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One of the points I appreciate is the comparison to a gold based investment strategy. Though unlike other commodities (like gold) but coin itself is not useful.

One of the points I appreciate is the comparison to a gold based investment strategy. Though unlike other commodities (like gold) but coin itself is not useful. At least with gold something can be made, Bitcoin consists of a completed computation so you’re paying for something that’s been used.

bopbeepboop 5y ago
I think the original BTC and now it’s heir Ethereum had the right idea of a distributed VM where the reward for doing work for the VM is debt from the VM to do future work for you. A sort of generalization of the dollar as debt for current work exchangeable for future work. Unfortunately, the “digital gold” mindset won out and those opcodes were removed from BTC and the compute-exchange it might have been was shattered before it formed. BTC now is purposeless and ETH a much poorer second system.
c22 5y ago
When you buy a gold ring you're paying for something that's been made from gold (and time and energy...) When you buy a bitcoin you're paying for something that's been made from just time and electricity. Not used.
- drdeca 5y ago
  A ring made of gold is made of gold using time and effort. You can retrieve the gold from the ring. You cannot retrieve the time and effort. There is, in fact, a distinction here. Bitcoin very well may have legitimate uses (and I would say it does), but it is not like a ring made of gold, in the ring's capacity of being returned to it's constituent components.
  - c22 5y ago
    I understand the distinction. Of course you can't "get back the gold" from a bitcoin, but you also didn't have to put it in in the first place. That doesn't reduce the value of the thing you've made except by degree (as would using more or less gold, or more or less time, or whatever).
    - drdeca 5y ago
      I may have over-matched what you were saying to what others have said. My mistake. I was thinking of when others have suggested that the electricity use is like the gold or something.
      - c22 5y ago
        Thanks for the response. I agree that bitcoin cannot fill exactly the same niche as gold and I think it's foolish to try to shoehorn it into that role. I mostly wanted to address the concept that bitcoins merely represent used resources. Bitcoins are in fact a novel good that are produced using no physical resources which intrinsically gives it interesting and potentially promising properties. When you buy a plastic toy and it breaks you don't usually melt it down for its valuable plastic, you just throw it away. You mostly paid for the time and the energy to make it, but the physical substrate was valueless. That type of good currently dominates the marketplace and seems subpar to bitcoin from a manufacturing perspective.
- gpapilion 5y ago
  A gold ring isn't a store of monetary value, and the value of it outside of the jeweler is based on its gold content only, and in some cases collectible value. Its value to the wearer is subjective in nature, and will vary based on wearer. So with regard to bitcoin, it's not art, and not a useful commodity. It can be a representation of "value", but then why make it expensive to make since it's only a representation?
  - c22 5y ago
    I'd argue bitcoins are actually rather inexpensive to make since they require no physical inputs (see my posts downthread).
jjk166 5y ago
Something being useless is a desirable quality for a currency, and gold, in addition to several other traits, was an optimal material specifically because of how useless it historically was. Where gold was used, it was for displaying wealth, for example in decorations and jewelry. Compare say steel - if your currency was based on steel, which historically was quite valuable because of its utility and difficulty in production, that means either perfectly good steel that could be used for tools that generate wealth is sitting useless in the form of coins, or people are smelting down the currency to make tools. And if your coinage derives its value from the utility of the material, what happens when someone develops a superior alloy, or figures out a cheaper production method? Do you stunt technological and economic growth to prevent hyperinflation? Nowadays gold has some niche industrial uses, but these uses are in competition with using gold as a store of value, which remains gold's dominant price driver by a wide margin, and thus you have, for example, artificially high prices on certain electronics that require gold.

bopbeepboop 5y ago

I think the original BTC and now it’s heir Ethereum had the right idea of a distributed VM where the reward for doing work for the VM is debt from the VM to do future work for you. A sort of generalization of the dollar as debt for current work exchangeable for future work. Unfortunately, the “digital gold” mindset won out and those opcodes were removed from BTC and the compute-exchange it might have been was shattered before it formed. BTC now is purposeless and ETH a much poorer second system.

c22 5y ago

When you buy a gold ring you're paying for something that's been made from gold (and time and energy...) When you buy a bitcoin you're paying for something that's been made from just time and electricity. Not used.

drdeca 5y ago
A ring made of gold is made of gold using time and effort. You can retrieve the gold from the ring. You cannot retrieve the time and effort. There is, in fact, a distinction here. Bitcoin very well may have legitimate uses (and I would say it does), but it is not like a ring made of gold, in the ring's capacity of being returned to it's constituent components.
- c22 5y ago
  I understand the distinction. Of course you can't "get back the gold" from a bitcoin, but you also didn't have to put it in in the first place. That doesn't reduce the value of the thing you've made except by degree (as would using more or less gold, or more or less time, or whatever).
  - drdeca 5y ago
    I may have over-matched what you were saying to what others have said. My mistake. I was thinking of when others have suggested that the electricity use is like the gold or something.
    - c22 5y ago
      Thanks for the response. I agree that bitcoin cannot fill exactly the same niche as gold and I think it's foolish to try to shoehorn it into that role. I mostly wanted to address the concept that bitcoins merely represent used resources. Bitcoins are in fact a novel good that are produced using no physical resources which intrinsically gives it interesting and potentially promising properties. When you buy a plastic toy and it breaks you don't usually melt it down for its valuable plastic, you just throw it away. You mostly paid for the time and the energy to make it, but the physical substrate was valueless. That type of good currently dominates the marketplace and seems subpar to bitcoin from a manufacturing perspective.
gpapilion 5y ago
A gold ring isn't a store of monetary value, and the value of it outside of the jeweler is based on its gold content only, and in some cases collectible value. Its value to the wearer is subjective in nature, and will vary based on wearer. So with regard to bitcoin, it's not art, and not a useful commodity. It can be a representation of "value", but then why make it expensive to make since it's only a representation?
- c22 5y ago
  I'd argue bitcoins are actually rather inexpensive to make since they require no physical inputs (see my posts downthread).

jjk166 5y ago

Something being useless is a desirable quality for a currency, and gold, in addition to several other traits, was an optimal material specifically because of how useless it historically was. Where gold was used, it was for displaying wealth, for example in decorations and jewelry. Compare say steel - if your currency was based on steel, which historically was quite valuable because of its utility and difficulty in production, that means either perfectly good steel that could be used for tools that generate wealth is sitting useless in the form of coins, or people are smelting down the currency to make tools. And if your coinage derives its value from the utility of the material, what happens when someone develops a superior alloy, or figures out a cheaper production method? Do you stunt technological and economic growth to prevent hyperinflation? Nowadays gold has some niche industrial uses, but these uses are in competition with using gold as a store of value, which remains gold's dominant price driver by a wide margin, and thus you have, for example, artificially high prices on certain electronics that require gold.