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The argument you're making is a strong argument for cryptocurrency, but not for Bitcoin specifically. Ethereum, Litecoin, Peercoin, Dogecoin, and a wide variety

The argument you're making is a strong argument for cryptocurrency, but not for Bitcoin specifically. Ethereum, Litecoin, Peercoin, Dogecoin, and a wide variety of other cryptocurrencies have the same properties you're describing. Bitcoin isn't the most advanced cryptocurrency out there. It doesn't have even close to the best technology. Bitcoin's continued dominance is very strong evidence that it's completely popularity, not technology, that drives prices. There are numerous other examples: Peercoin, for example, pioneered a new proof algorithm, but peaked at $10 and is now at $0.38; superior technology doesn't guarantee success. This means that it's entirely possible for another cryptocurrency to surpass Bitcoin, but the technology isn't the driving factor. With gold, there are industrial uses which drive the price up or down, and you can't just substitute platinum or silver for those industrial uses. You can substitute platinum or silver for gold as an investment, but the laws of physics limit the number of precious metals that can stably exist, so gold is competing with a limited number of precious metals as an investment. Not so for Bitcoin: I can spin up a competing blockchain this afternoon if I want, and there's no limit to the number of competing cryptocurrencies. What I'm saying is that I think that speaking of Bitcoin as "digital gold" breaks down pretty fast once you analyze it at all.

thdxr 7y ago
The key property of using gold as a store of value besides it being easily divisible, hard to counterfeit, etc is that there's plenty of other people in the world willing to accept it. Popularity isn't an arbitrary property, it's a feature
- kerkeslager 7y ago
  That's a circular argument. People accept it because it's valuable, it's valuable because people accept it?
  - typest 7y ago
    It’s weirdly circular, but it’s also correct. This is how many things with network effects work. Something is useful because others use it, which makes it more useful, which makes more people use it... In this case, you could also look up “coordinated Nash Equilibrium”, which can partially explain some of the behavior in bitcoin.
    - kerkeslager 7y ago
      > It’s weirdly circular, but it’s also correct. This is how many things with network effects work. Something is useful because others use it, which makes it more useful, which makes more people use it... This can work for a little while, but without other factors to maintain the cycle it's just a fad. > In this case, you could also look up “coordinated Nash Equilibrium”, which can partially explain some of the behavior in bitcoin. You could also explain how coordinated Nash equilibrium relates to your point, instead of name-dropping complex topics (which you may not even understand). If you actually have a valid point here, you can explain it rather than expecting others to do your research for you.

thdxr 7y ago

The key property of using gold as a store of value besides it being easily divisible, hard to counterfeit, etc is that there's plenty of other people in the world willing to accept it. Popularity isn't an arbitrary property, it's a feature

kerkeslager 7y ago
That's a circular argument. People accept it because it's valuable, it's valuable because people accept it?
- typest 7y ago
  It’s weirdly circular, but it’s also correct. This is how many things with network effects work. Something is useful because others use it, which makes it more useful, which makes more people use it... In this case, you could also look up “coordinated Nash Equilibrium”, which can partially explain some of the behavior in bitcoin.
  - kerkeslager 7y ago
    > It’s weirdly circular, but it’s also correct. This is how many things with network effects work. Something is useful because others use it, which makes it more useful, which makes more people use it... This can work for a little while, but without other factors to maintain the cycle it's just a fad. > In this case, you could also look up “coordinated Nash Equilibrium”, which can partially explain some of the behavior in bitcoin. You could also explain how coordinated Nash equilibrium relates to your point, instead of name-dropping complex topics (which you may not even understand). If you actually have a valid point here, you can explain it rather than expecting others to do your research for you.