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>> They said they might look at selling when the value of all the Bitcoin in circulation approaches the value of all gold in the world — some $7 trillion or $8

by TheBiv 9y ago

>> They said they might look at selling when the value of all the Bitcoin in circulation approaches the value of all gold in the world — some $7 trillion or $8 trillion compared with the $310 billion value of all Bitcoin on Tuesday — given that they think Bitcoin is set to replace gold as a rare commodity. But then Tyler Winklevoss questioned even that, pointing out the ways that he believes Bitcoin is better than gold. I found this to be the most fascinating part of the article.

felipeko 9y ago
There's a difference about Gold's rarity and Bitcoin's. Gold is rare on its kind and rare on its abundance. It may be hard to mine more gold, but it's way harder to find another gold-like commodity. Bitcoin is only rare in the abundance sense. It is hard to mine more bitcoin, but it's pretty easy to find a (arguably better) substitute for what it does. I can agree with it being better (having more utility) than gold, though. So I'd agree that the sum of all e-coins will surpass gold, but I see no reason for Bitcoin to do it alone.
- WorldMaker 9y ago
  Bitcoin definitely isn't rare in kind as we've already seen how relatively "easy" it is to fork. Could just fork Bitcoin infinitely as one way to deal with its supposed scarcity. Bitcoin isn't even rare in the abundance sense if you consider that how hard it is to mine new coins is merely a function of a mathematical curve that can be adjusted as a software change. Certainly any change to the mining difficulty and/or coin pool ceiling would be hugely controversial, but it's not like it's mathematically impossible merely politically improbable, for now.
  - derekp7 9y ago
    The thing that is rare is the total amount of mining nodes behind bitcoin. That is what you are buying into, is mindshare. Of course the mining nodes are mostly profit driven. If another coin had a higher profit margin, the miners would switch over to that coin.
    - WorldMaker 9y ago
      That rarity too is also software controlled based on the difficulty curve. Bitcoin doesn't have to boil the oceans, it could make mining easy enough again that transactions could be mined in a coffee break on an average person's smart phone's GPU. As I said, the scarcity of Bitcoin is much more a political structure than an inherent nature of Bitcoin. The miners control Bitcoin so much as anyone does and it is their political intent as much as anything else that creates any scarcity in Bitcoin at all.
  - pfisch 9y ago
    Forking bitcoin doesn't create more bitcoins. It creates something else that is not bitcoins any longer that will not be accepted anywhere.
    - WorldMaker 9y ago
      The philosophical and political reality of what makes a "real" Bitcoin that people can accept is outside of the question of scarcity. The fact that a Bitcoin can be endlessly "duplicated", at the whims of software developers and/or miners, regardless of how likely or improbable they may be able to be "spent" should definitely give people some pause in their Tulip mania that Bitcoins are not by their nature inherently a scarce commodity. They are scarce only so far as the political reality in which they are transacted continues to keep them scarce.
      - pfisch 9y ago
        But they are in fact different. Maybe not as different as gold vs silver but similar in that gold and silver also have completely artificial values driven by hype.
- KaoruAoiShiho 9y ago
  What do you mean gold is rare on its own kind? Aren't there tons of other pretty metals? There doesn't seem to be any unique property of gold (other than sociological) that would help it defend against competitors like bitcoin or any other new asset.
  - scaryspooky 9y ago
    Gold is insanely useful as a conductive metal.
  - felipeko 9y ago
    You can't find another precious metal that will have the rarity of gold and it's "non deterioration" property, both that made gold what it is (it's also a really useful commodity). But i agree that's not enough to defend against competitors like Bitcoin, but the same cannot be said of Bitcoin. Other than sociological factors (that are arguably much stronger on gold), there's nothing that would help it defend against others e-coins.
    - gruez 9y ago
      >You can't find another precious metal that will have the rarity of gold and it's "non deterioration" property, both that made gold what it is (it's also a really useful commodity). platinum. i will agree that gold is easier to tell apart (it's yellow) than platinum. although realistically that's a moot point because you're going to want to do chemical tests when dealing in non-trivial amounts of precious metals.
