4 ms·

It's been said many times before, but as digital gold. Gold is worth about $8tn. That puts it at about an 80x multiple from where it is today. But let's be "con

It's been said many times before, but as digital gold. Gold is worth about $8tn. That puts it at about an 80x multiple from where it is today. But let's be "conservative" and put a 20 to 40x estimate on it, from where it is. It's obviously an assumption, not a sure thing. But the only thing that needs to happen is people sharing the belief that it is and/or can become digital gold, which is quite peculiar. If large stable investors buy in (pension funds, endowments, etc) that will help massively to support price levels, after a period of value growth.

Blackstone4 8y ago
The same arguments I used above can also be applied to gold. Gold is intrinsically hard to value. So pricing BTC off gold feels tenuous to me. Gold also has non-monetary use (i.e. jewellery) which I imagine is a substantial portion of demand. 5+ years ago, I used to be really into gold when I used to read Zerohedge. I feel like I'm hearing similar arguments for crypto currencies vs. fiat as back then when I read up on gold vs. fiat. People were fanatical about gold (me included) and weren't objective. I owned shares in gold miners. I got burnt and lost a whole bunch of money. So personally I'm sticking to investments which produce cash flow. As they say, "History doesn't repeat itself, but it does rhyme." I had better learn from my mistakes.
- krageon 8y ago
  If you owned shares in gold mines and got burned, it had nothing to do with the value of the gold itself. The price of gold has seen a steady upward trend over the past ~17 years at least (that's how long I've been looking at it, anyway).
  - BugsJustFindMe 8y ago
    Adjust for inflation and look at the trend starting from the 17 years before that.
    - krageon 8y ago
      "adjust for inflation" on a 300% increase? Are you looking at a different graph than I am? Perhaps I don't understand what I'm looking at. Could you walk me through your reasoning?
      - BugsJustFindMe 8y ago
        Sure. Google "inflation adjusted price of gold since 1980". Or view https://b-i.forbesimg.com/rickferri/files/2013/04/GoldFig22.jpg https://b-i.forbesimg.com/rickferri/files/2013/04/GoldFig22.... The giant saddle does seem to support the idea that gold is hard to value. Then the next search phrase to look up is "inflation adjusted price of gold since 2011". It's not a pretty chart. I would not use the words "steady upward trend" to describe it. "Steady downward trend", maybe.
bjl 8y ago
Large, stable investors don't buy gold, so why would they buy BTC? Especially now that the blockchain hype is derided rather than celebrated on Wall Street.
mrfredward 8y ago
Fundamentals supporting gold: 1. It has industrial uses - this doesn't justify current prices, but it does provide support at low price points because there is a demand that will increase at lower price levels. 2. People are attracted to shiny objects, and people like status symbols, thus they are willing to pay a lot of money for shiny objects that their friends can't afford. Fundamentals supporting cryptocurrencies: 1. Criminals need a way to do business online. Of course it works for normal people too, but with the transaction fees and inconveniences inherent in current systems, cryptocurrencies are most attractive for people who can't do business through traditional channels. 2. But Blockchain is the future... You can see a lot of parallels here, but note the differences: 1. Industry may use more gold plating as prices fall, but falling bitcoin prices won't make criminals switch from cash to crypto, so the price cushion is weaker. 2. People have been attracted to shiny objects for all of human history, so this is likely a part of human nature. (Regular) people have been attracted to blockchain for like 10 months, so this is probably a fad. Additionally, while bitcoin may be scarce within its own ecosystem, cryptocurrencies are not scarce in a global sense...a new crapcoin is minted everday. Unless BTC is the one true coin (and it can't support the transaction load), there is no real scarcity here. By the way, if the fundamentals I listed for gold sound a little shaky, it's because they are. A responsible financial adviser might tell you to put 80% of your money in stocks, but he'd never tell you to hold 80% in gold.
UncleMeat 8y ago
Assuming that BTC replaces gold is insane. One BTC is exactly as useful as one "MyBTC" as a store of value. You can fork infinitely. Can't do that with gold.
- charlesdm 8y ago
  We'll see. I was sceptical at first, but I think as the market cap has grown, it's starting to make a lot more sense. The main question is: are people ready for a digital store of wealth? If yes, it'll likely be Bitcoin. If not, it'll falter. I don't know the correct answer.

