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Just a question, isn't all criticism against bitcoin applicable to gold? Money/Currency/Value in general can't be reduced or derived from first principles. You

Just a question, isn't all criticism against bitcoin applicable to gold? Money/Currency/Value in general can't be reduced or derived from first principles. You always have to take into account human nature, economic activity, and most unfortunately: psychology. So all criticism about how bitcoin inherently being pointless, sounds like off-tune. I want good reasons to/NOT-to buy in. First-world country citizens kind of trust their governments to at least behave lawfully, or at least be eventually accountable. There are systems in place for transactions and accounting, and "everyone" has access. The "Value" of bitcoin, coming from a struggling third-world country (Lebanon), is in the ability to be independent of a currency that is inflating quickly, being able to transact with the outside world (even if only in bulk) without being under the mercy of a failing financial system that is lurking around to take a share in every which way possible. The energy consumption needs of bitcoin are an obvious drawback. But I don't think it's fair to brush away the whole thing for only that reason. Disclosure: I own an embarrassingly small amount of bitcoin (~0.4BTC).

epmaybe 6y ago
That’s literally more money than I have in my bank account lol
jayd16 6y ago
>Just a question, isn't all criticism against bitcoin applicable to gold? Gold fluctuates a lot less. Its hard to swallow "ok ok bitcoin is useless but it can still be a stable currency/safe asset" when the price is booming and crashing every year.
- proverbialbunny 6y ago
  Fluctuation has to do with volume. (eg, penny stock) In the 1700s the stock market looked a lot like bitcoin.
- keymone 6y ago
  Bitcoin isn’t useless, it’s useful for storing or transferring Bitcoin in a permissionless way.
three_seagrass 6y ago
Gold isn't controlled by a handful of miners in China, the way Bitcoin is. The whole decentralization-as-design principle of Bitcoin has shown that, given few constraints, anything of value naturally centralizes on the select few with the means to control it anyways. The block size debate, and the tragedy of the commons that it shines a light on, is a prime example of that.
- quattrofan 6y ago
  How do they "control it" exactly?
  - three_seagrass 6y ago
    By design, any changes to update the Bitcoin protocol need to be accepted by the miners with the majority of computing power - a.k.a. a hard fork. For many reasons, such as stealing electricity and having access to chip manufacturers, there are a handful of miners in China who have the majority of the computing power for Bitcoin. They can mine bitcoins at a cost that is less than for everyone else. This creates problems because there are updates to Bitcoin that are needed, such as allowing the Bitcoin network to process more than 7 transactions a second (for reference, Visa does 40,000 a second). Unfortunately, this small block size rate means people have to pay extra fees to prioritize their bitcoin transactions to happen in the next 20 minutes. The miners get to keep these additional fees, so they are incentivized to keep the network slow and people paying more. This is why the Chinese miners have rejected any updates to improve Bitcoin transaction rate, meaning bitcoin is slower and more expensive for everyone but the miners extract more money from the network. It's tragedy of the commons.
    - ARandumGuy 6y ago
      This is one of my big issues with Bitcoin, and other cryptocurrencies. It's not a democratic system, it's controlled by whoever has the most investment in the currency (either through mining power, or amount of currency). This means that the people who get the most decision making power are incentivized to only make changes that help their investment. Any change that would help a majority of users, but harm these top users, is basically a non-starter.
batmanthehorse 6y ago
