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All economies are built on some combination of trust, fakery, coercion and hard work. The underlying rationale of a currency backed by "real material" is that i
by chipsy 15y ago
All economies are built on some combination of trust, fakery, coercion and hard work. The underlying rationale of a currency backed by "real material" is that it can be trusted to last. It can be trusted more than any government. Governments can fall quickly.
Bitcoin hasn't proven itself to the degree of gold. It doesn't necessarily have to, though. It just has to look _better_ than alternatives, within some useful timeframe of economic activity(i.e. more than a year or two, but probably less than a century). And, as the original author wrote, it might fall apart suddenly, but then it is basically the same risk as a government-backed currency.
- barrkel 15y agoGold isn't "real material" any more than paper. It's only has its value because of supply and demand, just like fiat money. If someone finds a huge lump of gold underneath the ground, or in some other possibly accessible location, gold's value will dramatically drop. If a new industrial use for gold is found, its value might dramatically rise (assuming the industrial use returns higher value than current prices). I think the chances of a flaw being found in the Bitcoin cipher system are a lot higher than e.g. a sudden disintegration of trust in the US dollar.
- dpatru 15y ago> Gold isn't "real material" any more than paper. It's only has its value because of supply and demand, just like fiat money. If this is so, then why have plundering governments consistently sought to replace gold with paper?
- barrkel 15y agoWhy have plundering governments plundered? The answer to your question is an implicit assumption of your question. As to governments replacing gold with paper, that seems to be correlated with economic growth and modernity than anything else. A mercantile approach to gold would be something like that followed by the Spanish with their South American possessions, mining for gold, etc. It didn't serve them very well because they didn't understand that it's not some magical property of the gold that holds value.
- Duff 15y agoIt is difficult for me to fathom an environment where bitcoin is more attractive than gold or silver. At least outside of the alternate universe of PR that bitcoin proponents seem to live in. Bitcoin claims to share the attributes of metals that make it different (ie. immutability, scarcity), but does so in a way that is impenetrable to the average person with the added flair of having do go through anonymous and shady middlemen to exchange bitcoin for an alternate currency in a highly volatile market. So other than making the early bitcoin users who likely hold most bitcoin rich, what is the advantage of using it over other physical commodities whose use has been established for millennia?
- phildawes 15y agoQuick + cheap to transact over distances without requirement of a trusted third party