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A lot of people bearish on Bitcoin's future claim that it cannot last and the fad will be extinguished because it isn't backed by something, like gold, or a gov

A lot of people bearish on Bitcoin's future claim that it cannot last and the fad will be extinguished because it isn't backed by something, like gold, or a government. I would like somebody to explain why gold is inherently valuable, or why government support is necessary. All I've really read on the subject is that "gold is inherently valuable because it's always had value, historically." Could someone elaborate?

brainburn 13y ago
The problem with governments is that they will stop at nothing (well, maybe murder) to make you comply with what they want.
- deleted 13y ago
  [deleted]
- aet 13y ago
  Do you want corporations in control or government? You can't vote corporations out. You can vote government out.
analog31 13y ago
Gold is volatile too.
bunderbunder 13y ago
Gold is inherently valuable because you can use it to do things like protect circuit contacts from corrosion, or protect astronauts from solar radiation. Government-backed currency isn't inherently valuable, per se, but for residents of many countries it's useful stuff to have because you need it to pay your taxes, and there's often a statutory obligation to accept it as a form of payment for settling debts. Neither of those uses necessarily accounts for 100% of the value of either gold or fiat currency. (Arguably, not even close.) But they do place a kind of floor under their values. For gold it's a fairly absolute floor - there'll always be uses for gold, so it'll always have at least some value. For a national currency that isn't necessarily the case, as the case of the Zimbabwean dollar famously illustrates. However, when the currency is backed by a nation with a strong, stable economy then in theory (and, so far, in practice) that provides sufficient protection against the worst extremes of volatility. Bitcoin, by contrast, is working without a net. Naturally that isn't a problem if it doesn't need a net. But there's an argument to be made that every currency is primarily fueled by human psychology, and every Dumbo likes to have his feather to hold.
- MattyRad 13y ago
  Interesting, thanks. That puts it in more perspective for me. Although, still, it seems the term "inherent" might be a poor adjective to use to describe the system.
fragsworth 13y ago
People bearish on Bitcoin's future price are usually the same people who are pissed that they didn't buy any bitcoins. But often, something happens - they realize how incredible the technology is. Then they buy it, and suddenly they're bullish because they want the price to go up. The price of gold is probably going to be killed to a very low ($50-100/oz?) price because the only thing keeping its value so high is how convenient it is as a store of manipulation-free value. However, bitcoins are far, far more convenient. And they will be even less subject to manipulation.
cfinke 13y ago
I would like somebody to explain why gold is inherently valuable Basically, gold is valuable because it is useful. For example: * Gold is the most maleable and ductile of all the metals. * Gold is very efficient for transmitting heat and electricity. * Gold has the highest corrosion resistance of all the metals. * Gold does not oxidize. * Gold can be used to make jewelry, which people find naturally attractive. It is the only "gold-colored" metal. * Gold is used in electronic components: connectors, switch and relay contacts, soldered joints, connecting wires and connection strips. * Gold alloys are used for fillings, crowns, bridges and orthodontic appliances. * Gold is used as a drug to treat a small number of medical conditions. * Small amounts of gold are used to remedy a condition known as Lagophthalmos, which is an inability of a person to close their eyes completely. * Radioactive gold is used in diagnosis. It is injected in a colloidal solution that can be tracked as a beta emitter as it passes through the body. * Gold is also used as a lubricant between mechanical parts on space vehicles. * Gold is also used when making specialty glass for climate controlled buildings and cases. * The visor on the helmet of an astronaut's space suit is coated with a very thin film of gold. What can you do with a Bitcoin?
- conception 13y ago
  Buy a pizza.
- cscurmudgeon 13y ago
  Can you send actual gold to the other of the planet within the blink of an eye?
- TomGullen 13y ago
  The current price of gold is far greater than the values of all those things. If gold price was based on intrinsic value alone it would be worth considerably less than it is now.
  - cfinke 13y ago
    I'm not arguing that the current monetary value of gold is appropriate; I'm simply answering the parent's question as to why gold was "chosen" to be valuable: it has many practical uses.
betterunix 13y ago
"I would like somebody to explain...why government support is necessary." Suppose you issue me a loan of some money, and I never bother to pay you back. What are you going to do about it?
- grinnbearit 13y ago
  Enforcement of contracts and control over the money supply can be (and imo should be) independent.
  - betterunix 13y ago
    That's not the point. The question was why government support is necessary. What if the courts refused to recognize that Bitcoin is an asset? What if the courts ruled that a Bitcoin debt could be settled by simply starting your own Bitcoin alternative and making a payment with that?
grinnbearit 13y ago
Gold has monetary utility, value as a store of value, besides being useful because of its shininess. Moldbug puts it better than I can in this comment, take a look here http://unqualified-reservations.blogspot.in/2011/04/on-monetary-restandardization.html http://unqualified-reservations.blogspot.in/2011/04/on-monet...