the energy consumption is my biggest criticism, so the answer is "no" (even though you try to sidestep that). buying a pack of gum with bitcoin could power a whole house for 2 months, that's awful and irresponsible.
- paulryanrogers 6y ago
  Nice to know I'm not the only one weighing these costs.
- rodiger 6y ago
  How much energy do you think the current financial system consumes? Eg paying for a pack of gum with your Mastercard Edit: This wasn't intended to be a hypothetical- I agree BTC uses significantly more per transaction, but I'm curious how it compares to the entirety of a system like Mastercard divided by number of transactions (including all employee/office space/commute/etc energy consumption). There are clearer/fewer inputs for Bitcoin for sure but that doesn't mean we shouldn't account for the total environmental cost of a behemoth like Mastercard. Bitcoin can never and should never replace our current payments network as it simply cannot scale in its current form. But, I do think people simply look at the cost to run the technology itself and assume that's the total environmental cost of a system.
  - elefanten 6y ago
    orders of magnitude less
  - jpsalm 6y ago
    Significantly less energy per transaction, which is the only metric that matters.
    - zadler 6y ago
      Lightning network will also scale to millions of transactions per second and consume much less than each Bitcoin transaction.
rgifford 6y ago
> Just a question, isn't all criticism against bitcoin applicable to gold? Gold has limited value as a commodity and widespread usage in central bank reserves. People I know who value Bitcoin highly do it on the expectation that either high net worth individuals will start to hold some small part of their net worth in BTC OR central banks will adopt it as a reserve currency. How viable those two outcomes are determines whether you view BTC and gold similarly.
cj 6y ago
Gold is something that exists IRL. It has value even in the absence of a market to buy/sell it. It can be melted down and formed into jewelry, as a simple example. The reason I won't buy into crypto is it's impossible to make informed investment decisions because, as an investment, the price is driven too highly by unknown market forces (at least unknown to me...). Perhaps it's a good investment if you truly feel you understand what drives the price of bitcoin, or have insider knowledge that you know will affect its price that others don't.
- SparkyMcUnicorn 6y ago
  I've never really understood the argument around gold being better because you can melt it down into jewelry. If there isn't a market for gold anymore, then the jewelry wouldn't be worth more than costume pieces, right? I guess the argument is that you can still make pennies on the dollar if there isn't a market for it anymore? Your other arguments I can understand, although I do think the use of cryptocurrencies will keep growing whether I like it or not.
- Siira 6y ago
  Jewelry is even more useless than ledgers.
- keymone 6y ago
  Bitcoin exists IRL - you can write down you private key on the piece of paper and that piece of paper suddenly is worth however many bitcoin is behind that key. The informed investment decision is that crypto is entirely new asset class and bitcoin is king. There is redistribution happening between asset classes and especially this year when 30% of all USD in existence was printed, there will be large inflows into bitcoin. Of course it will be volatile for a while.
- zadler 6y ago
  The point is that it’s not going away. Many times it has been pronounced dead but it has maintained enough utility to keep growing. This gives people confidence in it over time.
blacksmith_tb 6y ago
Gold is not just a store of value, it's a material with many practical uses (like all the electronics that make having this conversation possible). Even gold's decorative value gives it a serious advantage over BTC in my book (though I like silver and platinum better, to be honest).
- dumbfoundded 6y ago