Blackstone4 8y ago

The same arguments I used above can also be applied to gold. Gold is intrinsically hard to value. So pricing BTC off gold feels tenuous to me. Gold also has non-monetary use (i.e. jewellery) which I imagine is a substantial portion of demand. 5+ years ago, I used to be really into gold when I used to read Zerohedge. I feel like I'm hearing similar arguments for crypto currencies vs. fiat as back then when I read up on gold vs. fiat. People were fanatical about gold (me included) and weren't objective. I owned shares in gold miners. I got burnt and lost a whole bunch of money. So personally I'm sticking to investments which produce cash flow. As they say, "History doesn't repeat itself, but it does rhyme." I had better learn from my mistakes.

krageon 8y ago
If you owned shares in gold mines and got burned, it had nothing to do with the value of the gold itself. The price of gold has seen a steady upward trend over the past ~17 years at least (that's how long I've been looking at it, anyway).
- BugsJustFindMe 8y ago
  Adjust for inflation and look at the trend starting from the 17 years before that.
  - krageon 8y ago
    "adjust for inflation" on a 300% increase? Are you looking at a different graph than I am? Perhaps I don't understand what I'm looking at. Could you walk me through your reasoning?
    - BugsJustFindMe 8y ago
      Sure. Google "inflation adjusted price of gold since 1980". Or view https://b-i.forbesimg.com/rickferri/files/2013/04/GoldFig22.jpg https://b-i.forbesimg.com/rickferri/files/2013/04/GoldFig22.... The giant saddle does seem to support the idea that gold is hard to value. Then the next search phrase to look up is "inflation adjusted price of gold since 2011". It's not a pretty chart. I would not use the words "steady upward trend" to describe it. "Steady downward trend", maybe.

bjl 8y ago

Large, stable investors don't buy gold, so why would they buy BTC? Especially now that the blockchain hype is derided rather than celebrated on Wall Street.

mrfredward 8y ago

Fundamentals supporting gold: 1. It has industrial uses - this doesn't justify current prices, but it does provide support at low price points because there is a demand that will increase at lower price levels. 2. People are attracted to shiny objects, and people like status symbols, thus they are willing to pay a lot of money for shiny objects that their friends can't afford. Fundamentals supporting cryptocurrencies: 1. Criminals need a way to do business online. Of course it works for normal people too, but with the transaction fees and inconveniences inherent in current systems, cryptocurrencies are most attractive for people who can't do business through traditional channels. 2. But Blockchain is the future... You can see a lot of parallels here, but note the differences: 1. Industry may use more gold plating as prices fall, but falling bitcoin prices won't make criminals switch from cash to crypto, so the price cushion is weaker. 2. People have been attracted to shiny objects for all of human history, so this is likely a part of human nature. (Regular) people have been attracted to blockchain for like 10 months, so this is probably a fad. Additionally, while bitcoin may be scarce within its own ecosystem, cryptocurrencies are not scarce in a global sense...a new crapcoin is minted everday. Unless BTC is the one true coin (and it can't support the transaction load), there is no real scarcity here. By the way, if the fundamentals I listed for gold sound a little shaky, it's because they are. A responsible financial adviser might tell you to put 80% of your money in stocks, but he'd never tell you to hold 80% in gold.

UncleMeat 8y ago

Assuming that BTC replaces gold is insane. One BTC is exactly as useful as one "MyBTC" as a store of value. You can fork infinitely. Can't do that with gold.

charlesdm 8y ago
We'll see. I was sceptical at first, but I think as the market cap has grown, it's starting to make a lot more sense. The main question is: are people ready for a digital store of wealth? If yes, it'll likely be Bitcoin. If not, it'll falter. I don't know the correct answer.