      - felipeko 9y ago
        You got me! :) Now find a few hundreds more and we will be closer (not really) to Bitcoin's rarity of kind.
      - munchbunny 9y ago
        Which is even more rare for when you need to deal with issues like environmental temperatures going over 800C. The same argument applies to platinum: it has essential physical applications that are hard to replicate, so it will retain a high baseline value just on the merits of "we need it for essential hardware." If a cryptocurrency manages to pull off the software equivalent of "essential engineering applications," then the conversation about cryptocurrencies will change dramatically. As it stands, blockchains will probably prove to be situationally useful, but blockchain =/= cryptocurrency.
- deleted 9y ago
  [deleted]
- saalweachter 9y ago
  Another critical difference is that there are commodity uses of gold. The price of gold will never go to zero; it might go to $100 or $10 per oz if all speculation and hoarding were removed from the market but it wouldn't go to $0.
  - jstanley 9y ago
    And what's that got to do with bitcoin? If you're going to assert that gold can't go to $0 and imply that bitcoin can, you need to also give a good reason why bitcoin can go to $0.
    - fastball 9y ago
      At one point in time, Bitcoin was worthless. Therefore it is provable that it can be worthless. At no point in history has gold been worthless. As far as you and I know, gold has had worth as long as society has had the capability to get it.
      - erikpukinskis 9y ago
        False. At one point Mussolini was alive. Therefore it is provable that Mussolini could live again. Sorry, try again. At one point, these grains of sand were in this glass. Then I poured them into the ocean. But they were in the glass so they could be in there again. Except no, no they couldn’t. The 2nd law of thermodynamics makes many things non-repeatable.
        fastball 9y ago
        You are making the opposite claim to mine, they are not comparable. Try these on for size: Before his birth, Mussolini was not alive. Therefore, it is possible that he could not be alive again. At one point, there were no grains of sand in this glass. Therefore it is possible that there will be no grains of sand in this glass again. Thermodynamics is really not the tool you should bring to bear in this conversation. Entropy dictates that eventually everything will be worthless, and that includes Bitcoin. The price of Bitcoin is not an irreversible product of entropy, despite what some investors might wish.
- dahdum 9y ago
  "So I'd agree that the sum of all e-coins will surpass gold, but I see no reason for Bitcoin to do it alone." We could pick any number of gold-like commmodities, but like Bitcoin, gold has had a history of large expenditures to acquire it. Both are buoyed by that past. So many tokens and blockchains are coming out with incremental improvements or niche capabilities, but in the end I think consolidation of market cap is inevitable. I think it ends up Bitcoin as store of value, Ethereum as contracts/api and a large amount of application specific token/chains. Most applications would be backed by ethereum (like most tokens are now), but ones like Ripple could definitely be top 5.
  - hyprCoin 9y ago
    I respectfully disagree with your conclusion. There isn't one company for internet searches and there isn't one provider for online video content. Why should there be just a handful of currencies? The natural state of a healthy ecosystem includes competition and variety.
    - zaidf 9y ago
      There is only a handful of companies for internet search, no?
    - dahdum 9y ago
      75% of all searches are Google, 10% Baidu, and 8% Bing. Youtube represents the vast majority of online video content. Netflix the vast majority of on demand television. I only mean to say a handful will capture the vast majority of market share/cap.
      - atwebb 9y ago
        For now, those companies were different 10 years ago, Netflix has it's own issues if my viewing options are the same as everyone else's these days.
      - hyprCoin 9y ago
        Google is losing market share of searches last I looked. Baidu searches have doubled in percentage marketshare. Youtube and netflix are both on demand television as are amazon instant, modern cable tv subscriptions, and a variety of specific channels (hbo, showtime, etc). There will definitely be use case dominance, but they may not be the same whales as we currently see.
- lsadam0 9y ago
  We live in a world where the near-ish future could bring us asteroid mining. Something that could devastate the rarity of abundance of gold.
  - felipeko 9y ago
    That is true, and this should really factor in the decline of gold in the future, but this does not help Bitcoin against it's e-coins rivals. And isn't Bitcoin hackable in a near-ish future with quantum computing?
