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Reading your comment finally made it click to me why cryptocurrencies (specifically Bitcoin) are distinct from a gold bar or other non-currency stores of value.

Reading your comment finally made it click to me why cryptocurrencies (specifically Bitcoin) are distinct from a gold bar or other non-currency stores of value. A gold bar is going to remain a gold bar forever, people's perception of its value will change even though the supply will remain mostly steady, but it will stay a gold bar no matter what. Bitcoin may change in value based on perception, it's supply will remain constant after it has all been mined, but it's existence and integrity relies on a large network continuing to exist. To put it differently, in 50 years a gold bar is a gold bar, but in 50 years a Bitcoin may have no value because everyone stopped mining and the blockchain was destroyed by 51% attacks.

emodendroket 9y ago
To be fair, people could also stop thinking gold is worth much. Maybe a modern-day alchemist finally figures out the formula. I don't know. Probably far less likely than the Bitcoin scenarios though.
- masklinn 9y ago
  > To be fair, people could also stop thinking gold is worth much. They've already noted that: > people's perception of its value will change But as they say, a gold bar will remain a gold bar, until and unless it is actively destroyed. Not so for bitcoins, which only remain so as long as they're actively maintained (not just individual coins but the mining networks which allows the creation of new transactions)
  - emodendroket 9y ago
    I imagined that was talking about a certain level of fluctuation in the exchange rate of gold to dollars, not a radical change like happened to, say, aluminum (considered rare and precious at the time it was put on top of the Washington Monument; not so much today).
  - egeozcan 9y ago
    How do you think the story would end for gold, if it became unpopular and the exchanges closed? You can sell your gold bar, and you can sell your private key. I see them as the same and no, I don't own Bitcoins.
    - masklinn 9y ago
      > You can sell your gold bar, and you can sell your private key. I see them as the same and no, I don't own Bitcoins. If there's no support network for your bitcoins, their value is 0, exactly. Even if you assume people stop caring for shiny imputrescible metals, its intrinsic property (of being shiny and imputrescible) pretty much ensures there will always be some demand for gold, and thus it will keep a non-zero price. Possibly low, but not actually zero.
      - Jommi 9y ago
        But what does it matter which one has a larger "intrinsic value"? Both prices are determined more by speculation and group consciousness.
        sumedh 9y ago
        I think the parent comment is implying that in a worst case scenario bitcoin will be 0 but gold will still be greater than 0. During such times you need an asset whose value will be greater than 0.
        dragonwriter 9y ago
        > But what does it matter which one has a larger "intrinsic value"? It matters a lot of part of the reason to invest in them is as a hedge against general collapse of social institutions.
        Jommi 9y ago
        But are you really hedging against the collpase of _everything_ so that we are at a completely primative level. Or do we mean collapse as in another collapse of the world economy? If you mean the former, then yes, gold is a good hedge. But if you mean the latter, then I would argue Bitcoin beats gold 100x.
  - mikeash 9y ago
    I’m not entirely convinced, although I’m partway there. When you “have” a Bitcoin, that means you have the private key to a wallet which the blockchain says has such-and-such amount in it. You can have that even if the miners all disappear. You can still use it to sign transactions, although they won’t get confirmed. You can even confirm them by mining a new block yourself with your transactions in it. (If all the miners are gone, the difficulty has hopefully dropped precipitously. And if not, you could always fork it to have a lower difficulty, since the only thing that stops forks currently is network consensus.) This doesn’t sound super useful, but it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable.
    - masklinn 9y ago
      > If all the miners are gone, the difficulty has hopefully dropped precipitously AFAIK there is no mechanism for the difficulty of new blocks to fall. And if the only use is creating transactions between yourself and yourself, well you can also collect gravel. > This doesn’t sound super useful, but it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable. Even in a sub-industrial context and ignoring pretty much all of human history and assuming your gold has lost all of its extrinsic worth, your bar of gold could be molded or cast into plenty of useful things (light reflectors, heat shields, baubles, weights). Bitcoins, not so much.
      - clarkmoody 9y ago
        Difficulty falls when block times exceed 10 minutes over the adjustment period. It's happened plenty of times in the history of Bitcoin.
        mikeash 9y ago
        The catch is that the difficulty adjustment only happens every ~2k blocks. If a mass exodus of mining capacity happens really quickly, it could leave the network stranded. But if they leave at a reasonable pace, it will ramp down. That’s why I said “hopefully” before.
      - 9y ago
  - banku_brougham 9y ago
    One of the properties of gold is that it cant be destroyed by chemical reactions. Physical destruction would amount to powderizing and dispersing over an area too wide to re-mine. There are other ways though: http://www.imdb.com/title/tt0058150/ http://www.imdb.com/title/tt0058150/
    - banku_brougham 9y ago
      FYI the link is to Goldfinger.
