Recently I entered the world of cryptocurrencies, and this has lead me to really start to question the intrinsic nature of things. Everytime I speak to someone or hear others talk about Bitcoin and its comparison to physical gold, the intrinsic value of gold is always mentioned. This intrinsic value of gold is often used to establish the justification for the purchase of gold, and Bitcoin's lack of intrinsic value is often used as a reason to be cautious of purchasing cryptocurrencies. Cryptocurrency expert, Jeff Berwick, host a channel on youtube entitled"The Dollar Vigilante", and in his most recent video stated that he advises his followers to have a financial portfolio whereby 90% of one's holdings consist of gold. He too uses the intrinsic nature of gold as part of his justification for its purchase and use a value store. However, to establish the intrinsic nature of things presupposes that man is capable of developing an essential understanding of the thing (gold in this case) purported to have intrinsic value. I will attempt to explain why these discussions on intrinsic value have no true meaning and should not be used as a reason to purchase or avoid an asset.
The definition of the word "intrinsic" according to Webster's Dictionary is as follows: "belonging to the essential nature or constitution of a thing". 17th Century philosopher, John Locke, offers great insight into the discussion of intrinsic value in his "Essay Concerning Human Understanding." He argues that essential understanding of things is unknown to man, furthermore essential understanding is not discernible. Rather man understanding of the universe is derived through the observation of objects nominal essence. This is because man learns/understands from observing features of an individual object or thing or its nominal essence, and that our senses do not allow man to experience things at an essential level.
Let's apply Locke's distinction of nominal essence vs essential essence(Intrinsic value) to gold. When we state discuss gold's value as a 5K year old value store, or its malleability, or it karat weight, color, etc. , we are simply commenting on the observable features of gold and not the essence of Gold. To understand the Gold essence we would need what it is that produces these as well as all the features of gold. The features of gold, as well as that of any object are infinite as it is self evident that human understanding is a limitless pursuit. The invention of the scale gave early man a deeper understanding of the measure of gold, the microscope provided a deeper understanding of golds appearance, the computer provided a deeper understanding of golds elemental nature. So as time provided man with different ways to understand gold in the past so to with the passage of time will man be be able to observe gold in a more fundamental way. However, we will never reach an essential understanding of gold (or know its intrinsic value) as this would indicate that man is capable of divine understanding (in this case divine understanding means total and complete understanding).
Since Jeff Berwick nor any other man is capable of this type of understanding then we can not meaningfully discuss the intrinsic nature of anything. As our senses and condition within the universe prevent us from having essential understanding then it is useless for man to use his perception of an objects intrinsic value as a basis for any action. Simply, nothing has intrinsic value. Value comes simply from man's adoption of an object as a value store. An object's value (Bitcoin, gold, etc) comes simply from the number of humans that desire to have the said object. The more people that want an item/thing the more that item/thing value. Let me know your thoughts by replying below.