    - sumedh 9y ago
      > quantum computing? I have been hearing that for last 15 years.
    - lsadam0 9y ago
      Yes, in it’s current state it most certainly is. Though as I recall there are already proposed updates to address this threat.
- pishpash 9y ago
  It's not even rare in abundance. Every fork (Bitcoin Cash!?) defeats its supposed non-abundance.
- mtgx 9y ago
  That doesn't make much sense. I think you set up a rather arbitrary definition for this. Here's my attempt: Gold is just a "metal" just like Bitcoin is a "cryptocurrency." There are many types of metals and other materials. Some can directly replace gold while others have way different uses - just like cryptocurrencies.
dpflan 9y ago
Interesting. What are the economics arguments for Bitcoin replacing gold? Does the “ease of transaction” of Bitcoin provide an implicit value over gold and is that factored into the price of Bitcoin as maybe a fixed value?
- KaoruAoiShiho 9y ago
  Gold is just non-scalable and is bound to die eventually. If you think about it, if you're going to start a new country and a new federal reserve, how much sense does it make to ship tons of gold to Mars for example? Any store of value that makes sense for humanity in the long term has to be both digital and reflect the work/real value creation process that matters in the future. I'm not sure it's going to be bitcoin but it's definitely not gold.
  - meric 9y ago
    Gold is definitely useful for building the spacecraft going to Mars though. They cover the entire spacecraft in the stuff. It might be too useful for Mars to use as reserve! https://www.itmtrading.com/blog/aerospace-gold-the-next-frontier/ https://www.itmtrading.com/blog/aerospace-gold-the-next-fron... https://www.geek.com/news/geek-answers-why-does-nasa-use-so-much-gold-foil-1568610/ https://www.geek.com/news/geek-answers-why-does-nasa-use-so-...
    - dpflan 9y ago
      :) thanks!
- apeace 9y ago
  > Does the “ease of transaction” of Bitcoin provide an implicit value over gold... I know this doesn't answer your question but it's still relevant. Currently Bitcoin is the most expensive, least convenient currency available. According to estimatefee.com it would take about a $25 fee in order to get your transaction through in an hour. My point is that nothing about Bitcoin will ever really be "implicit" like it is with gold. Gold exists as it exists, cryptocurrencies only have the properties that are created by the developers, and/or are run on machines by participants in the network. In Bitcoin's case, the developers and the network have not been able to handle the load of all the transactions. I used to be in the "Bitcoin is the new gold" camp. But after seeing what's happened with Bitcoin, I'm certain it's not that simple.
QAPereo 9y ago
To me it just sounded like talk designed to pump the price now.
epx 9y ago
Good luck trying to make a fountain pen nib with a cryptocoin :)
0wing 9y ago
If you understand the computer science behind Bitcoin, you'll realize how ridiculous the false equivalency to gold is. 1. The claim of "rare" doesn't exactly hold true. Consider the 10,000 BTC pizza - how did this happen? This was the direct result of Satoshi's economic policy, granting vast sums of BTC to mint out very quickly very early for a short duration to the very small pool of people who ran the software. Satoshi's algorithm produced BTC in plentiful quantities enabling the 10,000BTC pizza - thus it wasn't rare if you were Satoshi and the dozen other early whales hording as much as possible, until the algorithm begins cutting off the production and limiting later users from producing coins, starving the economy. Now there's a psychological game being played, where public relations and marketing must convince new users to buy in. Because the exchanges are unregulated, they can manipulate the spot price though wash trading and painting the tape [2] (where trades are falsified and you just sell the same item back and forth to your friend for a higher and higher price). The supply was created by running a piece of software. It's not magic. Most of the supply was produced very early on and as much as 30% of all Bitcoins are owned by less than 100 people. Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy. The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China’s and even the US’ wealth distribution look like that of a workers’ paradise 2. Easy migration to more advanced e-cash services, LTC, XMR, ETH, so on See: https://coinmarketcap.com/currencies/views/all/ https://coinmarketcap.com/currencies/views/all/ 3. Bitcoin network requires ASIC miners, largely centralized in China [3]. Assuming the inveitable surpassing of a more advanced cryptosytem making Bitcoin obsolete, as the market is informed there will be a decline in BTC's spot price and once this falls below the cost of OPEX for miners, the hardware goes offline and the network will cease to function. Maximalists will attempt to offer an emergency fork, in any attempt to save their "investment", just as they have developed the lightening network to create centeralized payment hubs, so "investors" can act as liquidity providors and take fees, instead of miners. 