The Value of Value

Diamond hands, YOLOs, hundred-baggers – if you haven’t been living under a rock, you’ve probably heard of /r/WallStreetBets’ recent battle to short squeeze Citadel on Gamestop stock. If Twitter is more your jam, you’ve probably seen Elon Musk’s midnight tweeting on Dogecoin, doubling the price of $DOGE in a minute, only to see it plummet immediately downward in five.

And while it’s easy to write it off as a one-off, internet shenanigans at play. Consider many market indicators like $SPY or $DJI rallied for more than 70% during a period where many local businesses have shut down, and unemployment is still near 8%.

Bananas. 🍌

These recent events have gotten me thinking about value and how things can have value that is not intrinsic.

Ethereum, $TSLA, $GME, Dogecoin all have value, but only value that’s given to it by consensus of tens of thousands of people.

The dollar has value, but only because it is backed by the belief of billions of people. If enough people would buy a Bitcoin for nearly $60,000, then the monetary value of Bitcoin becomes $60,000. The same goes for NFTs. Or Pokemon cards. 🤷‍♂️

Extrinsic and intrinsic value don’t necessarily have to move in tandem. Though it would be nice if they did.