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> Perhaps there is an argument to Bitcoin being a kind of "digital gold" even if it is all but useless as a currency. Gold is less useful than most people thin

> Perhaps there is an argument to Bitcoin being a kind of "digital gold" even if it is all but useless as a currency. Gold is less useful than most people think: > In a 2012 paper entitled "The Golden Dilemma",[1] Claude Erb and Campbell Harvey examined some common assumptions about gold. First they looked at gold as an inflation hedge, analyzing gold returns from 1975 (the year the U.S. came off of the gold standard), through March 2012. They found that, due to its real-price volatility, gold had not been a good inflation hedge over the short- or long-term. * https://www.pwlcapital.com/will-gold-save-the-day/ https://www.pwlcapital.com/will-gold-save-the-day/ It's only of note because of historical accident and it's use in certain cultures (along with silver as well). The Incas had piles of gold, but only used it for jewelry and such, and not as a currency. * https://www.tourinperu.com/blog/inca-gold-culture-invasion-role https://www.tourinperu.com/blog/inca-gold-culture-invasion-r... If we didn't have the culture references of the Gold Standard, I don't think most people would accept a shiny rock as anything special. Or at least gold (Au) specifically, and not any other Period 6 element: * https://en.wikipedia.org/wiki/Period_6_element https://en.wikipedia.org/wiki/Period_6_element Is there perhaps something special about Group 11 element (Cu, Ag, Au) that they should be treated as "currency"? * https://en.wikipedia.org/wiki/Group_11_element https://en.wikipedia.org/wiki/Group_11_element They are certainly useful from a tooling perspective in some ways, but beyond that?

bcrl 6y ago
Silver is quite useful as wire. It's a better conductor than copper, but because of cost is only used rarely. It was used in WW2 for making magnets for uranium processing.
- matkoniecz 6y ago
  It is really an amazing story! > But copper—used in shell casings—was a high-priority commodity during the war. So Marshall and Nichols struck on the idea of using silver as a substitute. Congress had authorized the use of up to 86,000 tons of Treasury Department silver for defense purposes. (...) > Nichols met with Undersecretary of the Treasury Daniel Bell on August 3, 1942, to inquire about borrowing 6,000 tons of silver from Treasury vaults. In his memoirs, Nichols relates that Bell indignantly informed him that the Treasury’s unit of measure was the troy ounce—though not all present at that meeting recall any unpleasantness. (...) > Scrap recovery and cleanup operations were so successful that over the course of processing, more than 1.5 million pounds of silver were collected and returned to Treasury, much of it likely originating from earlier and unrelated silver processing. That more than offset a much smaller amount—11,000 pounds—of borrowed Treasury silver that was unaccounted for. (...) > The busbars were massive conductors about a foot square that carried current to the magnet coils. During their manufacture, armed guards again stood by, this time with pieces of paper positioned to catch drill dust as workmen bored holes in pieces of silver in preparation for fastening them together. https://www.americanscientist.org/article/from-treasury-vault-to-the-manhattan-project https://www.americanscientist.org/article/from-treasury-vaul...
redis_mlc 6y ago
> They are certainly useful from a tooling perspective in some ways, but beyond that? It doesn't matter whether gold is used as a currency or not. The more you try to malign a rare element (a tangible item) the sillier you look as a bitcoin fanboi.
roenxi 6y ago
> I don't think most people would accept a shiny rock as anything special. Gold isn't being treated all that differently to the other period 6 or 11 elements. Although it does sometimes get randomly good tax treatment due to its history which keeps it entrenched as the first choice for a monetary metal. But fundamentally it is being sold at cost to mine + a margin, same as everything else. My memory is anything with similar properties to gold has a similar price. The bulk of its value comes from nobody being able to produce the stuff for much less than $50k/kg US. If history was erased, the price of gold would go down a bit because demand drops, but it would still be somewhere similar to $50k/kg US - to a first approximation people can't produce gold more cheaply than that. The price might even go up if the cheap producers are big bulk-mining operations.
- kolinko 6y ago
  Alternative is that the price would drop far below $50k, mines would shut down and people would just trade gold that is already available on the market. Just because something is expensive to produce doesn’t mean that it’s worth that much.
  - roenxi 6y ago
    > Just because something is expensive to produce doesn’t mean that it’s worth that much. Well ... it kinda does? If a commodity cannot be produced for less than $X, then the price of that commodity is not going to be that far below $X. The price can vary away to anywhere you like to signal for producers to open and close in the short term, but the equilibrium price point is ~= cost of production and the market will trend in that direction. I'm going off one article [0] but there is enough gold to make a 28m x 28m x 28m cube. That isn't a lot of gold when compared to the 8 billion humans in the world and the amount of metal we go through (of iron, aluminium, copper, etc). Unless something really novel happens in the mining space, the price is never going to be low enough that an ordinary person can have a big block of gold. It will stabilise on the cost to mine pretty quickly. There are other metals that are just as good as gold (like platinum) that get less press but are similarly priced. [0] https://www.usgs.gov/faqs/how-much-gold-has-been-found-world https://www.usgs.gov/faqs/how-much-gold-has-been-found-world
not_kurt_godel 6y ago
https://en.wikipedia.org/wiki/Group_11_element#Applications https://en.wikipedia.org/wiki/Group_11_element#Applications > These metals, especially silver, have unusual properties that make them essential for industrial applications outside of their monetary or decorative value. Sounds special to me. There are lots of things we would make out of gold and silver if they were more common. Gold has quite a bit of inherent value independent of cultural accidents regarding beauty.

