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Gold has intrinsic value for applications like jewelry and electronics (it being easily malleable and a very good conductor). There are many more here: http://e

by necubi 13y ago

Gold has intrinsic value for applications like jewelry and electronics (it being easily malleable and a very good conductor). There are many more here: http://en.wikipedia.org/wiki/Gold#Applications http://en.wikipedia.org/wiki/Gold#Applications. These uses don't explain the price of gold fully, but they (along with its rarity) are the reason that gold has historically been considered valuable. Bitcoin as an idea may have some sort of "value" (although it's a stretch to compare it to a physical thing like gold), but that doesn't mean this particular blockchain has value. There are only so many bits of metal in the Earth's crust, but there are infinitely many possible cryptocurrencies.

dnautics 13y ago
gold has historically been valuable because due to relativistic contraction you can easily assess its purity using a low-tech solution: a touchstone, and therefore there is a trust model is built in. It's also portable, so could be carried long distances over caravan. Sound familiar?
- necubi 13y ago
  Please read my second paragraph. The bitcoin v. gold comparison is not really valid.
  - dnautics 13y ago
    I'm saying your first paragraph is not valid. If you're going to claim that the ancients valued gold because it has intrinsic value as a heat reflector in astronaut helmets or as a good conductor in electrical components, you're crazy. Specifically, These uses ... are the reason that gold has historically been considered valuable.
- ye 13y ago
  Actually it's extremely hard to assess gold's purity. Tungsten is extremely close in the density to gold, and even major banks got fooled into buying tungsten bricks wrapped in gold. http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting-goes-viral-10-tungsten-filled-gold-bars-are-discovered-manhattan http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting... http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungsten-filled-gold-coins-here?page=1 http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungs...
  - pyalot2 13y ago
    It's not that terribly hard. Tungsten is ferromagnetic, gold is weakly dimagnetic. If you have quite a strong magnet (like a large permanent magnet) and a fine scale, you can detect the presence of ferromagnetic materials even if present in low quantities. The weakly dimagnetic effect of gold will exert almost no force, and what little it does will weakly repel the magnet. The ferromagnetic tungsten on the other hand will be strongly attracted to the magnet and so can be detected already in trace quantities. You can in fact buy machines for a few thousand bucks that'll perform a barrage of non invasive physical tests on gold to verify that it's actually solid gold. Of course you can't expect banks and gold merchants to go the eye watering expense of actually getting one of those.
    - ye 13y ago
      So it means you have to bring this kind of expensive machine with you everywhere you go if you want to use gold as means of payment. Ridiculous.
      - dnautics 13y ago
        I guess bitcoin is superior, then. But really the point is a historical one; "superior" methods of gold forgery were equally as unavailable to the ancients as "superior" methods of gold verification.
adambard 13y ago
NPR's Planet Money podcast did a really cool episode a few years back called, "Why Gold?". http://www.npr.org/blogs/money/2011/02/07/131363098/the-tuesday-podcast-why-gold http://www.npr.org/blogs/money/2011/02/07/131363098/the-tues...
ye 13y ago
Only 10% of gold is used industrially. Aluminium used to be extremely expensive and was used in jewelry, until we discovered how to mine it more efficiently. That's not an intrinsic value, that's perceived value.
- TylerE 13y ago
  "belonging to a thing by its very nature: the intrinsic value of a gold ring." That's from dictionary.com. Gold is literally the EXAMPLE they give for intrinsic value.
- ye 13y ago
  @TylerE Yeah, and they would say they same about an aluminium ring when aluminium was rare. That definition is awfully circular and wrong, don't you think? People assign values to things based on their properties. Not because they have some magical natural number assigned to them by an invisible man in the sky.
baddox 13y ago
It all comes down to "how intrinsic" you want Bitcoin to be. I would say that the intrinsic value of Bitcoin is the decentralized network that maintains a transaction log that is virtually immune from fraud due to its foundation on proof-of-work. It's true that arbitrary forks of Bitcoin can be made, so the specific value of Bitcoin is based on the size of its network. So is the size of the Bitcoin network not "intrinsic enough" for consideration?
Brakenshire 13y ago
Moreover, Bitcoin is not only replicable, but also inadequate as an actual means of transfer. If various banks got together to launch a new crypto-currency, which could actually be exchanged for real money, Bitcoin would effectively become deprecated overnight.

