[fastball]

Cryptos have intrinsic value because they drive efficiency of value exchange. Specifically they allow for trustless exchange of value, which in an increasingly globalized world has become appealing for various reasons.

Some cryptos have value beyond that, like ETH, because the Ethereum network itself has intrinsic value, and ETH is the only thing you can use to pay the Gas fees if you want a program running on the network.

[drdeca]

Hm, is there a theory of pricing ease-of-transfer ? Of course, it would have to depend on the preferences and whatnot, but still, seems like something that there should be some good theory of, but I haven’t heard of one.

Side note: Aren’t there tokens that sort of have a kind of stored gas? Like, you can cash it in to get a refund of some of the gas cost of the transaction?

[fastball]

Yep, I'm not sure what exactly you call that in econ. What I do know is that this is the entire thesis behind Visa, Paypal, etc. who have some of the highest market caps in the world. If they have value for facilitating transactions then cryptos do too.

WRT the gas fee thing: yes, technically you can send a miner whatever you want in order to incentivize them to include your tx in a block, but the only thing baked in is ETH. Additionally, after the London hard fork (slated for release next month), EIP-1559 will be live which changes the fee system to become a "burn" fee system rather than a "tip to miner" fee system, which will force all fees to be paid in ETH (and algorithmically determined, rather than somewhat arbitrarily picking a fee that you hope is high enough for miners to include your tx).

[drdeca]

ok, but when you are sending money via visa or paypal or what have you, you aren't sending shares of stock in that company, you are sending something denominated in dollars.

The theory around "prices people are willing to pay for ease of transactions" seems probably not that tricky,

the theory around "the value people will assign to a good based on ease of transfer of that good" seems like it would be more complicated and confusing.

[fastball]

I think you're overcontemplating it. Sure, the means of transaction and the network responsible for the transaction are one in the same, but how does that fundamentally change the equation? If anything it makes cryptos more valuable, not less, because you only need the single token and you can do both (have a share in the network and transact on the network).

[drdeca]

I’m just saying the theory of how to price it is quite different!

The value of a PayPal share is tied to the expected future profit of PayPal, to how much transaction fees will be total, and how much costs will be.

This is a distinct question from the value that a user assigns to the ability to make transactions using PayPal, which, I suppose corresponds to the demand curve of how many transactions/ how much is transacted, given different transaction fee sizes.

Of course, an analogous demand curve should also apply to bitcoin (or what have you).

But this demand curve doesn’t seem enough to give an explanation for what price to expect. (Not just “it doesn’t explain the actual price” but rather, I don’t see how it by itself would explain any price.)

[WanderPanda]

I think the most valuable thing that makes bitcoin efficient for transactions is its cheap verifiability in comparison to gold where there is a long history of counterfeiting. Additionally Bitcoin is easier to transfer (in most cases) and harder to confiscate