Introduction
Whenever the topic of the value of BTC (Bitcoin) is discussed, people often find themselves in endless debates. Even with the use of the three treasures - left-hand Austrian, right-hand Marxian - and reciting Keynes, it seems that the problem remains unresolved.
Some say BTC is worthless garbage.
Some say BTC has no intrinsic value but has a price.
Some say BTC has value because it is scarce.
Some say BTC has value because it is the product of immense electrical energy condensation.
Some say BTC has value because miners provide significant computational power for security.
Some say BTC has value due to gray demands such as money laundering by criminals.
Some say BTC has value because it satisfies the needs of storing and transferring value for people.
The opinions vary, and there is no consensus.
Some approach the issue from the perspective of production and supply, while others look at it from the viewpoint of consumption and demand, and still others analyze it through the lens of transactions and price discovery. Does value come from production, or does it come from demand? We cannot stay on the surface; instead, we need to delve deeper and explore the origin of demand.
Meaning of Demand
In economics, the term “demand” is typically considered in relation to its counterpart, “supply.”
The existence of these two terms presupposes the presence of a market.
To delve into the original logic, we cannot start with the assumption that the market already exists and only examine what happens afterward. However, many people may limit their thinkings to the idea that the market naturally exists after its birth, which is naive and childish.
Friends familiar with how the internet works might know about a famous debate in the product management field, the distinction between “need” and “want.”
Chinese word formation provides us with insight: “demand” is composed of “need” and “request.” “Need” is the self-requirement, a kind of desire. “Request” is the method of obtaining satisfaction for that desire. This method is “request,” not “grab,” not “steal,” and not “deceive.”
Product managers focus on the “need” part to explain the intrinsic motivation behind human behavior. Here, Maslow’s hierarchy of needs is often brought up. Freud’s psychoanalysis and libido are also guiding principles for the early development of explicit content business on the internet.
Economics does not concern itself with the “need” part but only with the “request” part. As the Austrian economic master Mises said, economics is only concerned with purposeful human action, not the forces and factors that prompt someone to act, nor the purpose of the action, whether it is right or wrong, noble or base. (Mises, “Human Action,” Chapter 1, Human Action)
Therefore, the focus of demand lies in the word “request.” People seek because of their needs. “Need” relates to one’s own needs, while “request” is about external requisition. “Need” is the relationship between things and people, while “request” is the relationship between people. Just as rice can satisfy my desire to eat and defines the use value of rice, it is a “need.” However, when I open an app and order takeout from a restaurant, seeking rice from the restaurant, it is a relationship between me and the restaurant, a “request.”
The relationship between things and people defines the use value of things, just as rice fills my stomach, defining the use value of rice. The relationship between people defines the exchange value of things, just as the relationship between a restaurant and me defines the exchange value of rice and takeout. What we call value is economic value, exchange value. (Marx, “Capital,” Volume 1, Chapter 1, Commodities)
Thus, there must be society first, then social relationships between people, and finally, the birth of value. Without society, without social relationships, there is no value to speak of. In this sense, relationships are value, and value is relationships.
With society established, value created, and markets formed, one of the significant functions of the market is price discovery, reflecting value as a monetary measure. At this point, money becomes a sacred totem, and the quantity of money becomes the best proof of value.
When you work overtime to complete a perfect task, and your boss, after reviewing it, pats you on the shoulder and says, “Young man, you did a great job. The work outcome has great value!” Your boss is not praising the neatness of your code, the beauty of your documentation, or the attractiveness of your data. The true, subconscious meaning is undoubtedly: this thing will definitely make the company a lot of money.
One common reason for the psychological distress of employees is often due to the misalignment between their evaluation criteria for work and their boss’s criteria. If what you perceive as beautiful and perfect cannot help your boss make a fortune, it is considered worthless.
The only value of employees is in how much money they can make for their bosses.
In the eyes of the boss, there is only money; otherwise, they wouldn’t be a qualified boss and would eventually be eliminated by the market. Money has long transformed into value itself.
The market provides everyone with the strictest judgment criterion: demand. If what you create cannot meet market demand, you won’t make money, and you have no value.
The brilliant Sir Keynes focused on demand itself. By printing money to stimulate demand, companies can make money, creating an illusion that our products are still valuable. This drives the entire economic machine. This is the Keynesianism widely adopted in the world today.
Keynes’s Inner OS: As long as money is printed frantically, even dog feces can soar.
Regardless of what people claim to be their economic philosophy, when it comes to real market investments with real money and real risks, they all fall at the feet of Keynes. Otherwise, why do investors worldwide always pay the utmost attention to the monetary policy of the Federal Reserve!
Prerequisites of Demand
Through the analysis above, we understand that the prerequisites of demand are society, value, and market.
If everyone is a superman, capable of doing everything on their own without needing help from others, there would be no society, and value would be meaningless.
If there is no peaceful environment, no legal norms, and it is easier to rob, steal, and deceive than to engage in fair exchange, there would be no market, and demand would have no roots.
For example, if a tiger wants to eat a rabbit, is this demand? Clearly not.
But if you want to eat chicken, it is a demand. Why? Not because you cannot defeat a chicken but because the chicken has an owner. Your relationship with the chicken owner is a social relationship that defines value and demand. This is the essence and significance of property rights.
If you say you can kill the chicken owner and then eat his chicken, you also kill demand, kill the value of the chicken. When the property rights of the chicken owner over the chicken are destroyed, the chicken loses its value and only the use value of being eaten remains.
Peace requires constraints on violence, and laws are built on the foundation of the deterrent power of punishment. This requires stronger violence beyond the capabilities of individuals to deter and punish individuals who use violence to destroy property rights and undermine value. Hence, the state is born.
The reason demand arises lies in repeated evaluations, not using unfair exchange means but employing other methods
such as robbing, stealing, and cheating, which have higher costs and greater risks, leading back to the rules of the market.
If all the above prerequisites are lost, even if only some are lost, robbers, thieves, and fraudsters will flood the land. The so-called market demand and consumers will cease to exist.
Most of the time, economics focuses on what happens inside the market. This often causes people who study economics, intentionally or unintentionally, to overlook various prerequisites outside and above the market, creating blind spots in their thinking.
Bitcoin’s immense computational power is a form of special violence, and Bitcoin’s cryptographic mathematics is a form of special law. These things precisely exist beyond the market.
This is why the more someone claims to be well-versed in economics, the more they may fail to understand Bitcoin. Because Bitcoin has too much, too many things that fall within the blind spots of their thinking.
Human Demand and Value of Bitcoin
In summary, we have a rough understanding of the origin of demand.
So why do people have a genuine demand for Bitcoin?
Bitcoin provides an alternative to state violence, competing with it and offering unique protection for property rights. This is an important prerequisite for generating demand and achieving value.
If you can’t rob, steal, or cheat, you are left with only the path of fair exchange. Fair exchange allows value to be realized.
Most altcoins cannot compete with high-level violence and instead depend on state violence to exist. Therefore, they cannot become substitutes and competitors for the latter, fail to provide property rights protection beyond state violence, and do not have unique value.
Demand begins with the human heart, and seeking comes from strength.
Bitcoin, with its indestructible computational power, catalyzes people’s needs into demand. Demand further transforms into value, and value further takes shape as price.
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