Bitcoins now has an intrinsic value!

In my previous post I discussed the subject of Bitcoin's intrinsic value vs. the intrinsic value of gold. I found a definition of an intrinsic theory of value as what an item costs to produce. However, I know many gold bugs would argue that I should be taking some other definition, something closer to say, numismatic definition of intrinsic value, where a coin has intrinsic value equal to the amount of precious metal it has. Similarly, there is an argument of money that is backed by something having intrinsic value, like gold certificate having intrinsic value since it is backed by gold.

Lets appeal to such people now.

I don't consider myself rich, but I do have a few silver Casascius coins around. I hereby declare that I will do my best to hold at all times 4 ounces of silver in such coins and I will use them to back all bitcoins created in the past or future, at the exchange rate of 5.25 million bitcoins for 1 silver 1 ounce coin (exchanges will only be carried out in integer amount of coins - they will not be redeemable in parts). Baring forces beyond my control (natural disasters, theft, government mandate), I will hold myself accountable to exchange bitcoins at that exchange rate no matter whether Bitcoins are accepted by any exchange, merchant or other peer.

There, bitcoins now have intrinsic value. It might be a quite shitty intrinsic value, but it's a value - don't let anyone else tell you otherwise! How much is this all worth? At the current exchange rate of 20 USD per ounce, we are talking at about 1 cent being worth 2625BTC.

So there you have it. Since bitcoins now have an intrinsic value, they are on the same level as gold as to whether they are money according to Peter Schiff's video. If someone tells you bitcoins don't have intrinsic value, send them here and prove them wrong. ;)

PS: If someone is willing to increase the "intrinsic value of Bitcoin", contact me and we can try to arrange something. I will accept any precious metal I can safely and conveniently store ;).

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