Context vs Inherent Value
Can value be separated from context?
You can’t separate value from context. Where does value come from?
It always comes from context.
Let’s talk about gold, water, social graphs, and behavior on distributed ledgers and blockchains.
If you’re stuck in the desert, you want water, not gold. (Ideally, you want a way out of the desert before you die!) The context of being stuck in the desert makes the water more immediately valuable. On the other hand, if you’re stuck in the desert and find a well-stocked trader, the gold might be helpful. Again, it’s the context that actually matters.
In meme-coin land, there is only value as long as you can get exit liquidity at or above the level you entered. The context is that there will be another buyer that is ape-ing in after you so that you can profit as they enter.
Finally, considering Facebook, Instagram, Twitter, and other centralized tech companies’ power, you need to view social graphs (your network on the site). Here, your digital identity is the token, and embedding that identity into your social network graph is the context for the token. When centralized companies own the system for embedding, which is what they do now, they can and will ask for rent in some form, which is acceptable and fair. The value of your identity on any of these platforms is inseparable from the context of the platform. Unless you can export your social graph, which gives you optionality and power over your digital network effect.
There’s an excellent way to characterize this line of reasoning in terms of probability. Let A and B be asset types; at any given time, we’re interested in the likelihood of being able to find an exchange route from asset A to B; at a transaction cost that is less than the value of the assets being transferred for the transferring party (in some base asset class; or in terms of the assets themselves). For obvious reasons, if the transaction cost is too high, there’s no point in transferring the assets. There are some A’s for which there are many B’s, for example, US dollars or Bitcoin. And, there are some A’s for which there are very few B’s, like fine art and football clubs.
In a struggling labor market, it’s harder for people to find employment.
A key is only helpful if you can find the correct lockbox.
And so forth…
“What is the sound of one hand clapping?” — Zen kaon.
Emptiness is the sound of one hand clapping: It’s all relational.