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This is a great exploration of what's going on here without being too "pro" or "con." I see a lot of people here trying to quickly summarize "what side he's on"

by jrm4 5y ago

This is a great exploration of what's going on here without being too "pro" or "con." I see a lot of people here trying to quickly summarize "what side he's on" and I don't think that was the point here. I think he's correctly pointing out a very human barrier to adoption. There's, for example, a reasonable argument that bitcoin might be like gold -- really valuable, but perhaps not as moveable as a currency. What the author is pointing out is that gold is different because it's shiny and pretty and you can shape into things -- and like it or not, that MEANS something, even if that something isn't easily captured in a rigorous (nerdy?) economic analysis. I think the author would agree that it's too early to tell if the above "something" is a deal-killer or not, but it is certainly significant.

dsr_ 5y ago
The intrinsic value of gold is its usefulness in electronics and jewelry. The same for silver and other natural resources: the cost to dig them out of the ground or grow them, process them and bring them to where you want them to be is exceeded by their economic usefulness. The intrinsic value of a bitcoin is zero, and the cost of production is about 1.7 megawatt-hours.
- fuzzybear3965 5y ago
  Apparently the fair value of gold when considering the manufacturing value is less than a hundred dollars an ounce. Other demand (store of value) drives the price up.
- jrm4 5y ago
  Not electronics, historically, obviously. But this is important. Gold became "gold" not because it was "useful" -- but almost precisely because it "wasn't." It was shiny, pretty, and scarce, and also NOT GOOD for tools. Its rise as a symbolic store of value is likely directly attributable to its lack of intrinsic value.
  - dsr_ 5y ago
    Iron pyrite is also shiny and pretty, and if it's not as rare as gold, it's still very pretty. But nobody used iron pyrite for jewelry, much, because it's neither malleable nor ductile -- properties which make gold useful for wire and leaf, and later turn out to be important for electronics, too.
phase5 5y ago
I think he needs to checkout Lightning Network. Adoption is going parabolic.

by jrm4 5y ago

dsr_ 5y ago

The intrinsic value of gold is its usefulness in electronics and jewelry. The same for silver and other natural resources: the cost to dig them out of the ground or grow them, process them and bring them to where you want them to be is exceeded by their economic usefulness. The intrinsic value of a bitcoin is zero, and the cost of production is about 1.7 megawatt-hours.

fuzzybear3965 5y ago
Apparently the fair value of gold when considering the manufacturing value is less than a hundred dollars an ounce. Other demand (store of value) drives the price up.
jrm4 5y ago
Not electronics, historically, obviously. But this is important. Gold became "gold" not because it was "useful" -- but almost precisely because it "wasn't." It was shiny, pretty, and scarce, and also NOT GOOD for tools. Its rise as a symbolic store of value is likely directly attributable to its lack of intrinsic value.
- dsr_ 5y ago
  Iron pyrite is also shiny and pretty, and if it's not as rare as gold, it's still very pretty. But nobody used iron pyrite for jewelry, much, because it's neither malleable nor ductile -- properties which make gold useful for wire and leaf, and later turn out to be important for electronics, too.

phase5 5y ago

I think he needs to checkout Lightning Network. Adoption is going parabolic.