Why is a collectible issued by a company like Panini (company owning the rights of NFL, FIFA, NBA collectible cards) is more valuable than a simple copy? Why USD are more valuable than most of other currencies? Why some currencies are move valuable than USD? Why gold is valuable? Why Bitcoin is valuable? If we understand how humans perceive value from a human behavior point point everything start making sense. Also we can definitely understand why a cryptocurrency like Bitcoin will always outperform any other means for representing value in the context of global digital societies.
There are two ways to look at perceived value: Objectively, and from the perspective of human behavior and the need for belonging to a network of like-minded people:
- From the perspective of objective measures:
- Panini is the owner of the issuing licenses and it determines the number of cards being issued and the security measures they use to enforce authenticity.
- We can also argue the same for FIAT money, being backed by the political, economic and/or religious power of a certain country.
- From the perspective of gold, due to its utility value and applicability to different industries.
- From the perspective of human behavior, the need for belonging to a network/ecosystem of people and the fact that in general humans value their sense of belonging more than the “truth”
- People value their sense of immersion into the NFL, NBA, Champions League and other ‘affinity groups’ more than those who might own the right to issue the card and how trustworthy that entity could be.
- This is the “F” of FIAT (Fiduciary=Faith) money’s perceived value. For people, it is often more important to belong to a given societal ecosystem limited by physical boundaries than to admit that money is merely a sheet of paper.
- From a gold perspective, one could argue that this is mainly due to its scarcity and the “shiny” characteristic (Jewelry), which triggers a sense of exclusivity belonging to certain social groups. Think about the Olympic games and their Gold, Silver, Bronze Medals. Why is the gold medal “better” than the bronze one? Just because of imputed belonging beliefs.
How humans perceive value is a complex system in continuous evolution. Empirical evidence demonstrates that belonging beliefs are more powerful than any objective utility way to measure value. A good example of that is why FIAT money (with no or minimal actual value “backing it up” other than the promise of the country) was able to replace gold, and why countries now routinely carry deficits that are multiples of annual GDP.
FIAT money is based on herd or belonging beliefs constrained by physical boundaries (a sovereign country). Bitcoin and public blockchains in general are based on borderless, apolitical global belonging beliefs without physical boundaries. (see: The evolution of the 3 functions of money)
Public blockchains will almost always outweigh any narrow value perception based on physical sovereignty constraints when it comes to appealing to the belonging beliefs of humans.