Consume Value

Posted by Unspector Blog on Wednesday, July 21, 2021

You cannot consume value

Value is, what happens between two process steps. Something with a value of X goes in and something with a value of X+n comes out. This means everything we can buy is worth a lot more than its parts: You can buy sand, oil and aluminum, but you won’t have a MacBook when you do.

Consuming value can be most easily imagined to exist, when we eat food: Someone needed to buy the ingredients and prepare the meal, then we eat it and it is gone. Sure, we might feel enriched by eating a great meal and may even be more motivated afterwards, which would put “eating food” as process step into the value generation process. But more often than not, the added value is simply lost.

Or is it? We pay the MacBook and the food with our own money, which changes hands and keeps on existing, even though it is not with us anymore, but with someone else. This must be true for every added value everytime, which means we are participating in an inflationary system, just by buying and producing stuff, which is worth more than its parts.

And this is where speculation comes in: Buy anything, with the intent to sell it at a later date and you expose yourself to the risk of ending on the losing side of this transaction. This is where all generated value gets consumed. You may have bought a house, a share or an NFT. If its value goes up? Good for you! But if it goes down, value has just been consumed.

Or has it? You paid someone to buy that NFT, who has your money now, the difference between your bid and your ask has been felt by you, but the monetary value stays in the system.

Value cannot be consumed. And this is a comforting thought: Whatever you trade or create, the world is richer for it.