I have a hard time believing the intrinsic value of anything is zero.
A bitcoin is list of signed transactions that is encoded within a chain of blocks verified by a proof of work. A list of transactions is only considered a valid bitcoin if it is accepted by the largest existing block chain.
So a bitcoin must follow certain rules if it is to be considered to be valid, and this means it has certain intrinsic properties. For instance: if you have the private key that signed the last transaction for the bitcoin, you can extend the bitcoin with a new transaction, and that bitcoin will still be considered valid.
So I'd argue that being able to cryptographically transfer a bitcoin is an intrinsic property of the bitcoin, and therefore something that gives a bitcoin intrinsic value (assuming you think this property is useful).
I have a hard time believing the intrinsic value of anything is zero.
Well shit man, I have some random bytes I'd like to sell you. How much are you willing to pay for 'em?
So I'd argue that being able to cryptographically transfer a bitcoin is an intrinsic property of the bitcoin, and therefore something that gives a bitcoin intrinsic value (assuming you think this property is useful).
Like I've said before (and nobody has yet taken me up on this offer), I'm selling Bitcoin Prime. This has the following properties:
1. Every string of bits that is a bitcoin is also a bitcoin prime
2. All bitcoins prime currently in existence are owned by me.
Does my huge stock of bitcoins prime have any intrinsic value? I think not. But if anyone disagrees them I'm more than willing to part with my entire collection for a hundred US dollars. (I reserve the right to invent bitcoin double-prime as soon as our transaction is completed...)
My point: even if a bitcoin is a string with some unique properties you don't actually own that string of bits in any useful sense, you only own it by convention with other bitcoin users. Bitcoin is just one of an infinite number of possible equivalent systems, and just happens to be the only one in which there's any real money floating around at the moment.
You may have a point with the random bytes. That is as close to worthless as makes no difference.
But regarding your "Bitcoin Prime": your system isn't backed by proof of work. My point is that bitcoins are not just a set of random bytes, or even a chain of signed transactions. They are also secured by a proof of work chain, and without this they are not bitcoins, by definition.
So even though you can come up with a set of bitcoin primes, one for each bitcoin, there's no proof of work backing your system. You can't reuse the proof of work that backs bitcoins without knowing all of the private keys, so you'd have to start from scratch.
I have a hard time believing the intrinsic value of anything is zero.
Think of the contrast between “value for use” and “value for exchange”. A gold coin, even if you have no interest in exchanging it, can be pretty to look at, or melted down for jewelry. A share of stock, even if it is not being traded, gives you voting rights and possibly dividends. Fiat currency has damn close to zero use-value, but at least you can use it to pay taxes to the country that issue it.
By contrast, without a market for bitcoins, a bitcoin is just a record of spent CPU power.
Not quite. The CPU power spent on a bitcoin guarantees that a certain level of work must be performed to reverse an existing transaction. In other words, an inherent property of a bitcoin is that it is hard to double-spend.
Creating a token of information that cannot be spent more than once is hard to achieve without relying on a central trusted authority, so I'd argue this inherent property of bitcoins is useful and valuable.
Those factors affect a bitcoin’s exchange value: for the purpose of exchange, a bitcoin is arguably more valuable than, say, an original haiku. But the difficulty in double-spending bitcoins is irrelevant if there is nothing to spend one on in the first place.
(On the flip side, there are things whose use-value exceeds their exchange-value. If, for example, I am hungry and I have one fresh fish, I would derive benefit from cooking the fish and eating it, but if I’m not standing in a fish market, it’s probably not worth the effort for me to sell it.)
The overall bitcoin protocol has some use-value: even if people stopped trading bitcoins, the protocol for running the system would be a worthy object of study for cryptologists. But you can derive that kind of benefit from the protocol without owning a single bitcoin.
If we can agree that the protocol has value, then the only question is whether or not an individual bitcoin exists outside the protocol. I'd argue it doesn't. You can't point to a sequence of bytes and say "that's a bitcoin".
Instead, a bitcoin exists only as an agreement between the CPU-majority in the network. They agree that user A solved a block, and therefore is entitled to new coins, and they agree that user A transferred that coin to user B, and so forth. But there's no piece of data that specifically represents a bitcoin. Outside of the bitcoin network, bitcoins don't exist, and therefore it's meaningless to talk about them in isolation.
A bitcoin is list of signed transactions that is encoded within a chain of blocks verified by a proof of work. A list of transactions is only considered a valid bitcoin if it is accepted by the largest existing block chain.
So a bitcoin must follow certain rules if it is to be considered to be valid, and this means it has certain intrinsic properties. For instance: if you have the private key that signed the last transaction for the bitcoin, you can extend the bitcoin with a new transaction, and that bitcoin will still be considered valid.
So I'd argue that being able to cryptographically transfer a bitcoin is an intrinsic property of the bitcoin, and therefore something that gives a bitcoin intrinsic value (assuming you think this property is useful).