4. Electricty usage is unsustainable, GOTO 3 [1] https://bitcoin.stackexchange.com/questions/86/is-it-possible-to-estimate-the-gini-coefficient-for-bitcoins-and-if-the-trend-is https://bitcoin.stackexchange.com/questions/86/is-it-possibl... http://www.businessinsider.com/bitcoin-inequality-2014-1 http://www.businessinsider.com/bitcoin-inequality-2014-1 [2] https://www.youtube.com/watch?v=6r04gfWfRkE https://www.youtube.com/watch?v=6r04gfWfRkE [3] https://qz.com/1055126/photos-china-has-one-of-worlds-largest-bitcoin-mines/ https://qz.com/1055126/photos-china-has-one-of-worlds-larges...
sytelus 9y ago
That's quite a balony. - Both are in fixed quantity so none is more rare than other. - Gold has practical use in industry which puts lower bound on its value. BTC has no lower bound. - Gold is exchangeable virtually in any country and any culture regardless of how technologically advanced that society is. - Thousands of years of history has proven that humans have almost natural lust for this shiny metal and it gets displayed as jewelry uses. This again further sets the lower bound for gold prices. - Gold is not only rare but is virtually rust proof and can be stowed away without any advanced tech for 100s of years. BTC will be pointless if there was a natural or human made disaster and few people had electricity. - Gold is far more unlikely to be made illegal by governments. - There are no new rare metals popping up every day like whole slew of new cryptocurrencies which might fragment and trump each other. No one knows which cryptocurrency will end up dominating 10 years down the line. - BTC has huge risk of getting stolen and hacked because someone exploiting zero day vulnerabilities in your system even if you did everything you possibly could to keep your system safe. - Governments can start their secret operations to control the crypto market behind the scene, hack in to exchanges, find vulnerabilities or do dirty trades. - Crypto exchanges are wild west without regulations which means clever deep pocketed traders would be exploiting them by techniques like frontrunning, wash trades, willybot, spoofing etc. This enables big investors to profit at the expense of small investors. Above arguments should make it clear that btc has very real upper bound that it can rationally reach and its most definitely less than gold market cap. Of course, big investors can juice up things in the short term but it would be impossible to sustain irrational highs on long term.
- varjag 9y ago
  Should just point out that gold was made illegal in multiple cultures on several occasions.
  - svachalek 9y ago
    Some may be surprised to learn this includes the U.S. from 1933-1974.
    - 9y ago
nathancahill 9y ago
Say the guys with a significant stake in BTC.
- shostack 9y ago
  So rather than just assume ulterior motives here (which I agree should be considered as a possibility whenever a big stakeholder is discussing a major investment of theirs), I wonder if there's a different question to ask. Specifically, how does the game theory play out for his comments? Does it point towards him being genuine? Or does it point to him trying to do something else?
jpm_sd 9y ago
BTC is far more likely to hit zero than to outstrip gold.
- jhall1468 9y ago
  Literally nobody knows what Bitcoin is going to do, so comments like this are not only blatantly false (you have no idea what's more likely), they serve zero purpose.
- Kiro 9y ago
  I claim the opposite. The truth is that neither of us knows so your comment is nonsense.
cohnnton 9y ago
can someone explain why bitcoin is rare? there are COUNTLESS cryptocurrencies out there. The only reason bitcoin is believed to be rare is blind belief, much like believing in santa claus.
- glitch003 9y ago
  There will only ever be 21 million BTC. I mean, it's right there in the code for Bitcoin. Yes you can fork or create new cryptocurrencies, but they don't have the mining power of BTC, and they are inherently NOT BTC. So Bitcoin is rare, cryptocurrencies are not.
tim333 9y ago
Just now Bitcoin is down 11% (to $17k) and Bitcoin Cash up 55% (to $3.4k) as people look to it as an alternative. I'm not convinced Bitcoin will last thousands of years as a major asset the way gold has.
kamaal 9y ago
>>But then Tyler Winklevoss questioned even that, pointing out the ways that he believes Bitcoin is better than gold. :) Well. This could be another Facebook level embarrassment if it turns out false.