bcrl 6y ago

Silver is quite useful as wire. It's a better conductor than copper, but because of cost is only used rarely. It was used in WW2 for making magnets for uranium processing.

matkoniecz 6y ago
It is really an amazing story! > But copper—used in shell casings—was a high-priority commodity during the war. So Marshall and Nichols struck on the idea of using silver as a substitute. Congress had authorized the use of up to 86,000 tons of Treasury Department silver for defense purposes. (...) > Nichols met with Undersecretary of the Treasury Daniel Bell on August 3, 1942, to inquire about borrowing 6,000 tons of silver from Treasury vaults. In his memoirs, Nichols relates that Bell indignantly informed him that the Treasury’s unit of measure was the troy ounce—though not all present at that meeting recall any unpleasantness. (...) > Scrap recovery and cleanup operations were so successful that over the course of processing, more than 1.5 million pounds of silver were collected and returned to Treasury, much of it likely originating from earlier and unrelated silver processing. That more than offset a much smaller amount—11,000 pounds—of borrowed Treasury silver that was unaccounted for. (...) > The busbars were massive conductors about a foot square that carried current to the magnet coils. During their manufacture, armed guards again stood by, this time with pieces of paper positioned to catch drill dust as workmen bored holes in pieces of silver in preparation for fastening them together. https://www.americanscientist.org/article/from-treasury-vault-to-the-manhattan-project https://www.americanscientist.org/article/from-treasury-vaul...

redis_mlc 6y ago

> They are certainly useful from a tooling perspective in some ways, but beyond that? It doesn't matter whether gold is used as a currency or not. The more you try to malign a rare element (a tangible item) the sillier you look as a bitcoin fanboi.

roenxi 6y ago

> I don't think most people would accept a shiny rock as anything special. Gold isn't being treated all that differently to the other period 6 or 11 elements. Although it does sometimes get randomly good tax treatment due to its history which keeps it entrenched as the first choice for a monetary metal. But fundamentally it is being sold at cost to mine + a margin, same as everything else. My memory is anything with similar properties to gold has a similar price. The bulk of its value comes from nobody being able to produce the stuff for much less than $50k/kg US. If history was erased, the price of gold would go down a bit because demand drops, but it would still be somewhere similar to $50k/kg US - to a first approximation people can't produce gold more cheaply than that. The price might even go up if the cheap producers are big bulk-mining operations.

kolinko 6y ago
Alternative is that the price would drop far below $50k, mines would shut down and people would just trade gold that is already available on the market. Just because something is expensive to produce doesn’t mean that it’s worth that much.
- roenxi 6y ago
  > Just because something is expensive to produce doesn’t mean that it’s worth that much. Well ... it kinda does? If a commodity cannot be produced for less than $X, then the price of that commodity is not going to be that far below $X. The price can vary away to anywhere you like to signal for producers to open and close in the short term, but the equilibrium price point is ~= cost of production and the market will trend in that direction. I'm going off one article [0] but there is enough gold to make a 28m x 28m x 28m cube. That isn't a lot of gold when compared to the 8 billion humans in the world and the amount of metal we go through (of iron, aluminium, copper, etc). Unless something really novel happens in the mining space, the price is never going to be low enough that an ordinary person can have a big block of gold. It will stabilise on the cost to mine pretty quickly. There are other metals that are just as good as gold (like platinum) that get less press but are similarly priced. [0] https://www.usgs.gov/faqs/how-much-gold-has-been-found-world https://www.usgs.gov/faqs/how-much-gold-has-been-found-world

not_kurt_godel 6y ago

https://en.wikipedia.org/wiki/Group_11_element#Applications https://en.wikipedia.org/wiki/Group_11_element#Applications > These metals, especially silver, have unusual properties that make them essential for industrial applications outside of their monetary or decorative value. Sounds special to me. There are lots of things we would make out of gold and silver if they were more common. Gold has quite a bit of inherent value independent of cultural accidents regarding beauty.