Where does value come from you may think? How come Chris believes only silver or gold ie something tangible is worth something? How come Jamie thinks cryptocurrencies are worth nothing more than what the next buyer is willing to pay for it, only to launch a own JPM coin slightly after making the statement?
It's a highly debated subject so let's start where they agree on cryptocurrencies: Chris and Jamie both seem to agree that the technology ie blockchain, that fueled the cryptocurrencies is worth something. However because everybody can launch a cryptocurrency with the blockchain technology the current widely accepted crypto's are not worth anything.
Something is not right here. Let me give you an example. Nowadays people still accept printed paper as a form of money ie dollar, euro yen. Does that mean if I print my own paper money that the current paper currencies become worthless? I guess both a yes and a no can do.
I think it has everything with the first question. Where does value come from?
It is only you and I who can give things value. We exchange our energy and our time for something that we think is valuable, whether we are conscious about it or not. Acceptance is key. So to say that the widely accepted crypto's are not worth anything is to say that all the energy and time it took for people to accept and hodl crypto's is not worth anything. Does that sound right to you?
For example you may think I am mad for accepting poop as a form of payment. But what if told you I am a farmer and I'm going to use the poop as a fertilizer. And that means it holds value for me.
You may prefer hodling cryptocurrencies because you like to travel and the private keys are quite mobile and easy to use. Imagine traveling with a ton of poop. Not quite practical and even dangerous because it could explode.
Cryptocurrencies can off-course also explode but they won't leave a stinking mess everywhere. On the other hand I can't see how I can use some private keys as a successful fertilizer, even if the private keys are from a “shit-coin”.
Jamie's “cryptocurrencies are worth nothing more than what the next buyer is willing to pay for it” is not complete without also stating that cryptocurrencies are worth nothing less than what the next hodler is willing to settle for. Half a truth is often a great lie – Benjamin Franklin.
What I want to illustrate is that everything can be accepted as a form of money. Throughout history we've seen animals, skins, herbs, minerals, tools, paper and precious metals function as a form of money.
It all boils down to perspective and acceptance. One needs to perceive the item as precious ie limited, scarce, easy to use, (pseudo)anonymous and divisible, to accept it. Which means that anything including cryptocurrencies has a backing as long as there are people accepting cryptocurrencies. The people accepting cryptocurrencies function as a form of gold.
You sometimes hear people talking about that gold or silver have no backing which is quite funny and a bit of a mindfuck. Only something with a questionable credibility ie a third party with lets say a paper money needed this backing mechanism because of it's fastly changing perspective ie inflation, rising food- and asset prices.
A true money like gold, silver and cryptocurrencies don't need the traditional backing-mechanisme ie gold, oil or violence. They just need you and me and no third party. Fiat-currencies on the other hand, is like someone showing you a picture of a horse on a paper and claiming the paper is worth the same as the horse. You just hope that there is a horse somewhere waiting to be picked up.
Let's imagine you are in the desert. You have one btc, one golden and one silver coin and a thousand euro's. You are thirsty and there is no-one around. What kind of purpose do these items serve if there is no one to trade with? Non, whatsoever. I think you would trade everything for a cup of water just to survive.
Utility is something what could influence your perspective of money. Let's say you live in a digitized environment with crazy bankers who think they can solve everything through the endless expansion of the currency supply. Do you think the items you had in the desert still serve no purpose or do you want a cup of water?
Don't get me wrong guys. I think Chris Duane has done a great job igniting the fire of freedom but Jamie Dimon not so much. Quite the contrary.