3 ms·

It needs to be useful for something other than just "being a store of value". Gold 'works' as well as it does because there's at least something tying it down t

It needs to be useful for something other than just "being a store of value". Gold 'works' as well as it does because there's at least something tying it down to market fundamentals. You can make jewelry out of it, you can coat electrical contacts with it. There's reasons besides collective psychology that gold is worth something particular which isn't $0. A digital asset like Bitcoin has nothing tying it down to market fundamentals at all unless there's something else to do with it. It's a disconnected number flapping about in the wind. And as we've observed, since the value people ascribe to a Bitcoin is entirely psychological, the price can do anything. I'm not storing my value in anything I can't be fairly certain will have similar or greater value in the future. A Bitcoin that could be used as a currency would have some inherent value, because being able to use something as currency is valuable. Something has to be at least a little useful for its value to be reliable. (Having a trusted organization, which you expect to be around for a long time, that promises to exchange it for something useful counts as being useful itself.)

csomar 8y ago
Not looking to argue with you as it seems like you have an idea stuck to your mind. But bitcoin/crypto is very useful to tax evasion, capital flight, criminal organizations, scams, speculative trading, wealth transfer, and other stuff. Some of these are trillion dollar markets.
- scalesolved 8y ago
  All of that is true to fiat, which of the above in your list is not possible with fiat?
  - mpfundstein 8y ago
    Just because there is a substitute doesn’t render cryptos useless. Further is it much more easy to send 1M in btc than smuggle them in a suitcase
  - eriken 8y ago
    There are plenty of people who use fiat currencies that are almost useless outside of their own nations borders, with extremely bad exchange rates. This basically binds a person to one country and hinders movement and prosperity.
    - scalesolved 8y ago
      Look at what the OP was saying, he was only listing negative things and attributing them all to something BTC excels at. I was saying that fiat is hardly a paragon of virtue :)
scalesolved 8y ago
> Gold 'works' as well as it does because there's at least something tying it down to market fundamentals. You can make jewelry out of it, you can coat electrical contacts with it. In the earlier phases of Gold as a store of value I'd agree that it having additional uses were a bonus but now when an institution be it private or governmental purchases millions of gold as assets for a SoV then this usage is inconsequential. Gold used to be volatile but now is a stable store of value, it retains this because the market decides a fair price, gold can theoretically go to zero, it's just had hundreds of years to achieve a more stable price/value. > since the value people ascribe to a Bitcoin is entirely psychological This is totally true of gold too, it's just embedded more into society as an element that has value. > A Bitcoin that could be used as a currency would have some inherent value, because being able to use something as currency is valuable It's cheaper and faster for me to send BTC between US/EU, volatility is an issue of course. > Something has to be at least a little useful (or else backed up by a trusted organization) for its value to be reliable. I'm not sure many of the 'trusted' organizations are that trustworthy, look at the 2007 crash, massively over leveraged assets with complex rules/instruments and collusion (that resulted in the UK with no one being prosecuted). There a few ways where I see BTC having an advantage as a SoV over gold. * Portability (transferring any amount of BTC is limited only by transaction cost). * Scarcity (The number of BTC is capped at 21 million ever on the network, gold will still be found and mined). * Divisible (BTC can be divided to small amounts that would make it more useful for smaller purchases where gold is not practicable).
- MrEldritch 8y ago
  >In the earlier phases of Gold as a store of value I'd agree that it having additional uses were a bonus but now when an institution be it private or governmental purchases millions of gold as assets for a SoV then this usage is inconsequential. Nearly 70% of the demand for gold is for jewelry, electronics, and other non-financial/SoV applications. The market value of gold is dominated by its practical and aesthetic uses. https://www.statista.com/statistics/299609/gold-demand-by-industry-sector-share/ https://www.statista.com/statistics/299609/gold-demand-by-in...
  - scalesolved 8y ago
21 8y ago
Only 10% of the price of gold is "tied down" to it's real world usage. The other 90% is psychological. So gold - 90% psychological Bitcoin - 100% psychological If you don't believe in psychological value, both are about as bad. I'm pretty sure no investment gold holder will be happy if gold price drops down to "tied down" value.
- MrEldritch 8y ago
  Actually, 70% of the price of gold is tied down to its real world usage. I was surprised too - I actually thought it was only around 10% when I made that comment. But what I was referring to was that simply having some significant non-psychological value was key for giving people the stability and confidence to invest more value in it. In which case, the difference between 10% non-psychological value and 0% non-psychological value is something on the order of an infinity percent relative difference.

