Bitcoin's intrinsic value requires use cases

Price is what you pay, value is what you get. Everyone is talking about Bitcoin's historical, current, and future prices. But what is its real value? The Bitcoin value proposition refers to the unique attributes and benefits that Bitcoin offers, which provide reasons for its adoption and investment. To increase its value, Bitcoin must grow less through greed and more through need.

The true value of Bitcoin is the higher of its external and internal value. The extrinsic value is based on the expectation that Bitcoin will fulfil a monetary function in the future. The market is already honouring this assumption with a monetary premium. However, the acceptance of this narrative is subject to political and market-related developments, which explains the high volatility of the Bitcoin price.

Furthermore, the intrinsic value of Bitcoin must be taken into account, which is determined by a fundamental analysis of substance, yield and other content-related characteristics. Since Bitcoin is not backed by third parties and does not generate any cash flow, its intrinsic value lies in the concrete benefits that an investment in Bitcoin offers to the investor.

The definition of value is commonly the utility of a good multiplied by its scalability in relation to its availability. In this context, scalability is sometimes described as "people" and availability as "scarcity" or "rarity". In the following, Bitcoin's value is discussed and analyzed. Its use cases need to be demystified so real advantages can be understood, if any. All these Bitcoin buzz words like self-custody, pseudonymity, decentralization, and transparency are more often than not misunderstood and overrated. Hype is no replacement for true value. 

The compilation above has shown that when determining the value of Bitcoin, a distinction must be made between its present value advantages, and thus the benefits that already exist today, and the increase in value that may (or may not) qarise in the future. Without the prospects of a dystopian future, Bitcoin largely lacks a unique selling point. It is a nerdy niche product that offers limited advantages to a pretty limited group of users. For this, it has a moderate rarity that does not necessarily have to be interpreted as scarcity. 

As a consequence, Bitcoin can be seen as a bet on a dark future and insurance against madness. The Bitcoin price, i.e. the betting odds, is rightly rising constantly. In this respect, there is for Bitcoin a rosy future in an increasingly dark world. For the typical investor, therefore, it makes sense to hodl on to his Bitcoin until the full range of use cases becomes commercially relevant.

The current rather moderate price of Bitcoin is not being paid for an already viable use case, but for the proof of concept for a future global reserve currency. It is based on the expectation that its unique characteristics will be needed, and, at that future point in time, Bitcoin will no longer be a financial asset. Instead, it will be money.