brainburn 13y ago

The problem with governments is that they will stop at nothing (well, maybe murder) to make you comply with what they want.

deleted 13y ago
[deleted]
aet 13y ago
Do you want corporations in control or government? You can't vote corporations out. You can vote government out.

analog31 13y ago

Gold is volatile too.

bunderbunder 13y ago

Gold is inherently valuable because you can use it to do things like protect circuit contacts from corrosion, or protect astronauts from solar radiation. Government-backed currency isn't inherently valuable, per se, but for residents of many countries it's useful stuff to have because you need it to pay your taxes, and there's often a statutory obligation to accept it as a form of payment for settling debts. Neither of those uses necessarily accounts for 100% of the value of either gold or fiat currency. (Arguably, not even close.) But they do place a kind of floor under their values. For gold it's a fairly absolute floor - there'll always be uses for gold, so it'll always have at least some value. For a national currency that isn't necessarily the case, as the case of the Zimbabwean dollar famously illustrates. However, when the currency is backed by a nation with a strong, stable economy then in theory (and, so far, in practice) that provides sufficient protection against the worst extremes of volatility. Bitcoin, by contrast, is working without a net. Naturally that isn't a problem if it doesn't need a net. But there's an argument to be made that every currency is primarily fueled by human psychology, and every Dumbo likes to have his feather to hold.

MattyRad 13y ago
Interesting, thanks. That puts it in more perspective for me. Although, still, it seems the term "inherent" might be a poor adjective to use to describe the system.

fragsworth 13y ago

People bearish on Bitcoin's future price are usually the same people who are pissed that they didn't buy any bitcoins. But often, something happens - they realize how incredible the technology is. Then they buy it, and suddenly they're bullish because they want the price to go up. The price of gold is probably going to be killed to a very low ($50-100/oz?) price because the only thing keeping its value so high is how convenient it is as a store of manipulation-free value. However, bitcoins are far, far more convenient. And they will be even less subject to manipulation.

cfinke 13y ago

I would like somebody to explain why gold is inherently valuable Basically, gold is valuable because it is useful. For example: * Gold is the most maleable and ductile of all the metals. * Gold is very efficient for transmitting heat and electricity. * Gold has the highest corrosion resistance of all the metals. * Gold does not oxidize. * Gold can be used to make jewelry, which people find naturally attractive. It is the only "gold-colored" metal. * Gold is used in electronic components: connectors, switch and relay contacts, soldered joints, connecting wires and connection strips. * Gold alloys are used for fillings, crowns, bridges and orthodontic appliances. * Gold is used as a drug to treat a small number of medical conditions. * Small amounts of gold are used to remedy a condition known as Lagophthalmos, which is an inability of a person to close their eyes completely. * Radioactive gold is used in diagnosis. It is injected in a colloidal solution that can be tracked as a beta emitter as it passes through the body. * Gold is also used as a lubricant between mechanical parts on space vehicles. * Gold is also used when making specialty glass for climate controlled buildings and cases. * The visor on the helmet of an astronaut's space suit is coated with a very thin film of gold. What can you do with a Bitcoin?

conception 13y ago
Buy a pizza.
cscurmudgeon 13y ago
Can you send actual gold to the other of the planet within the blink of an eye?
TomGullen 13y ago
The current price of gold is far greater than the values of all those things. If gold price was based on intrinsic value alone it would be worth considerably less than it is now.
- cfinke 13y ago
  I'm not arguing that the current monetary value of gold is appropriate; I'm simply answering the parent's question as to why gold was "chosen" to be valuable: it has many practical uses.

betterunix 13y ago

"I would like somebody to explain...why government support is necessary." Suppose you issue me a loan of some money, and I never bother to pay you back. What are you going to do about it?

grinnbearit 13y ago
Enforcement of contracts and control over the money supply can be (and imo should be) independent.
- betterunix 13y ago
  That's not the point. The question was why government support is necessary. What if the courts refused to recognize that Bitcoin is an asset? What if the courts ruled that a Bitcoin debt could be settled by simply starting your own Bitcoin alternative and making a payment with that?

grinnbearit 13y ago

Gold has monetary utility, value as a store of value, besides being useful because of its shininess. Moldbug puts it better than I can in this comment, take a look here http://unqualified-reservations.blogspot.in/2011/04/on-monetary-restandardization.html http://unqualified-reservations.blogspot.in/2011/04/on-monet...