csomar 8y ago

Not looking to argue with you as it seems like you have an idea stuck to your mind. But bitcoin/crypto is very useful to tax evasion, capital flight, criminal organizations, scams, speculative trading, wealth transfer, and other stuff. Some of these are trillion dollar markets.

scalesolved 8y ago
All of that is true to fiat, which of the above in your list is not possible with fiat?
- mpfundstein 8y ago
  Just because there is a substitute doesn’t render cryptos useless. Further is it much more easy to send 1M in btc than smuggle them in a suitcase
- eriken 8y ago
  There are plenty of people who use fiat currencies that are almost useless outside of their own nations borders, with extremely bad exchange rates. This basically binds a person to one country and hinders movement and prosperity.
  - scalesolved 8y ago
    Look at what the OP was saying, he was only listing negative things and attributing them all to something BTC excels at. I was saying that fiat is hardly a paragon of virtue :)

scalesolved 8y ago

> Gold 'works' as well as it does because there's at least something tying it down to market fundamentals. You can make jewelry out of it, you can coat electrical contacts with it. In the earlier phases of Gold as a store of value I'd agree that it having additional uses were a bonus but now when an institution be it private or governmental purchases millions of gold as assets for a SoV then this usage is inconsequential. Gold used to be volatile but now is a stable store of value, it retains this because the market decides a fair price, gold can theoretically go to zero, it's just had hundreds of years to achieve a more stable price/value. > since the value people ascribe to a Bitcoin is entirely psychological This is totally true of gold too, it's just embedded more into society as an element that has value. > A Bitcoin that could be used as a currency would have some inherent value, because being able to use something as currency is valuable It's cheaper and faster for me to send BTC between US/EU, volatility is an issue of course. > Something has to be at least a little useful (or else backed up by a trusted organization) for its value to be reliable. I'm not sure many of the 'trusted' organizations are that trustworthy, look at the 2007 crash, massively over leveraged assets with complex rules/instruments and collusion (that resulted in the UK with no one being prosecuted). There a few ways where I see BTC having an advantage as a SoV over gold. * Portability (transferring any amount of BTC is limited only by transaction cost). * Scarcity (The number of BTC is capped at 21 million ever on the network, gold will still be found and mined). * Divisible (BTC can be divided to small amounts that would make it more useful for smaller purchases where gold is not practicable).

MrEldritch 8y ago
>In the earlier phases of Gold as a store of value I'd agree that it having additional uses were a bonus but now when an institution be it private or governmental purchases millions of gold as assets for a SoV then this usage is inconsequential. Nearly 70% of the demand for gold is for jewelry, electronics, and other non-financial/SoV applications. The market value of gold is dominated by its practical and aesthetic uses. https://www.statista.com/statistics/299609/gold-demand-by-industry-sector-share/ https://www.statista.com/statistics/299609/gold-demand-by-in...
- scalesolved 8y ago

21 8y ago

Only 10% of the price of gold is "tied down" to it's real world usage. The other 90% is psychological. So gold - 90% psychological Bitcoin - 100% psychological If you don't believe in psychological value, both are about as bad. I'm pretty sure no investment gold holder will be happy if gold price drops down to "tied down" value.

MrEldritch 8y ago
Actually, 70% of the price of gold is tied down to its real world usage. I was surprised too - I actually thought it was only around 10% when I made that comment. But what I was referring to was that simply having some significant non-psychological value was key for giving people the stability and confidence to invest more value in it. In which case, the difference between 10% non-psychological value and 0% non-psychological value is something on the order of an infinity percent relative difference.