What is value?

Overnight, BTC continues to consolidate above 30k. It’s a garbage time for traders but a golden time for hodlers. The longer it consolidates, the more fear it instills in many people. The more afraid they become, the less inclined they are to accumulate more or even consider reducing their holdings for safety. There is a superstitious saying among technical analysis enthusiasts, “Consolidation leads to a drop.” Jiao Chain doesn’t understand this saying. Drop? In which direction will it drop? If that’s the case, wouldn’t a 1/BTC candlestick chart indicate a rise after prolonged consolidation? It shows that technical analysis, if not entirely useless, is at least largely ineffective.

Some may scoff and ask: If technical analysis is useless, does that mean we should focus on value investing? Well, let’s hear your opinion. What value does BTC have?

To answer the question of “What value does BTC have?”, we must first ask a more fundamental question: What is value?

Essentially, the answers to this question constitute the entire field of economics. Different answers and the supporting theories form different economic schools of thought. However, we won’t delve into the profound and abstract economic theories here. Jiao Chain simply wants to share some brief thoughts and understanding on this question.


Firstly, in the most basic language, when we say that something has value to someone, we mean that it is beneficial to their interests. For example, bread has value to Zhang San because eating it can alleviate hunger, or Zhang San can sell the bread and make money. Similarly, Xiao Li has value to Lao Wang because Xiao Li can take care of Lao Wang’s daily needs, or Xiao Li can work for Lao Wang and help him sell products to earn money.

The ability to be eaten and taken care of, such as bread and Xiao Li’s services, constitutes non-economic value. The ability to be sold or exchanged, such as bread being sold for money or Xiao Li earning money, constitutes economic value. Some economic schools refer to non-economic value as “use value” or “practical value,” and economic value as “exchange value.” However, can’t we consider the value of Lao Wang employing Xiao Li as a form of use value? Therefore, the value derived from Lao Wang’s employment of Xiao Li can also be called use value. It’s evident that the ambiguity of language often confuses people. No wonder Ludwig Wittgenstein said that language is the limit of human reason.

Some economic schools focus on non-economic value and discover the principle of diminishing marginal utility. However, this principle doesn’t hold true for economic value. Eating bread can satisfy hunger, and non-economic value diminishes or disappears as it is satisfied. However, no one would complain about having too much money. People’s pursuit of economic value is insatiable, and there is no diminishing marginal utility in this context.

Deep down, humans tend to prioritize economic value over non-economic value, even though, ironically, all economic value must ultimately be tied to some form of non-economic value, or else it devolves into financial speculation. In a family, the person who works full-time at home often receives less recognition, while the one who goes out to work and earns money often has a higher status. In a company, those involved in product technology often have less say, while the top-performing salesperson who directly generates revenue can influence major decisions. In a country, the hardworking lower-class people have little social status, while the idle capitalist players suffering from depression are listed on the rich list and admired by the world.


Secondly, economic value is highly regarded because we need to benefit others. What does it mean to benefit others? It means enabling someone to gain value. Why do we benefit others? The fundamental reason is that we have needs that can only be fulfilled by others.

I have five pieces of bread. After eating three pieces, I am no longer hungry. The remaining two pieces have no non-economic value to me. Overall, the value of three pieces of bread is reduced to zero.

But if I give the remaining two pieces of bread to Xiao Wang, he eats them and is no longer hungry. The two pieces of bread regain their non-economic value in Xiao Wang’s hands. The entire “society” realizes the value of all five pieces of bread (non-economic value) collectively.

Let’s denote non-economic value as vn and economic value as ve.

In the case of me eating the bread, it contributes overall: vn(three pieces of bread) = vn(3).

In the case of Xiao Wang and me eating the bread together, it contributes overall: vn(three pieces of bread) + vn(two pieces of bread) = vn(3) + vn(2) = vn(5). Sharing maximizes the non-economic value of the bread.

However, this kind of gratuitous sharing is limited to a network of acquaintances or even family. In primitive tribal societies, it could extend to a tribe or a few neighboring tribes at most. If we want to share on a larger scale, it becomes impossible because we cannot guarantee that others will not become selfish individuals who only take without giving.

Thus, if Xiao Wang and I are not related, I would have to exchange the two pieces of bread for something he has that I need. The common medium

of exchange we use today is currency.

Once economic exchange occurs, the bread gains an additional layer of economic value, ve. Overall, it contributes: vn(three pieces of bread) + ve(two pieces of bread) + vn(two pieces of bread) = vn(3) + ve(2) + vn(2) = v(7).

Can we simply add vn(3) and ve(2) together? Mathematically, we cannot directly add values with different dimensions. However, psychologically, we can add them together. I feel that I have gained the total value of five pieces of bread (although I have confused non-economic value with economic value, as mentioned earlier).

The creation of ve(2) value through economic exchange represents the indebtedness of society to the recipient of the currency. This value is only realized when, at some future time, you can exchange the currency equivalent to ve(2) for something you desire. This is the logic behind the dominant debt-based monetary system in today’s world. The US dollar is the largest and most widely used debt-based currency globally.

What if we didn’t use debt-based currency? Instead, we used dried fish as a medium of exchange equivalent to ve(2). In this case, I would exchange for a tangible value: the actual N dried fish I receive represents a combination of the non-economic value I derive from eating them and the economic value of being able to trade them for the goods I need from others.

Bitcoin is that dried fish—never decaying, easily divisible, easily identifiable, and can be sent via the Internet—a better form of dried fish.

Regardless, our willingness to engage in exchange and maximize value is not due to our kindness or pure altruism, but because we are interdependent and need each other to fulfill our needs.


Thirdly, merely needing each other is not enough; there must also be clear and inalienable ownership rights. Ownership and property rights are closely related to sovereignty.

Humans have a need for pigs (to eat pork), but they don’t engage in economic exchange with pigs. In the novel “Journey to the West,” monsters have a need to eat humans, but they also don’t engage in economic exchange with humans most of the time.

When you lose ownership rights over yourself, you lose sovereignty; when you lose ownership rights over your property, you lose property rights. When you lose sovereignty and property rights, you also lose the value of exchanging with others.

We are not just talking about personal ownership, such as the advocacy of “personal sovereignty.” Individual power is too weak when faced with organized groups or powerful Leviathans, making it unable to defend itself. Therefore, modern individuals must rely on the protection of the state to safeguard their ownership rights and engage in fair trade on that foundation.

From the moment the first human picked up a tree branch or a stone from the ground and used it as a weapon, they established ownership over that branch or stone through their labor. This acquisition of ownership is natural.

Because another person cannot violently seize the branch or stone from his hand, they must offer something else they own in exchange. Ownership rights emerge from this exchange.

Bitcoin ensures that your private keys are your coins through cryptography and powerful computational power. No matter how powerful an individual or organization may be, they cannot seize your coins from you. Only in this way can your ownership of Bitcoin be a truly secure right.

When ownership is lost, economic exchange ceases to exist.

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