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Gold is based on something tangible and useful. This minimizes it's maximum drop. A safety net if you like. Bitcoin does not have this, so when/if it crashes
by brador 11y ago
Gold is based on something tangible and useful. This minimizes it's maximum drop. A safety net if you like. Bitcoin does not have this, so when/if it crashes it can hit 0.
- pdq 11y agoThe long term value of gold is based on the price of mining new ounces of gold. Likewise, the long term value of Bitcoin is based on the price of mining new coins, which is based on the mining network. The only way Bitcoin would go to zero is if a fatal architecture fault is found, which is quite unlikely.
- pavel_lishin 11y agoBut isn't there a maximum number of bitcoins to be mined? Eventually the price of mining new coins becomes infinite.
- llamataboot 11y agoyes, this is an oft-reversed causation. The price of bitcoin is determined by the same thing the price of everything is determined by in a market system. What the current supply of bitcoins is and what the current demand for those bitcoins is. The "cost" of mining doesn't even enter into the picture. How mining does enter into the picture is the ingenious way that difficulty auto-corrects. If bitcoin prices plummet and the cost to mine them is more than they are worth, many miners will drop out, and the difficulty to mine them will get easier, until the difficulty stabilizes around a place where it is slightly profitable to mine them -- this is why mining has always been a race to the bottom and why eventually economies of mining scale (server farms, etc) would beat the person with 4 GPUs running in their basement.
- TheOtherHobbes 11y agoThe long term value of gold is based on price fixing. Crazy conspiracy talk? Not according to Reuters: http://www.reuters.com/article/deutsche-bank-lawsuit-metals-idUSL2N17H1OS http://www.reuters.com/article/deutsche-bank-lawsuit-metals-...
- deleted 11y ago[deleted]
- riprowan 11y agoFortunately Bitcoin is immune to such things /s
- JonFish85 11y ago"The only way Bitcoin would go to zero is if a fatal architecture fault is found, which is quite unlikely." Or if people just forget about it and move to something else. At least gold has some physical properties that make it useful for things.
- deleted 11y ago[deleted]
- CJefferson 11y agoThere is already a fatal architecture flaw - someone owning 51% of the mining power could reck havoc. We just need some way for someone to make enough money out of bitcoin's failure.
- vinceguidry 11y agoThat problem also exists with 'normal' currencies.
- daveguy 11y agoSomeone owning 51% mining power could reak havoc by falsifying transactions... Could they control the price in general?
- maaku 11y agoThey could take all the coins. All of them.
- cb18 11y agoAlso, when gox tried to blame "transaction malleability," people rightly saw that as a ruse. But when people said transaction malleability was a non-issue, they were quickly proven wrong when someone used it to DOS the network. But that was quickly swept under the rug, down the memory hole in the bitcoin community.
- mikeokner 11y agoActually, Bitcoin is having some pretty serious problems at the moment. The stability is surprising. https://www.cryptocoinsnews.com/block-size-halving-bitcoin-network/ https://www.cryptocoinsnews.com/block-size-halving-bitcoin-n...
- brador 11y agoIt's almost like it's being artificially propped to prevent panic selling.
- maaku 11y agoWhat problems?
- mikeokner 11y ago...click the link.
- maaku 11y agoI did, it's a massive distortion of non-issues. What are the _actual_ problems?
- mikeokner 11y agoBasically, the current block size limit of 1MB isn't sufficient for the current volume of transactions. Some transactions aren't making it into blocks in real-time and have to sit waiting in a queue to be processed. This leads to delays in processing commercial payments, which in turn threatens Bitcoin's viability as a mainstream currency. Some people argue the issue could be easily fixed by simply raising the block size limit, but others disagree and believe that would become too costly in bandwidth and processing capacity for miners, so AFAIK there's still no consensus on a resolution. A couple other good explanations: http://rusty.ozlabs.org/?p=535 http://rusty.ozlabs.org/?p=535 https://medium.com/@octskyward/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.s44pxu3o5 https://medium.com/@octskyward/the-resolution-of-the-bitcoin...
- aqme28 11y agoOnly a small fraction of the price of gold is based on its utility. It's price is basically purely speculation (as is bitcoin's). But you are right in that it does have a floor that bitcoin does not have.
- teddyh 11y agoAir is also useful, but you can't claim that there's a minimum price for air. If a cheap way was found to extract gold from seawater, gold would still be as useful, but its price would plummet.
- lisper 11y agoBut it would still not drop to zero.
- rm_-rf_slash 11y agoI'm sure that there will soon be a minimum price for fresh air in smog-choked cities like Beijing. If someone ever does find a way to extract gold from seawater economically, I wonder what kind of economic contractions would occur? As gold goes down people would lose billions while other safe assets like real estate would go through the roof. If we too-heavily rely on crypto-currencies, the same could certainly happen.
- paulgb 11y ago> I'm sure that there will soon be a minimum price for fresh air in smog-choked cities like Beijing. http://www.cnn.com/2015/12/15/asia/china-canadian-company-selling-clean-air/ http://www.cnn.com/2015/12/15/asia/china-canadian-company-se...
- swah 11y agoThats seagold, not Tifanny quality!