  Most of gold's value is attributed to speculation just as bitcoin is. Bitcoin uniquely offers a way to spend money without the government knowing about it. Ransomware, moving money out of China, buying drugs online were all extremely difficult without bitcoin. Of course Bitcoin isn't completely anonymous, but it can be. Buy bitcoin with cash to a new wallet and then send anywhere. Gold is just the physical version of that. Just like all money is made up, the value of bitcoin and gold are pretty much imaginary.
jariel 6y ago
There are parallels, but gold has a 5000 year incumbency. It's outlasted not only Empires, but eras. It's valued by cultures that have no relationship with one another and no common past, totally independent. It's physical so it can't be 'cracked' and people like physical things. It's universal in how it is understood. Bitcoin is 'well understood' by basically 0.0001% of the population arguably not even most it's traders.
- jcranmer 6y ago
  > It's valued by cultures that have no relationship with one another and no common past, totally independent. Actually, not really. In historical terms, the gold standard is historically limited to cultures that existed in (direct or indirect) trading relationships with the Mediterranean culture. Notably, China (and correspondingly East and Southeast Asia) instead used a silver standard, while the New World cultures eschewed gold or silver for monetary standards.
AuryGlenz 6y ago
In the age where we might see asteroid mining in our lifetimes, or possibly even economically transmuting elements, gold seems like a bad investment to me.
- dumbfoundded 6y ago
  The power requirements for transmuting elements would probably significantly out do the power needed for mining bitcoin. In the case of asteroid mining, it'd likely go the way of the diamond. Diamonds are not rare and easy to create in labs yet still retain high values due to monopolization of the supply. No company that mines asteroids will want to flood the markets. Instead, they will monopolize the supply and find a balance of introducing supply and maintaining prices.
beefield 6y ago
> Just a question, isn't all criticism against bitcoin applicable to gold? Pretty much. It is insane that gold mines pollute the environment while central banks hoard double-digit percentage of ever mined gold in their vaults. And I see also no difference in the stupidity of central banks supporting gold price or cryptocurrency price. (There is a small difference, though, as a noble metal, gold actually has some utility outside inves^H^H^H^Hgambling and illegal trade)
webinvest 6y ago
Gold doesn’t become more expensive to transport as the price goes up.
- staplers 6y ago
  Yes it does. Security always comes at a cost.
- 627467 6y ago
  Only if you don't care to insure for transporting your gold. If you do care, it definitely would be more expensive to insure a more valuable cargo. But more crucially, if you need to use extraordinary quantities of gold to settle a transaction (ie. When nation states buy something with their gold reserves) the gold likely won't even move: most of it are stored in "trusted" first world nation central banks like the bank of england. But then again, with bitcoin you don't need "trusted" central banks.
throwaway-8c93 6y ago
Gold is a material with certain physical properties that cannot be replicated: it's attractively shiny, rare, dense, and chemically inert. These properties make it ideal for an international store of value across time. Moreover, those properties are independent of the current jurisdiction. Regardless of society's conventions, iron will never be worth more than gold. Although Bitcoin's current implementation limits the supply to 21M BTC, the idea of a cryptocurrency can be replicated ad-nauseum and is 100% fungible. For all intents and purposes, it has no intrinsic advantage over, say Ethereum or Monero. The fact there are perfectly fine alternatives for it makes the value proposition much more shaky than gold. If people en masse, for any reason switch to other cryptocurrency, the existing tokens are rendered useless. And there are many scenarios in which this can happen - government action, protocol attack, untangling of distributed trust, breaking SHA256, BTC no longer fashionable, transaction cost creep,...
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epmaybe 6y ago

