The Value of Intrinsic Utility

Value is subjective. This is easy to prove because prices are always set at levels where both the buyer and the seller are satisfied.

Prices are set above the value given by sellers and lower than the value given by buyers. The price reflects a middle-ground where both sides of the trade feel that they benefit. The price is objective, but the value is subjective.

This is central to all economic thinking, and is therefore something no-one should attempt to deny. However, it doesn't follow from this that there's no such thing as intrinsic value.

Some things are undeniably useful beyond trade while other things aren't. This has to do with utility, which we can broadly divide into into two types. One is trade, the other is intrinsic.

The intrinsic utility of things has to do with what they can be used for beyond trade. Apples have intrinsic utility because they can be consumed. Gold has intrinsic utility because it can be fashioned into jewellery, and it can be used in industry. Apples and gold have intrinsic utility.

All utility has value. Trade has value, and intrinsic utility has value. This can be objectively stated even if value itself is subjective. When something derives at least some part of its value from intrinsic utility, we can say that such a thing has intrinsic value. But if there's no intrinsic utility, there's no intrinsic value.

Bitcoin is an example of something that has no intrinsic value. It cannot be consumed and it cannot be used to fashion anything in the real world. Unlike apples and gold, there's no intrinsic utility in Bitcoin.

Intrinsic utility itself is not subjective. We cannot deny the intrinsic utility of apples and piece of metal because their intrinsic utility is independent of whether we value this utility high or low. Similarly, we cannot deny that Bitcoin has no intrinsic utility. We may value Bitcoin highly for its potential in trade, but we cannot say that there's intrinsic utility in Bitcoin because there simply is none. Only things with intrinsic utility have intrinsic value.

Hence, we can conclude that intrinsic value is real and a valid way to describe some things as opposed to other things.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link