by necubi 13y ago

dnautics 13y ago

gold has historically been valuable because due to relativistic contraction you can easily assess its purity using a low-tech solution: a touchstone, and therefore there is a trust model is built in. It's also portable, so could be carried long distances over caravan. Sound familiar?

necubi 13y ago
Please read my second paragraph. The bitcoin v. gold comparison is not really valid.
- dnautics 13y ago
  I'm saying your first paragraph is not valid. If you're going to claim that the ancients valued gold because it has intrinsic value as a heat reflector in astronaut helmets or as a good conductor in electrical components, you're crazy. Specifically, These uses ... are the reason that gold has historically been considered valuable.
ye 13y ago
Actually it's extremely hard to assess gold's purity. Tungsten is extremely close in the density to gold, and even major banks got fooled into buying tungsten bricks wrapped in gold. http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting-goes-viral-10-tungsten-filled-gold-bars-are-discovered-manhattan http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting... http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungsten-filled-gold-coins-here?page=1 http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungs...
- pyalot2 13y ago
  It's not that terribly hard. Tungsten is ferromagnetic, gold is weakly dimagnetic. If you have quite a strong magnet (like a large permanent magnet) and a fine scale, you can detect the presence of ferromagnetic materials even if present in low quantities. The weakly dimagnetic effect of gold will exert almost no force, and what little it does will weakly repel the magnet. The ferromagnetic tungsten on the other hand will be strongly attracted to the magnet and so can be detected already in trace quantities. You can in fact buy machines for a few thousand bucks that'll perform a barrage of non invasive physical tests on gold to verify that it's actually solid gold. Of course you can't expect banks and gold merchants to go the eye watering expense of actually getting one of those.
  - ye 13y ago
    So it means you have to bring this kind of expensive machine with you everywhere you go if you want to use gold as means of payment. Ridiculous.
    - dnautics 13y ago
      I guess bitcoin is superior, then. But really the point is a historical one; "superior" methods of gold forgery were equally as unavailable to the ancients as "superior" methods of gold verification.

adambard 13y ago

NPR's Planet Money podcast did a really cool episode a few years back called, "Why Gold?". http://www.npr.org/blogs/money/2011/02/07/131363098/the-tuesday-podcast-why-gold http://www.npr.org/blogs/money/2011/02/07/131363098/the-tues...

ye 13y ago

Only 10% of gold is used industrially. Aluminium used to be extremely expensive and was used in jewelry, until we discovered how to mine it more efficiently. That's not an intrinsic value, that's perceived value.

TylerE 13y ago
"belonging to a thing by its very nature: the intrinsic value of a gold ring." That's from dictionary.com. Gold is literally the EXAMPLE they give for intrinsic value.
ye 13y ago
@TylerE Yeah, and they would say they same about an aluminium ring when aluminium was rare. That definition is awfully circular and wrong, don't you think? People assign values to things based on their properties. Not because they have some magical natural number assigned to them by an invisible man in the sky.

baddox 13y ago

It all comes down to "how intrinsic" you want Bitcoin to be. I would say that the intrinsic value of Bitcoin is the decentralized network that maintains a transaction log that is virtually immune from fraud due to its foundation on proof-of-work. It's true that arbitrary forks of Bitcoin can be made, so the specific value of Bitcoin is based on the size of its network. So is the size of the Bitcoin network not "intrinsic enough" for consideration?

Brakenshire 13y ago

Moreover, Bitcoin is not only replicable, but also inadequate as an actual means of transfer. If various banks got together to launch a new crypto-currency, which could actually be exchanged for real money, Bitcoin would effectively become deprecated overnight.