by TheBiv 9y ago

felipeko 9y ago

There's a difference about Gold's rarity and Bitcoin's. Gold is rare on its kind and rare on its abundance. It may be hard to mine more gold, but it's way harder to find another gold-like commodity. Bitcoin is only rare in the abundance sense. It is hard to mine more bitcoin, but it's pretty easy to find a (arguably better) substitute for what it does. I can agree with it being better (having more utility) than gold, though. So I'd agree that the sum of all e-coins will surpass gold, but I see no reason for Bitcoin to do it alone.

WorldMaker 9y ago
Bitcoin definitely isn't rare in kind as we've already seen how relatively "easy" it is to fork. Could just fork Bitcoin infinitely as one way to deal with its supposed scarcity. Bitcoin isn't even rare in the abundance sense if you consider that how hard it is to mine new coins is merely a function of a mathematical curve that can be adjusted as a software change. Certainly any change to the mining difficulty and/or coin pool ceiling would be hugely controversial, but it's not like it's mathematically impossible merely politically improbable, for now.
- derekp7 9y ago
  The thing that is rare is the total amount of mining nodes behind bitcoin. That is what you are buying into, is mindshare. Of course the mining nodes are mostly profit driven. If another coin had a higher profit margin, the miners would switch over to that coin.
  - WorldMaker 9y ago
    That rarity too is also software controlled based on the difficulty curve. Bitcoin doesn't have to boil the oceans, it could make mining easy enough again that transactions could be mined in a coffee break on an average person's smart phone's GPU. As I said, the scarcity of Bitcoin is much more a political structure than an inherent nature of Bitcoin. The miners control Bitcoin so much as anyone does and it is their political intent as much as anything else that creates any scarcity in Bitcoin at all.
- pfisch 9y ago
  Forking bitcoin doesn't create more bitcoins. It creates something else that is not bitcoins any longer that will not be accepted anywhere.
  - WorldMaker 9y ago
    The philosophical and political reality of what makes a "real" Bitcoin that people can accept is outside of the question of scarcity. The fact that a Bitcoin can be endlessly "duplicated", at the whims of software developers and/or miners, regardless of how likely or improbable they may be able to be "spent" should definitely give people some pause in their Tulip mania that Bitcoins are not by their nature inherently a scarce commodity. They are scarce only so far as the political reality in which they are transacted continues to keep them scarce.
    - pfisch 9y ago
      But they are in fact different. Maybe not as different as gold vs silver but similar in that gold and silver also have completely artificial values driven by hype.
KaoruAoiShiho 9y ago
What do you mean gold is rare on its own kind? Aren't there tons of other pretty metals? There doesn't seem to be any unique property of gold (other than sociological) that would help it defend against competitors like bitcoin or any other new asset.
- scaryspooky 9y ago
  Gold is insanely useful as a conductive metal.
- felipeko 9y ago
  You can't find another precious metal that will have the rarity of gold and it's "non deterioration" property, both that made gold what it is (it's also a really useful commodity). But i agree that's not enough to defend against competitors like Bitcoin, but the same cannot be said of Bitcoin. Other than sociological factors (that are arguably much stronger on gold), there's nothing that would help it defend against others e-coins.
  - gruez 9y ago
    >You can't find another precious metal that will have the rarity of gold and it's "non deterioration" property, both that made gold what it is (it's also a really useful commodity). platinum. i will agree that gold is easier to tell apart (it's yellow) than platinum. although realistically that's a moot point because you're going to want to do chemical tests when dealing in non-trivial amounts of precious metals.
    - felipeko 9y ago
      You got me! :) Now find a few hundreds more and we will be closer (not really) to Bitcoin's rarity of kind.
    - munchbunny 9y ago
      Which is even more rare for when you need to deal with issues like environmental temperatures going over 800C. The same argument applies to platinum: it has essential physical applications that are hard to replicate, so it will retain a high baseline value just on the merits of "we need it for essential hardware." If a cryptocurrency manages to pull off the software equivalent of "essential engineering applications," then the conversation about cryptocurrencies will change dramatically. As it stands, blockchains will probably prove to be situationally useful, but blockchain =/= cryptocurrency.
deleted 9y ago
[deleted]
saalweachter 9y ago