- sonoffett 9y ago
  Or asteroid mining
  - jokermatt999 9y ago
    Asteroid mining would disrupt the market for many rare elements, but I think it could be less chaotic than people think. It's not going to be like the Gold Rush where a deposit was found and prospectors flocked to it. It'll be a massive undertaking, almost certainly with multiple nations working together to achieve. The time between the project becoming public and the resulting mined resources being delivered would give markets time to settle on a price. That said, yes, asteroids mining could certainly affect the price of gold, but not necessarily destroy all its value. There's a price floor set by the industrial applications for it. With BitCoin, there is no floor. If no one wants to buy your BitCoins, you can't do anything else with them. They are just data representing proof of work, but no outside value.
    - roywiggins 9y ago
      Plus, in a world where you can mine asteroids for gold, suddenly there's potential for growth not only on Earth, but in the solar system at large, and there have to be industrial uses of gold on Mars...
  - TeMPOraL 9y ago
    Asteroid mining won't be able to significantly affect prices of gold downwell, definitely not until we bootstrap a real industrial presence in space - with the way we do space today, mission costs would eat up any profit you could make on shipping raw material down.
  - emodendroket 9y ago
    It seems like it'd be hard for such a profligate use of petroleum to ever be profitable.
- Brendinooo 9y ago
  If someone discovers a huge lode or if something crazy happened like the US Government divesting, it could cause a pretty wild swing, in the manner of Mansa Musa's pilgrimage. Guess it's one of those things that seems impossible, until it isn't.
- michaelbuckbee 9y ago
  Consider aluminium. At one point it was more expensive than gold (due to mining+refining challenges). When those were overcome the cost plummeted to it's current "cheap" level. Personally, I think a better comparison is to the diamond trade. Through a series of machinations (price fixing, artificial supply constraint, marketing) diamonds are deeply overvalued if you consider just the fundamentals of them - aka they're in a bubble. However, due to those same expertly administered steps they've maintained a high retail value for decades.
  - katastic 9y ago
    >decades Centuries.
  - vkou 9y ago
    But only a one-way retail value. No diamond dealer will give you anything close to their retail price, when you try to sell them diamonds.
    - Brockenstein 9y ago
      Madden games have the same problem.
    - emodendroket 9y ago
      I always wonder about this when I see films where criminals mastermind a plan to steal diamonds.
      - kaybe 9y ago
        Maybe they have a diamond shop somewhere.
        emodendroket 9y ago
        I found that sequel to The Asphalt Jungle a bit less interesting than the original.
      - 9y ago
- seanmcdirmid 9y ago
  Or we start mining exponentially more of it on asteroids. After all, more than 90% of the Earth’s gold has been mined since 1848.
- darethas 9y ago
  It's more likely that technological advances in mining techniques allow us to extract the millions of tons of gold closer to the upper mantle.
- drewm1980 9y ago
  Gold is worth a lot less to me now that I've seen what illegal mining of it by narcos is doing to the rainforests in south america.
- tuna-piano 9y ago
  Even the mighty platinum has fallen: https://www.google.com/amp/s/www.wsj.com/amp/articles/platinum-clinging-to-its-status-as-a-top-precious-metal-faces-a-crisis-1516043471 https://www.google.com/amp/s/www.wsj.com/amp/articles/platin...
root_axis 9y ago
> it's supply will remain constant after it has all been mined Even this could change if the miners and thought-leaders decide that it should.
- EnFinlay 9y ago
  Haha, good point.
- WorldMaker 9y ago
  You can't hard fork gold, either. You don't suddenly wind up with two copies of a gold bar because someone decided to Xerox your ledger to start a new one. The scarcity of Bitcoins is entirely a cultural delusion.
  - milcron 9y ago
    If your payment is denominated in BTC, you can't pay it with BCH even though they're a fork of the same blockchain. BTC proper is scarce, regardless of how many times the chain is forked.
    - WorldMaker 9y ago
      The distinction between "BTC" and "BCH" (and "BTCS" and "BCD" and so on ad infinitum) is cultural convention. There's no inherent technical merit (or alchemical nature) to one ledger over all other contenders, it's entirely a state of mind of its users.
      - eric_cc 9y ago
        What you’re saying makes no sense and is in no way shape or form accurate.
      - milcron 9y ago
        Yes and no. Once the blockchain forks, the distinction between all those coins is very technical. Coins from one ledger cannot be spent on another ledger. You're right though, cultural convention decides which blockchain is the "real" Bitcoin. Most people are using BTC at the moment, but Bitmain takes payment exclusively in BCH. This might seem like a semantic quibble, but I think it's important. There will only ever be 21 million BTC, and only ever 21 million BCH. If Bitmain decided to charge 22 million BCH for their latest ASIC miner, nobody would ever be able to pay that bill regardless of how many forks there are. For a blockchain fork to have any value whatsoever, people need to want to own it. Bitmain ASIC sales are driving demand for BCH. Every other Bitcoin fork is doing rather poorly. Forks aren't diluting the value of BTC, because people know that BTC is the real asset. Everything else is like fool's gold.
desireco42 9y ago
I think you are not taking into account 'internet time' ie. 2-3 years is huge time span. No one can predict what will happen in that time.

