The collapse of the May contracts for American oil (WTI) has led to negative prices for black gold becoming apparent for the first time in stock market history. It is, therefore, more pressing than ever to compare the understanding of values of digital versus physical assets. Why natural gas and ether gas have the same function, it is anything but easy to trade physical goods on futures exchanges and why the digital space needs a new economic view.
The statement “Bitcoin has no intrinsic value” because it does not exist in the physical world or how a company generates returns, persists. Of course, the value of investments is always socially constructed. But especially with digital values, it quickly becomes abstract. Especially since the concept of “value” is subject to different perspectives.
Oil, however, requires less abstraction than bitcoin. Nevertheless, the collapse of the oil price contracts (WTI) for May has shown more than ever what shaky legs the value proposition of scarce, ergo supposedly valuable resources can stand on. Hardly anyone would have thought that black gold could have a negative price.
In their functioning as “raw material,” there are certain parallels between cryptocurrencies and fossil fuels such as oil or gas. It is not for nothing that the Ethereum unit for operating blockchain applications is referred to as “gas.” Just like filling up a car with petrol, you need to have cryptocurrencies or tokens to use smart contracts. No tokens, no transaction. Instead of physical machines, one operates virtual ones. At Bitcoin, funding costs arise through digital mining instead of physical. To say that oil and gold have an intrinsic value, but Bitcoin is not, is, therefore, only partially logical.
We are currently facing the challenge of developing awareness of digital raw materials and cultivating them in society. We have to learn to understand that even in the digital space, things can rarely be limited. Nor should physical…