Another critical difference is that there are commodity uses of gold. The price of gold will never go to zero; it might go to $100 or $10 per oz if all speculation and hoarding were removed from the market but it wouldn't go to $0.
- jstanley 9y ago
  And what's that got to do with bitcoin? If you're going to assert that gold can't go to $0 and imply that bitcoin can, you need to also give a good reason why bitcoin can go to $0.
  - fastball 9y ago
    At one point in time, Bitcoin was worthless. Therefore it is provable that it can be worthless. At no point in history has gold been worthless. As far as you and I know, gold has had worth as long as society has had the capability to get it.
    - erikpukinskis 9y ago
      False. At one point Mussolini was alive. Therefore it is provable that Mussolini could live again. Sorry, try again. At one point, these grains of sand were in this glass. Then I poured them into the ocean. But they were in the glass so they could be in there again. Except no, no they couldn’t. The 2nd law of thermodynamics makes many things non-repeatable.
      - fastball 9y ago
        You are making the opposite claim to mine, they are not comparable. Try these on for size: Before his birth, Mussolini was not alive. Therefore, it is possible that he could not be alive again. At one point, there were no grains of sand in this glass. Therefore it is possible that there will be no grains of sand in this glass again. Thermodynamics is really not the tool you should bring to bear in this conversation. Entropy dictates that eventually everything will be worthless, and that includes Bitcoin. The price of Bitcoin is not an irreversible product of entropy, despite what some investors might wish.
dahdum 9y ago
"So I'd agree that the sum of all e-coins will surpass gold, but I see no reason for Bitcoin to do it alone." We could pick any number of gold-like commmodities, but like Bitcoin, gold has had a history of large expenditures to acquire it. Both are buoyed by that past. So many tokens and blockchains are coming out with incremental improvements or niche capabilities, but in the end I think consolidation of market cap is inevitable. I think it ends up Bitcoin as store of value, Ethereum as contracts/api and a large amount of application specific token/chains. Most applications would be backed by ethereum (like most tokens are now), but ones like Ripple could definitely be top 5.
- hyprCoin 9y ago
  I respectfully disagree with your conclusion. There isn't one company for internet searches and there isn't one provider for online video content. Why should there be just a handful of currencies? The natural state of a healthy ecosystem includes competition and variety.
  - zaidf 9y ago
    There is only a handful of companies for internet search, no?
  - dahdum 9y ago
    75% of all searches are Google, 10% Baidu, and 8% Bing. Youtube represents the vast majority of online video content. Netflix the vast majority of on demand television. I only mean to say a handful will capture the vast majority of market share/cap.
    - atwebb 9y ago
      For now, those companies were different 10 years ago, Netflix has it's own issues if my viewing options are the same as everyone else's these days.
    - hyprCoin 9y ago
      Google is losing market share of searches last I looked. Baidu searches have doubled in percentage marketshare. Youtube and netflix are both on demand television as are amazon instant, modern cable tv subscriptions, and a variety of specific channels (hbo, showtime, etc). There will definitely be use case dominance, but they may not be the same whales as we currently see.
lsadam0 9y ago
We live in a world where the near-ish future could bring us asteroid mining. Something that could devastate the rarity of abundance of gold.
- felipeko 9y ago
  That is true, and this should really factor in the decline of gold in the future, but this does not help Bitcoin against it's e-coins rivals. And isn't Bitcoin hackable in a near-ish future with quantum computing?
  - sumedh 9y ago
    > quantum computing? I have been hearing that for last 15 years.
  - lsadam0 9y ago
    Yes, in it’s current state it most certainly is. Though as I recall there are already proposed updates to address this threat.
pishpash 9y ago
It's not even rare in abundance. Every fork (Bitcoin Cash!?) defeats its supposed non-abundance.
mtgx 9y ago
That doesn't make much sense. I think you set up a rather arbitrary definition for this. Here's my attempt: Gold is just a "metal" just like Bitcoin is a "cryptocurrency." There are many types of metals and other materials. Some can directly replace gold while others have way different uses - just like cryptocurrencies.

dpflan 9y ago

Interesting. What are the economics arguments for Bitcoin replacing gold? Does the “ease of transaction” of Bitcoin provide an implicit value over gold and is that factored into the price of Bitcoin as maybe a fixed value?