emodendroket 9y ago

To be fair, people could also stop thinking gold is worth much. Maybe a modern-day alchemist finally figures out the formula. I don't know. Probably far less likely than the Bitcoin scenarios though.

masklinn 9y ago
> To be fair, people could also stop thinking gold is worth much. They've already noted that: > people's perception of its value will change But as they say, a gold bar will remain a gold bar, until and unless it is actively destroyed. Not so for bitcoins, which only remain so as long as they're actively maintained (not just individual coins but the mining networks which allows the creation of new transactions)
- emodendroket 9y ago
  I imagined that was talking about a certain level of fluctuation in the exchange rate of gold to dollars, not a radical change like happened to, say, aluminum (considered rare and precious at the time it was put on top of the Washington Monument; not so much today).
- egeozcan 9y ago
  How do you think the story would end for gold, if it became unpopular and the exchanges closed? You can sell your gold bar, and you can sell your private key. I see them as the same and no, I don't own Bitcoins.
  - masklinn 9y ago
    > You can sell your gold bar, and you can sell your private key. I see them as the same and no, I don't own Bitcoins. If there's no support network for your bitcoins, their value is 0, exactly. Even if you assume people stop caring for shiny imputrescible metals, its intrinsic property (of being shiny and imputrescible) pretty much ensures there will always be some demand for gold, and thus it will keep a non-zero price. Possibly low, but not actually zero.
    - Jommi 9y ago
      But what does it matter which one has a larger "intrinsic value"? Both prices are determined more by speculation and group consciousness.
      - sumedh 9y ago
        I think the parent comment is implying that in a worst case scenario bitcoin will be 0 but gold will still be greater than 0. During such times you need an asset whose value will be greater than 0.
      - dragonwriter 9y ago
        > But what does it matter which one has a larger "intrinsic value"? It matters a lot of part of the reason to invest in them is as a hedge against general collapse of social institutions.
        Jommi 9y ago
        But are you really hedging against the collpase of _everything_ so that we are at a completely primative level. Or do we mean collapse as in another collapse of the world economy? If you mean the former, then yes, gold is a good hedge. But if you mean the latter, then I would argue Bitcoin beats gold 100x.
- mikeash 9y ago
  I’m not entirely convinced, although I’m partway there. When you “have” a Bitcoin, that means you have the private key to a wallet which the blockchain says has such-and-such amount in it. You can have that even if the miners all disappear. You can still use it to sign transactions, although they won’t get confirmed. You can even confirm them by mining a new block yourself with your transactions in it. (If all the miners are gone, the difficulty has hopefully dropped precipitously. And if not, you could always fork it to have a lower difficulty, since the only thing that stops forks currently is network consensus.) This doesn’t sound super useful, but it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable.
  - masklinn 9y ago
    > If all the miners are gone, the difficulty has hopefully dropped precipitously AFAIK there is no mechanism for the difficulty of new blocks to fall. And if the only use is creating transactions between yourself and yourself, well you can also collect gravel. > This doesn’t sound super useful, but it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable. Even in a sub-industrial context and ignoring pretty much all of human history and assuming your gold has lost all of its extrinsic worth, your bar of gold could be molded or cast into plenty of useful things (light reflectors, heat shields, baubles, weights). Bitcoins, not so much.
    - clarkmoody 9y ago
      Difficulty falls when block times exceed 10 minutes over the adjustment period. It's happened plenty of times in the history of Bitcoin.
      - mikeash 9y ago
        The catch is that the difficulty adjustment only happens every ~2k blocks. If a mass exodus of mining capacity happens really quickly, it could leave the network stranded. But if they leave at a reasonable pace, it will ramp down. That’s why I said “hopefully” before.
    - 9y ago
- banku_brougham 9y ago
  One of the properties of gold is that it cant be destroyed by chemical reactions. Physical destruction would amount to powderizing and dispersing over an area too wide to re-mine. There are other ways though: http://www.imdb.com/title/tt0058150/ http://www.imdb.com/title/tt0058150/
  - banku_brougham 9y ago
    FYI the link is to Goldfinger.
sonoffett 9y ago
Or asteroid mining
- jokermatt999 9y ago
  Asteroid mining would disrupt the market for many rare elements, but I think it could be less chaotic than people think. It's not going to be like the Gold Rush where a deposit was found and prospectors flocked to it. It'll be a massive undertaking, almost certainly with multiple nations working together to achieve. The time between the project becoming public and the resulting mined resources being delivered would give markets time to settle on a price. That said, yes, asteroids mining could certainly affect the price of gold, but not necessarily destroy all its value. There's a price floor set by the industrial applications for it. With BitCoin, there is no floor. If no one wants to buy your BitCoins, you can't do anything else with them. They are just data representing proof of work, but no outside value.
  - roywiggins 9y ago
    Plus, in a world where you can mine asteroids for gold, suddenly there's potential for growth not only on Earth, but in the solar system at large, and there have to be industrial uses of gold on Mars...
- TeMPOraL 9y ago
  Asteroid mining won't be able to significantly affect prices of gold downwell, definitely not until we bootstrap a real industrial presence in space - with the way we do space today, mission costs would eat up any profit you could make on shipping raw material down.
- emodendroket 9y ago
  It seems like it'd be hard for such a profligate use of petroleum to ever be profitable.
Brendinooo 9y ago
If someone discovers a huge lode or if something crazy happened like the US Government divesting, it could cause a pretty wild swing, in the manner of Mansa Musa's pilgrimage. Guess it's one of those things that seems impossible, until it isn't.
michaelbuckbee 9y ago
Consider aluminium. At one point it was more expensive than gold (due to mining+refining challenges). When those were overcome the cost plummeted to it's current "cheap" level. Personally, I think a better comparison is to the diamond trade. Through a series of machinations (price fixing, artificial supply constraint, marketing) diamonds are deeply overvalued if you consider just the fundamentals of them - aka they're in a bubble. However, due to those same expertly administered steps they've maintained a high retail value for decades.
- katastic 9y ago
  >decades Centuries.
- vkou 9y ago
  But only a one-way retail value. No diamond dealer will give you anything close to their retail price, when you try to sell them diamonds.
  - Brockenstein 9y ago
    Madden games have the same problem.
  - emodendroket 9y ago
    I always wonder about this when I see films where criminals mastermind a plan to steal diamonds.
    - kaybe 9y ago
      Maybe they have a diamond shop somewhere.
      - emodendroket 9y ago
        I found that sequel to The Asphalt Jungle a bit less interesting than the original.
    - 9y ago
seanmcdirmid 9y ago
Or we start mining exponentially more of it on asteroids. After all, more than 90% of the Earth’s gold has been mined since 1848.
darethas 9y ago
It's more likely that technological advances in mining techniques allow us to extract the millions of tons of gold closer to the upper mantle.
drewm1980 9y ago
Gold is worth a lot less to me now that I've seen what illegal mining of it by narcos is doing to the rainforests in south america.
tuna-piano 9y ago
Even the mighty platinum has fallen: https://www.google.com/amp/s/www.wsj.com/amp/articles/platinum-clinging-to-its-status-as-a-top-precious-metal-faces-a-crisis-1516043471 https://www.google.com/amp/s/www.wsj.com/amp/articles/platin...

