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Why is Bitcoin different than gold though? Is gold also a Ponzi scheme?
by xutopia 6y ago
Why is Bitcoin different than gold though? Is gold also a Ponzi scheme?
- assface 6y agoGold has material use. You can make things with it.
- Icathian 6y agoOkay, but the value of gold has basically zero relationship to it's industrial or commercial uses, so that isn't really relevant here.
- lotsofpulp 6y agoThere could be some value attributed to being able to use gold as a store of value and currency in the event of a dissolution of modern society such that the internet or widespread electricity is no longer around.
- danielbarla 6y agoSure, but this is based on the idea that the innate uses and value of gold would be similar (or "relatively high") after such a transformation of the world. This is not clear to me at all, compared to say, a similar wealth invested into a large cache of firearms and ammo. Or whatever will happen to be useful, depending on the scenario. It reminds me of an anecdote from my grandfather from the end of WW2, people were giving away gold rings for loaves of bread. (Clearly, only when in desperate need, but it did happen.)
- lotsofpulp 6y agoFirearms and ammo are a necessity, but one person/small tribe can only defend against so many others. What you really need is a community (or bigger tribe) that will come to your aid, and the community will need to be able to trade between themselves and others, which is where gold comes in.
- rainbowzootsuit 6y agoIn that situation, the inability to eat it or shoot something with it is probably going to make gold/silver pretty close to worthless as well until society re-exists. Even if the US government ceases to exist, the features of non reproducibility built into cash dollars (watermarks, intaglio printing) would still exist although they won't be as ultimately durable into the future as an element. At least you can also use them as fire starters.
- jpdb 6y agoPaper money has a lower bound of material value equal to $(toilet paper - utility value for the comfort of toilet paper over a dollar bill) per square inch.
- booleandilemma 6y agoBy that point you're going to have bigger things to worry about, like where to get fresh water and go to bathroom. And people with guns are going to quickly steal your gold anyway.
- ddevault 6y agoGold is also the most reasonable element to use as a store of value. It isn't very reactive or radioactive, so it's stable for long periods of time, it's a solid at room temperature, it's not hazardous to human health, it's easily manipulated and formed, and it's not super abundant but also not super rare. Silver is the only other element that comes close, and it tarnishes.
- teawrecks 6y agoThen why don't we all use gold as payment?
- jcbrand 6y agoWe used to (indirectly at least) until 1971 when the US went off the gold standard in order to not be bankrupted by the Vietnam war
- hudon 6y agoGold is found in nature. We can’t manufacture it or change its atomic number. Bitcoin is human code run on human machines. If society or the powers that be see fit to generate infinite Bitcoin, they can (ie forks are political power plays and we can’t control how the powerful will coopt Bitcoin in the future).
- dTal 6y agoWe can't manufacture it or change its atomic number, but the powerful can (and have) manipulated its "value" in all the same ways as they could manipulate bitcoin. They can buy up supply, insist that taxes be paid in it, or threaten to lock up anyone who mysteriously comes across a large amount of it. Gold's status as a physical element is basically irrelevant. Bitcoin is basically gold you can email.
- tim333 6y ago>If society or the powers that be see fit to generate infinite Bitcoin But not real ones. It's like saying you can make infinite Mona Lisas with a colour photocopier.
- ForHackernews 6y agoWho decides what is a "real" bitcoin? This is the point parent commenter is making. The only difference between Bitcoin OG and Bitcoin Cash or Segwit or any of the others is some kind of vague consensus that everyone agrees to pretend one magic bean is more special and valuable than the other, less-special magic bean with the same name.
- jcbrand 6y agoThe real Bitcoin will be the one that the market prefers. Why is Gold coins more valuable than copper coins? Why is the original Bitcoin more valuable than any of its forks?
- ForHackernews 6y ago
- dilippkumar 6y agoNot GP, here is my thesis. Right now, on coinbase, rate of bitcoin purchases paid in dollars > rate of dollars purchased in bitcoin. Anyone who wants to exit bitcoin today is getting dollars from people buying into bitcoin. When this changes (for whatever reason), coinbase and other exchanges have a limited capacity to buy back bitcoins for dollars, assuming they would even want to do that in the middle of a run on crypto exchanges. If bitcoin was a viable currency, then people buying bitcoin today would never want to trade it back for dollars. But that’s not happening- everyone still buys groceries, coffee, gas, tools and computer software with dollars. A run on coinbase is a problem when bitcoin is an “investment” and not an actively used currency. Finally, Monero has shown that there is still plenty of room for innovation beyond what bitcoin currently implements. If crypto currencies are the future, already Monero looks like a more viable option than btc (note that all the illegal stuff that used to happen with btc is now happening with xmr on the dark web). It’s very possible that even Monero isn’t the final incarnation of the ultimate crypto currency and something even better will replace it one day. A new crypto doesn’t threaten people who want to transact with that currency. Everyone on the darkweb markets switched from btc to xmr and business continues as usual, and it will continue even when the next evolution arrives. But those who see it as a store of value are at the mercy of everyone else buying that currency more than how much everyone else is selling- a classic ponzi scheme.
- OscarCunningham 6y ago"rate of bitcoin purchases paid in dollars > rate of dollars purchased in bitcoin" Why don't these two numbers have to be equal?
- dilippkumar 6y ago“Rate” here meant the first derivative of the number of transactions. Not the “btc <—> usd exchange rate” An equivalent way to say the same thing is: “number of bitcoins being purchased with USD per hour > number of USDs being purchased with bitcoin per hour”.
- OscarCunningham 6y ago
- michaelt 6y agoArguably nothing. Except with gold, there's a history of greater or lesser fools buying it from you that goes back thousands of years; there are a great many non-scam businesses trading in it, and they ain't come out with many new precious metals in my lifetime. Cryptocurrencies have a much shorter history, an exceptionally large number of scams, and nigh-limitless supply of new types of coin and token.
- jedberg 6y agoThe value of gold is supported by huge militaries all around the world, including the US military. Just like fiat currency, it derives its value in part from the large group of people with guns willing to commit violence to support its value. Bitcoin doesn't have an army of people willing to commit violence to support its value. At least not yet.
- simonh 6y agoYou do realise the gold standard was abandoned a long time ago. What are they going to do, force people to buy it at gunpoint? Back in the 60s the gold trade was highly regulated. That's why the plot of Goldfinger doesn't really make any sense from a moderns perspective. It seemed quaint even to me as a teenager in the 80s. Nowadays gold is just posh bitcoin.
- jedberg 6y agoI'm aware that we aren't on the gold standard, but the US still has the largest store of gold in the world, and uses its army (and courts) to defend the value of gold. Along with the next top three holders, Germany, France, and Italy.
- simonh 6y agoAs I said, what are they actually doing to achieve this?
- Applejinx 6y agoIn an abstract enough sense, Jeff Bezos is a Ponzi scheme :D …okay, then: Elon Musk.