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Give me a single, just one single, way that a BTC ETF different than owning shares in a gold mining company, using the language of economics. If you want a sim

Give me a single, just one single, way that a BTC ETF different than owning shares in a gold mining company, using the language of economics. If you want a simpler problem, how is it different from an ETF that tracks the price of gold?

jpatokal 10y ago
The odds of gold being completely worthless 5 years from now are rather lower than the odds of BTC being completely worthless 5 years from now.
- DoctorBit 10y ago
  That's why the market cap of bitcoin is 1/1000 the market cap of gold - to compensate for that risk.
- alex_young 10y ago
  Why? Gold has the same basic economic proposition: * Mined at a steady and predictable rate * Ecologically destructive * Valued because it is hoarded * Hoarded because it is valued
  - jrockway 10y ago
    Can you plate Bitcoins on to metals to produce a layer that doesn't corrode or oxidize? Because gold is pretty good at that.
- wcoenen 10y ago
  Space mining could have some interesting effects on the gold market, assuming it can be done profitably. The asteroid 433 Eros alone likely contains more gold than was ever mined on Earth. But that indeed won't happen within 5 years.
youngButEager 10y ago
If I bought a brand new $500 desktop computer (yes they're that cheap these days) -- and then bought a brand new 500 gigabyte hard drive that cost $100, and put it in the new computer........ then I gathered 200 people who each had between $500,000 and $1million to invest, and told them "this hard drive is worth at least $500,000. I'll start the bidding there, at $500,000." How many would bid?
- lsadam0 10y ago
  You fail to understand that you just made up the price of 500,000. No one will invest. BTC, however, has reached the current USD value by natural market forces. You don't get to just make up prices, and neither does BTC.
  - youngButEager 10y ago
    You missed the point entirely. I'm not saying everyone who read this missed the point entirely. But you clearly did. The $100 hard drive is being used as cold storage for $500k btc. I won't apologize for having to spell everything out for you here, because you didn't think things through given the context of the post. The post's message was "bitcoin is not a medium of exchange" and "bitcoin is a highly speculative gambling vehicle." The point was, and again I'm not going to apologize for having to spell things out in this level of detail since you did not 'connect the dots' -- the point was, if you gather 20 people who have $500k to $1M dollars to invest, no one will bid on the $500,000 hard drive. The vast majority of people with $500k to $1M dollars to invest will seek a reliable asset like gold or other legitimate asset that is backed by something. Would a gambler bid $500k for the hard drive? Maybe. But then again, if you go to Vegas or Reno, you will find lots of gamblers who will never gamble on card games in the casino due to cheaters (cards being the easiest game to cheat at as everyone knows). So even gamblers are selective and may not put money on btc. The point made was -- the vast majority of the population are NOT GAMBLERS. They want to see lots of evidence that the value of their $500k+ will be recoverable in a traditional manner that is widely accepted. - such as precious metals, which cannot be wiped clean by exposure to a magnetic field (unlike cold storage for btc) - such as real estate - such as an ETF of higly-liquid stocks On the "safest to mostly gambling" continuum of placements of your money in search of a good return, precious metals are at one end of the spectrum. Poker chips, the craps table, and btc are at the far other end. My entire point was, the profile of a btc 'investor' is that they're a gambler. And with the U.S. government seeking to curtail efforts to use btc as 'money', only gamblers willing to lose everything overnight use btc.

jpatokal 10y ago

The odds of gold being completely worthless 5 years from now are rather lower than the odds of BTC being completely worthless 5 years from now.

DoctorBit 10y ago
That's why the market cap of bitcoin is 1/1000 the market cap of gold - to compensate for that risk.
alex_young 10y ago
Why? Gold has the same basic economic proposition: * Mined at a steady and predictable rate * Ecologically destructive * Valued because it is hoarded * Hoarded because it is valued
- jrockway 10y ago
  Can you plate Bitcoins on to metals to produce a layer that doesn't corrode or oxidize? Because gold is pretty good at that.
wcoenen 10y ago
Space mining could have some interesting effects on the gold market, assuming it can be done profitably. The asteroid 433 Eros alone likely contains more gold than was ever mined on Earth. But that indeed won't happen within 5 years.

youngButEager 10y ago

If I bought a brand new $500 desktop computer (yes they're that cheap these days) -- and then bought a brand new 500 gigabyte hard drive that cost $100, and put it in the new computer........ then I gathered 200 people who each had between $500,000 and $1million to invest, and told them "this hard drive is worth at least $500,000. I'll start the bidding there, at $500,000." How many would bid?

lsadam0 10y ago
You fail to understand that you just made up the price of 500,000. No one will invest. BTC, however, has reached the current USD value by natural market forces. You don't get to just make up prices, and neither does BTC.
- youngButEager 10y ago
  You missed the point entirely. I'm not saying everyone who read this missed the point entirely. But you clearly did. The $100 hard drive is being used as cold storage for $500k btc. I won't apologize for having to spell everything out for you here, because you didn't think things through given the context of the post. The post's message was "bitcoin is not a medium of exchange" and "bitcoin is a highly speculative gambling vehicle." The point was, and again I'm not going to apologize for having to spell things out in this level of detail since you did not 'connect the dots' -- the point was, if you gather 20 people who have $500k to $1M dollars to invest, no one will bid on the $500,000 hard drive. The vast majority of people with $500k to $1M dollars to invest will seek a reliable asset like gold or other legitimate asset that is backed by something. Would a gambler bid $500k for the hard drive? Maybe. But then again, if you go to Vegas or Reno, you will find lots of gamblers who will never gamble on card games in the casino due to cheaters (cards being the easiest game to cheat at as everyone knows). So even gamblers are selective and may not put money on btc. The point made was -- the vast majority of the population are NOT GAMBLERS. They want to see lots of evidence that the value of their $500k+ will be recoverable in a traditional manner that is widely accepted. - such as precious metals, which cannot be wiped clean by exposure to a magnetic field (unlike cold storage for btc) - such as real estate - such as an ETF of higly-liquid stocks On the "safest to mostly gambling" continuum of placements of your money in search of a good return, precious metals are at one end of the spectrum. Poker chips, the craps table, and btc are at the far other end. My entire point was, the profile of a btc 'investor' is that they're a gambler. And with the U.S. government seeking to curtail efforts to use btc as 'money', only gamblers willing to lose everything overnight use btc.