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> Still, gold is a close analogue. But there are important differences there, still. The biggest difference is that gold does not require significant upkeep to
by MereInterest 5y ago
> Still, gold is a close analogue. But there are important differences there, still.
The biggest difference is that gold does not require significant upkeep to maintain. Mining gold extracts a resource, which can then be used at low marginal cost. Running proof of work computations enables transactions to occur, and is rewarded as compensation. If the proof of work computations stop, then the reward can no longer be spent. This is why I refuse to use the term "mining", as it brings in a large number of incorrect assumptions of the process.
- adam_arthur 5y agoYeah, didn't want to go into all the details in my original post. But over 50% of mined gold is actually used for industrial or jewelry purposes. Also you can't create "Gold 2.0" out of thin air. Or flash sell millions of ounces of physical gold tanking the price in a matter of minutes. Bitcoin is only valuable because it's called Bitcoin and has a cool origin story, yet the Blockchain mechanism backing it has been replicated quite exactly many times. There is power in shared belief, but something without a strong cushion of intrinsic value will inevitably get sold off when the hard times comes. Not that I'm big on gold for investing purposes...