had the pleasure to finally meet him in person. First of all, welcome to Bitcoin 2021, and I hope you are enjoying your time here.
Dhruv Bansal: Thanks Casey, it looks like I’m going to be a little overwhelmed, it looks like a huge conference.
Carrillo: Absolutely. So, jumping right in: in your previous article you mentioned that you’re excited to see the Bitcoin-inspired discoveries other scientists make within their respective fields. What, in your opinion, gives Bitcoin this capacity to inspire different ways of thinking about things?
Bansal: I think anytime humanity discovers a new principle of organization, governance, construction or material science, it affects everything. I think that’s true for ideas of evolution and for ideas of computation. I think we’re seeing that with Bitcoin. Bitcoin is interdisciplinary. One of the things it does is that it distributes decision-making, order matching, reality and truth in a way that we’ve never seen happen before, which gives Bitcoin a lot of its strength and resilience and is what makes it unique. I would love to see scientists and researchers of all stripes apply those kinds of thoughts and methods to other kinds of systems. My talk with Ryan is attempting to apply some of this thinking to things like the internet, other networks and civilization. But I think Bitcoin can go beyond that: it can teach us how to deal with systems that don’t have any definite state in a given moment in time but that eventually become consistent. We know this from databases quite intimately, but to see it not only affect a database in an esoteric programming context but to see normal people talking about notions of forks and eventual consistency is really powerful. I love to see that learning wash over humanity as a whole and allow us to be more informed of the trade-offs and rules of distributed systems.
Carrillo: I find your business, Unchained Capital, extremely interesting. What is your personal interpretation of the macroeconomic conditions surrounding the surge in bitcoins price, and do you believe the conditions we’re in currently are set to continue?
Bansal: That’s an interesting question—and I’m certainly not an economist or anybody you should look to for macroeconomic commentary—but what I’ll mention is that like a lot of Bitcoiners I expected the price to increase in 2021 tremendously. Why? History, stock-to-flow, four-year cycles. It feels a little bit silly to say that just because it happened four years ago it’s going to happen again, but I have admitted to myself that that’s kind of what I believe. And here we are: it’s happening again and it’s been happening. Now, truthfully, it’s not happening merely because it’s four years from the last time. It’s happening for real reasons. Most people who are buying bitcoin probably don’t care that four years ago was the halvening or that last year we had a halvening. It’s so curious to me, believing that the price would increase, to watch things like the COVID pandemic happen, to watch things like money printing go crazy over the last year, and to watch people pay attention to that and connect it to bitcoin. And lo and behold, the price started to increase. And as much as I expected it would, I was still shocked to understand why it did. Obviously nobody expected the COVID pandemic. There are probably other reasons too, which if I was more of a macroeconomic thinker I would be able to draw out. To me that’s been the most interesting part of this whole process, knowing that it would happen but not really knowing why and then seeing the why and understanding thesense behind why it happened.
Carrillo: Going off that, I suppose it may be believed that these conditions drive the price in the short term. Are you of the personal belief that in the long term these things are irrelevant to bitcoin and we’re experiencing a sort of water flowing down a mountain, a sort of inevitability?
Bansal: I think that’s a nice way to put it. I mean yes, this is something Ryan and I were talking about: Bitcoin has already won. And I’m not saying there’s no risk or no concern and we should all just be chill and not try to work hard to make this asset class better, richer, stronger and more robust. We should be doing those things. But essentially I believe it’s already won. That, in your words, it’s kind of like we’re just going to be going downhill in the next fifty years as Bitcoin takes over every aspect of society and affects it in some meaningful way. Nevertheless, even water going downhill has to contend with things in its way like obstacles, boulders, whatever you like. And there are a lot of those. So I think when we see the price retrace by 50%, that affects my business very strongly, it affects so many people here [Bitcoin 2021], and so when I see that happen I kinda think “well, we’re still just rolling down hill, aren’t we?” Like, we’ll be right back at $60,000 in a couple months, we’ll maybe cross $100,000 after that. I still tend to be extremely optimistic. Of course I could be wrong and it won’t work out this way, but hopefully it continues to do, on the largest scale, the thing I think it’s going to do, which is increase in price tremendously over the next few decades.
Carrillo: Having conducted this interview at Bitcoin 2021, I want to ask you what you’re most looking forward to at the conference.
Bansal: Oh that’s an easy answer. There are so many people here that part of me is worried that, while walking through the conference and all the events, there’s gonna be so much noise and chaos. But the excitement is that there are so many people here, so many of my friends and colleagues, people I’ve been reading the last few years and admiring from a distance. And I’m getting to meet them, have drinks, go on walks with them. You know, the chance to really dig in and have that kind of conversation you can only have in person is what’s so great about conferences in general, and in particular that’s what’s going to be so great about this one for me.
I really appreciate Mr. Bansal taking the time to answer my questions at Bitcoin 2021. Thanks for reading, and be sure to check out his talk at the conference on YouTube.
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Prior to the Bitcoin 2021 conference, “Bitcoin Magazine Podcast” host Christian Keroles sat down with keynote speaker and incredible Bitcoin thinker Allen Farrington for one of his very first podcasts appearances. This interview covered two of Farrington’s seminal works and why Farrington prefers to investigate Bitcoin’s cultural and literature alignments over the typical framing of economics, trading and technology.
First, Keroles and Farrington dove into the latter’s article, “The Capital Strip Mine.” The article is a roughly 30-minute read and it dives into why the current fiat system is effectively strip mining the U.S. and current financial system of its resources. Farrington compares what is going on in capital markets to the strip mining techniques that have become popular in the modern day. Farrington laments that, because of fiat money’s poor incentives, civilization has taken on a growth-at-all-costs mentality and has thrown away all regard for long-term thinking and preservation.
Second, they got into Farrington’s blockbuster article” Bitcoin Is Venice, Bitcoin Is.” In this article, Farrington educates the reader about the anomaly that is Venice, Italy at its peak. Venice was a magical mixture of sound money, capitalism and free society when many of its neighbors were still operating in futility. Venice, in contrast to other large cities, was a bastion for the arts, wealth and thought. Farrington details how Bitcoin’s sounds and fair monetary properties provide a framework for humanity to return back to Venice-like conditions and hopefully prosperity.
Lastly, Keroles and Farrington discussed Farrington’s plan’s for his now live Bitcoin 2021 keynote presentation titled, “The Milk Of Paradise: Bitcoin And The Western Canon.” The speech discussed how Western literature, culture and historical lessons can all be fit into the values and properties that Bitcoin codifies into a physical network on nodes that maintain consensus in a decentralized way. Please enjoy this fascinating conversation with Allen Farrington.