root_axis 9y ago

> it's supply will remain constant after it has all been mined Even this could change if the miners and thought-leaders decide that it should.

EnFinlay 9y ago
Haha, good point.
WorldMaker 9y ago
You can't hard fork gold, either. You don't suddenly wind up with two copies of a gold bar because someone decided to Xerox your ledger to start a new one. The scarcity of Bitcoins is entirely a cultural delusion.
- milcron 9y ago
  If your payment is denominated in BTC, you can't pay it with BCH even though they're a fork of the same blockchain. BTC proper is scarce, regardless of how many times the chain is forked.
  - WorldMaker 9y ago
    The distinction between "BTC" and "BCH" (and "BTCS" and "BCD" and so on ad infinitum) is cultural convention. There's no inherent technical merit (or alchemical nature) to one ledger over all other contenders, it's entirely a state of mind of its users.
    - eric_cc 9y ago
      What you’re saying makes no sense and is in no way shape or form accurate.
    - milcron 9y ago
      Yes and no. Once the blockchain forks, the distinction between all those coins is very technical. Coins from one ledger cannot be spent on another ledger. You're right though, cultural convention decides which blockchain is the "real" Bitcoin. Most people are using BTC at the moment, but Bitmain takes payment exclusively in BCH. This might seem like a semantic quibble, but I think it's important. There will only ever be 21 million BTC, and only ever 21 million BCH. If Bitmain decided to charge 22 million BCH for their latest ASIC miner, nobody would ever be able to pay that bill regardless of how many forks there are. For a blockchain fork to have any value whatsoever, people need to want to own it. Bitmain ASIC sales are driving demand for BCH. Every other Bitcoin fork is doing rather poorly. Forks aren't diluting the value of BTC, because people know that BTC is the real asset. Everything else is like fool's gold.

desireco42 9y ago

I think you are not taking into account 'internet time' ie. 2-3 years is huge time span. No one can predict what will happen in that time.