That’s literally more money than I have in my bank account lol

jayd16 6y ago

>Just a question, isn't all criticism against bitcoin applicable to gold? Gold fluctuates a lot less. Its hard to swallow "ok ok bitcoin is useless but it can still be a stable currency/safe asset" when the price is booming and crashing every year.

proverbialbunny 6y ago
Fluctuation has to do with volume. (eg, penny stock) In the 1700s the stock market looked a lot like bitcoin.
keymone 6y ago
Bitcoin isn’t useless, it’s useful for storing or transferring Bitcoin in a permissionless way.

three_seagrass 6y ago

Gold isn't controlled by a handful of miners in China, the way Bitcoin is. The whole decentralization-as-design principle of Bitcoin has shown that, given few constraints, anything of value naturally centralizes on the select few with the means to control it anyways. The block size debate, and the tragedy of the commons that it shines a light on, is a prime example of that.

quattrofan 6y ago
How do they "control it" exactly?
- three_seagrass 6y ago
  By design, any changes to update the Bitcoin protocol need to be accepted by the miners with the majority of computing power - a.k.a. a hard fork. For many reasons, such as stealing electricity and having access to chip manufacturers, there are a handful of miners in China who have the majority of the computing power for Bitcoin. They can mine bitcoins at a cost that is less than for everyone else. This creates problems because there are updates to Bitcoin that are needed, such as allowing the Bitcoin network to process more than 7 transactions a second (for reference, Visa does 40,000 a second). Unfortunately, this small block size rate means people have to pay extra fees to prioritize their bitcoin transactions to happen in the next 20 minutes. The miners get to keep these additional fees, so they are incentivized to keep the network slow and people paying more. This is why the Chinese miners have rejected any updates to improve Bitcoin transaction rate, meaning bitcoin is slower and more expensive for everyone but the miners extract more money from the network. It's tragedy of the commons.
  - ARandumGuy 6y ago
    This is one of my big issues with Bitcoin, and other cryptocurrencies. It's not a democratic system, it's controlled by whoever has the most investment in the currency (either through mining power, or amount of currency). This means that the people who get the most decision making power are incentivized to only make changes that help their investment. Any change that would help a majority of users, but harm these top users, is basically a non-starter.

batmanthehorse 6y ago

the energy consumption is my biggest criticism, so the answer is "no" (even though you try to sidestep that). buying a pack of gum with bitcoin could power a whole house for 2 months, that's awful and irresponsible.

paulryanrogers 6y ago
Nice to know I'm not the only one weighing these costs.
rodiger 6y ago
How much energy do you think the current financial system consumes? Eg paying for a pack of gum with your Mastercard Edit: This wasn't intended to be a hypothetical- I agree BTC uses significantly more per transaction, but I'm curious how it compares to the entirety of a system like Mastercard divided by number of transactions (including all employee/office space/commute/etc energy consumption). There are clearer/fewer inputs for Bitcoin for sure but that doesn't mean we shouldn't account for the total environmental cost of a behemoth like Mastercard. Bitcoin can never and should never replace our current payments network as it simply cannot scale in its current form. But, I do think people simply look at the cost to run the technology itself and assume that's the total environmental cost of a system.
- elefanten 6y ago
  orders of magnitude less
- jpsalm 6y ago
  Significantly less energy per transaction, which is the only metric that matters.
  - zadler 6y ago
    Lightning network will also scale to millions of transactions per second and consume much less than each Bitcoin transaction.

rgifford 6y ago

> Just a question, isn't all criticism against bitcoin applicable to gold? Gold has limited value as a commodity and widespread usage in central bank reserves. People I know who value Bitcoin highly do it on the expectation that either high net worth individuals will start to hold some small part of their net worth in BTC OR central banks will adopt it as a reserve currency. How viable those two outcomes are determines whether you view BTC and gold similarly.

cj 6y ago

Gold is something that exists IRL. It has value even in the absence of a market to buy/sell it. It can be melted down and formed into jewelry, as a simple example. The reason I won't buy into crypto is it's impossible to make informed investment decisions because, as an investment, the price is driven too highly by unknown market forces (at least unknown to me...). Perhaps it's a good investment if you truly feel you understand what drives the price of bitcoin, or have insider knowledge that you know will affect its price that others don't.

SparkyMcUnicorn 6y ago
I've never really understood the argument around gold being better because you can melt it down into jewelry. If there isn't a market for gold anymore, then the jewelry wouldn't be worth more than costume pieces, right? I guess the argument is that you can still make pennies on the dollar if there isn't a market for it anymore? Your other arguments I can understand, although I do think the use of cryptocurrencies will keep growing whether I like it or not.
Siira 6y ago
Jewelry is even more useless than ledgers.
keymone 6y ago
Bitcoin exists IRL - you can write down you private key on the piece of paper and that piece of paper suddenly is worth however many bitcoin is behind that key. The informed investment decision is that crypto is entirely new asset class and bitcoin is king. There is redistribution happening between asset classes and especially this year when 30% of all USD in existence was printed, there will be large inflows into bitcoin. Of course it will be volatile for a while.
zadler 6y ago
The point is that it’s not going away. Many times it has been pronounced dead but it has maintained enough utility to keep growing. This gives people confidence in it over time.