KaoruAoiShiho 9y ago
Gold is just non-scalable and is bound to die eventually. If you think about it, if you're going to start a new country and a new federal reserve, how much sense does it make to ship tons of gold to Mars for example? Any store of value that makes sense for humanity in the long term has to be both digital and reflect the work/real value creation process that matters in the future. I'm not sure it's going to be bitcoin but it's definitely not gold.
- meric 9y ago
  Gold is definitely useful for building the spacecraft going to Mars though. They cover the entire spacecraft in the stuff. It might be too useful for Mars to use as reserve! https://www.itmtrading.com/blog/aerospace-gold-the-next-frontier/ https://www.itmtrading.com/blog/aerospace-gold-the-next-fron... https://www.geek.com/news/geek-answers-why-does-nasa-use-so-much-gold-foil-1568610/ https://www.geek.com/news/geek-answers-why-does-nasa-use-so-...
  - dpflan 9y ago
    :) thanks!
apeace 9y ago
> Does the “ease of transaction” of Bitcoin provide an implicit value over gold... I know this doesn't answer your question but it's still relevant. Currently Bitcoin is the most expensive, least convenient currency available. According to estimatefee.com it would take about a $25 fee in order to get your transaction through in an hour. My point is that nothing about Bitcoin will ever really be "implicit" like it is with gold. Gold exists as it exists, cryptocurrencies only have the properties that are created by the developers, and/or are run on machines by participants in the network. In Bitcoin's case, the developers and the network have not been able to handle the load of all the transactions. I used to be in the "Bitcoin is the new gold" camp. But after seeing what's happened with Bitcoin, I'm certain it's not that simple.

QAPereo 9y ago

To me it just sounded like talk designed to pump the price now.

epx 9y ago

Good luck trying to make a fountain pen nib with a cryptocoin :)

0wing 9y ago

If you understand the computer science behind Bitcoin, you'll realize how ridiculous the false equivalency to gold is. 1. The claim of "rare" doesn't exactly hold true. Consider the 10,000 BTC pizza - how did this happen? This was the direct result of Satoshi's economic policy, granting vast sums of BTC to mint out very quickly very early for a short duration to the very small pool of people who ran the software. Satoshi's algorithm produced BTC in plentiful quantities enabling the 10,000BTC pizza - thus it wasn't rare if you were Satoshi and the dozen other early whales hording as much as possible, until the algorithm begins cutting off the production and limiting later users from producing coins, starving the economy. Now there's a psychological game being played, where public relations and marketing must convince new users to buy in. Because the exchanges are unregulated, they can manipulate the spot price though wash trading and painting the tape [2] (where trades are falsified and you just sell the same item back and forth to your friend for a higher and higher price). The supply was created by running a piece of software. It's not magic. Most of the supply was produced very early on and as much as 30% of all Bitcoins are owned by less than 100 people. Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy. The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China’s and even the US’ wealth distribution look like that of a workers’ paradise 2. Easy migration to more advanced e-cash services, LTC, XMR, ETH, so on See: https://coinmarketcap.com/currencies/views/all/ https://coinmarketcap.com/currencies/views/all/ 3. Bitcoin network requires ASIC miners, largely centralized in China [3]. Assuming the inveitable surpassing of a more advanced cryptosytem making Bitcoin obsolete, as the market is informed there will be a decline in BTC's spot price and once this falls below the cost of OPEX for miners, the hardware goes offline and the network will cease to function. Maximalists will attempt to offer an emergency fork, in any attempt to save their "investment", just as they have developed the lightening network to create centeralized payment hubs, so "investors" can act as liquidity providors and take fees, instead of miners. 4. Electricty usage is unsustainable, GOTO 3 [1] https://bitcoin.stackexchange.com/questions/86/is-it-possible-to-estimate-the-gini-coefficient-for-bitcoins-and-if-the-trend-is https://bitcoin.stackexchange.com/questions/86/is-it-possibl... http://www.businessinsider.com/bitcoin-inequality-2014-1 http://www.businessinsider.com/bitcoin-inequality-2014-1 [2] https://www.youtube.com/watch?v=6r04gfWfRkE https://www.youtube.com/watch?v=6r04gfWfRkE [3] https://qz.com/1055126/photos-china-has-one-of-worlds-largest-bitcoin-mines/ https://qz.com/1055126/photos-china-has-one-of-worlds-larges...