blacksmith_tb 6y ago

Gold is not just a store of value, it's a material with many practical uses (like all the electronics that make having this conversation possible). Even gold's decorative value gives it a serious advantage over BTC in my book (though I like silver and platinum better, to be honest).

dumbfoundded 6y ago
Most of gold's value is attributed to speculation just as bitcoin is. Bitcoin uniquely offers a way to spend money without the government knowing about it. Ransomware, moving money out of China, buying drugs online were all extremely difficult without bitcoin. Of course Bitcoin isn't completely anonymous, but it can be. Buy bitcoin with cash to a new wallet and then send anywhere. Gold is just the physical version of that. Just like all money is made up, the value of bitcoin and gold are pretty much imaginary.

jariel 6y ago

There are parallels, but gold has a 5000 year incumbency. It's outlasted not only Empires, but eras. It's valued by cultures that have no relationship with one another and no common past, totally independent. It's physical so it can't be 'cracked' and people like physical things. It's universal in how it is understood. Bitcoin is 'well understood' by basically 0.0001% of the population arguably not even most it's traders.

jcranmer 6y ago
> It's valued by cultures that have no relationship with one another and no common past, totally independent. Actually, not really. In historical terms, the gold standard is historically limited to cultures that existed in (direct or indirect) trading relationships with the Mediterranean culture. Notably, China (and correspondingly East and Southeast Asia) instead used a silver standard, while the New World cultures eschewed gold or silver for monetary standards.

AuryGlenz 6y ago

In the age where we might see asteroid mining in our lifetimes, or possibly even economically transmuting elements, gold seems like a bad investment to me.

dumbfoundded 6y ago
The power requirements for transmuting elements would probably significantly out do the power needed for mining bitcoin. In the case of asteroid mining, it'd likely go the way of the diamond. Diamonds are not rare and easy to create in labs yet still retain high values due to monopolization of the supply. No company that mines asteroids will want to flood the markets. Instead, they will monopolize the supply and find a balance of introducing supply and maintaining prices.

beefield 6y ago

> Just a question, isn't all criticism against bitcoin applicable to gold? Pretty much. It is insane that gold mines pollute the environment while central banks hoard double-digit percentage of ever mined gold in their vaults. And I see also no difference in the stupidity of central banks supporting gold price or cryptocurrency price. (There is a small difference, though, as a noble metal, gold actually has some utility outside inves^H^H^H^Hgambling and illegal trade)

webinvest 6y ago

Gold doesn’t become more expensive to transport as the price goes up.

staplers 6y ago
Yes it does. Security always comes at a cost.
627467 6y ago
Only if you don't care to insure for transporting your gold. If you do care, it definitely would be more expensive to insure a more valuable cargo. But more crucially, if you need to use extraordinary quantities of gold to settle a transaction (ie. When nation states buy something with their gold reserves) the gold likely won't even move: most of it are stored in "trusted" first world nation central banks like the bank of england. But then again, with bitcoin you don't need "trusted" central banks.

throwaway-8c93 6y ago

Gold is a material with certain physical properties that cannot be replicated: it's attractively shiny, rare, dense, and chemically inert. These properties make it ideal for an international store of value across time. Moreover, those properties are independent of the current jurisdiction. Regardless of society's conventions, iron will never be worth more than gold. Although Bitcoin's current implementation limits the supply to 21M BTC, the idea of a cryptocurrency can be replicated ad-nauseum and is 100% fungible. For all intents and purposes, it has no intrinsic advantage over, say Ethereum or Monero. The fact there are perfectly fine alternatives for it makes the value proposition much more shaky than gold. If people en masse, for any reason switch to other cryptocurrency, the existing tokens are rendered useless. And there are many scenarios in which this can happen - government action, protocol attack, untangling of distributed trust, breaking SHA256, BTC no longer fashionable, transaction cost creep,...

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