sytelus 9y ago

That's quite a balony. - Both are in fixed quantity so none is more rare than other. - Gold has practical use in industry which puts lower bound on its value. BTC has no lower bound. - Gold is exchangeable virtually in any country and any culture regardless of how technologically advanced that society is. - Thousands of years of history has proven that humans have almost natural lust for this shiny metal and it gets displayed as jewelry uses. This again further sets the lower bound for gold prices. - Gold is not only rare but is virtually rust proof and can be stowed away without any advanced tech for 100s of years. BTC will be pointless if there was a natural or human made disaster and few people had electricity. - Gold is far more unlikely to be made illegal by governments. - There are no new rare metals popping up every day like whole slew of new cryptocurrencies which might fragment and trump each other. No one knows which cryptocurrency will end up dominating 10 years down the line. - BTC has huge risk of getting stolen and hacked because someone exploiting zero day vulnerabilities in your system even if you did everything you possibly could to keep your system safe. - Governments can start their secret operations to control the crypto market behind the scene, hack in to exchanges, find vulnerabilities or do dirty trades. - Crypto exchanges are wild west without regulations which means clever deep pocketed traders would be exploiting them by techniques like frontrunning, wash trades, willybot, spoofing etc. This enables big investors to profit at the expense of small investors. Above arguments should make it clear that btc has very real upper bound that it can rationally reach and its most definitely less than gold market cap. Of course, big investors can juice up things in the short term but it would be impossible to sustain irrational highs on long term.

varjag 9y ago
Should just point out that gold was made illegal in multiple cultures on several occasions.
- svachalek 9y ago
  Some may be surprised to learn this includes the U.S. from 1933-1974.
  - 9y ago

nathancahill 9y ago

Say the guys with a significant stake in BTC.

shostack 9y ago
So rather than just assume ulterior motives here (which I agree should be considered as a possibility whenever a big stakeholder is discussing a major investment of theirs), I wonder if there's a different question to ask. Specifically, how does the game theory play out for his comments? Does it point towards him being genuine? Or does it point to him trying to do something else?

jpm_sd 9y ago

BTC is far more likely to hit zero than to outstrip gold.

jhall1468 9y ago
Literally nobody knows what Bitcoin is going to do, so comments like this are not only blatantly false (you have no idea what's more likely), they serve zero purpose.
Kiro 9y ago
I claim the opposite. The truth is that neither of us knows so your comment is nonsense.

cohnnton 9y ago

can someone explain why bitcoin is rare? there are COUNTLESS cryptocurrencies out there. The only reason bitcoin is believed to be rare is blind belief, much like believing in santa claus.

glitch003 9y ago
There will only ever be 21 million BTC. I mean, it's right there in the code for Bitcoin. Yes you can fork or create new cryptocurrencies, but they don't have the mining power of BTC, and they are inherently NOT BTC. So Bitcoin is rare, cryptocurrencies are not.

tim333 9y ago

Just now Bitcoin is down 11% (to $17k) and Bitcoin Cash up 55% (to $3.4k) as people look to it as an alternative. I'm not convinced Bitcoin will last thousands of years as a major asset the way gold has.

kamaal 9y ago

>>But then Tyler Winklevoss questioned even that, pointing out the ways that he believes Bitcoin is better than gold. :) Well. This could be another Facebook level embarrassment if it turns out false.