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Warren Buffet said this about gold, but it's still relevant to Bitcoin: >“If you put your money into gold or other non-income- producing assets [read: Bitcoin]

Warren Buffet said this about gold, but it's still relevant to Bitcoin: >“If you put your money into gold or other non-income- producing assets [read: Bitcoin] that are dependent on what someone else values that in the future, you’re in speculation,” he said. “You’re not into investing....” >To illustrate the point, he asked readers to picture the world’s entire gold stock melded together into a cube 68 feet (21 meters) on each side valued at $9.6 trillion at then- prevailing prices. For the same amount, an investor could have purchased all the farmland in the U.S., 16 replicas of Exxon Mobil Corp., and still have about $1 trillion of “walking- around money.” >A century later, the farmland will be producing valuable crops no matter the currency, and dividends from the companies would probably added up to trillions of dollars, Buffett wrote. >The 170,000 metric tons of gold “will be unchanged in size and still incapable of producing anything,” he wrote. “You can fondle the cube, but it will not respond.”

dwaltrip 13y ago
Bitcoin has many extremely strong advantages compared to gold that make it a far more pragmatic monetary asset/neutral currency. I would list them out but I'm sure you know them (very fast transfer anywhere in the world, maximum portability, etc).
- logicallee 13y ago
  As you can see in my other comments the basic things it lacks are a worldwide history of acceptance as currency (going back millennia in the case of gold) as well as uniqueness (the non-existence of equivalent substitutes). Whatever the technical characteristics of bitcoin, an alt coin can have the same technical characteristics. So we are riding a thin uniqueness, in terms of level of acceptance, that is not going to be driven deeper due to limits on adoption as a currency. (That I mention elsewhere.) The uniqueness is a special lock-in for gold, and as gold becomes inconvenient due to price or scarcity, you can't just transfer it to Pt (platinum) or Ag (silver) in 10 minutes times however many confirmations you need. Gold has several layers of stickiness or lock-in, including historical and technical/physical. Not so for bitcoin. It has self-limiting on adoption (due to the lack of anyone minting it by fiat, and its low total numbers), but moving away from it takes just minutes. The most interesting chart is seeing the fall of bitcoin market cap against the rise of all other alt coins market cap - and to see if that is on the fall or on the rise. Especially when things aren't denominated in BTC, but it is just used transiently, really, any other currency with a spot price will do just as well. There is no reason to believe bitcoin will have any greater use as a currency in the future than it does now. And unlike gold, it has no historical lock-in as a long-term store of value. No one is "stuck" with it, it is easy to verify transfer, and it is a totally liquid market (even at 3 AM on bank holidays) that is not held up by any printed prices or industrial uses. It doesn't even have basic exchange mechanisms such as halting trading. The spot price of Bitcoin can collapse overnight. Unlike gold, there is just anything holding it up long-term. It's a bit like pokemon cards, beanie babies, or pogs. Sure it can have value for a while, but as it doesn't see adoption as a currency, has no alternative or basic uses (less than these three examples in fact), and is very easy to move away from - there is no reason to suppose this will not happen. Bitcoin for a while was the only currency with its particular properties. But that is far from true anymore.
3pt14159 13y ago
The medium for exchange grows in value as a side effect of productivity increases and increased faith in its continued stability. Government fiat money counteracts this mechanism of value growth through inflation. Some argue that this leads to a net benefit to the economy, but if Bitcoin is the currency of the world in the future, then it will gain value as the whole production of mankind grows. And unlike gold, it cannot be synthesized with very large amounts of energy.

dwaltrip 13y ago

Bitcoin has many extremely strong advantages compared to gold that make it a far more pragmatic monetary asset/neutral currency. I would list them out but I'm sure you know them (very fast transfer anywhere in the world, maximum portability, etc).

logicallee 13y ago
As you can see in my other comments the basic things it lacks are a worldwide history of acceptance as currency (going back millennia in the case of gold) as well as uniqueness (the non-existence of equivalent substitutes). Whatever the technical characteristics of bitcoin, an alt coin can have the same technical characteristics. So we are riding a thin uniqueness, in terms of level of acceptance, that is not going to be driven deeper due to limits on adoption as a currency. (That I mention elsewhere.) The uniqueness is a special lock-in for gold, and as gold becomes inconvenient due to price or scarcity, you can't just transfer it to Pt (platinum) or Ag (silver) in 10 minutes times however many confirmations you need. Gold has several layers of stickiness or lock-in, including historical and technical/physical. Not so for bitcoin. It has self-limiting on adoption (due to the lack of anyone minting it by fiat, and its low total numbers), but moving away from it takes just minutes. The most interesting chart is seeing the fall of bitcoin market cap against the rise of all other alt coins market cap - and to see if that is on the fall or on the rise. Especially when things aren't denominated in BTC, but it is just used transiently, really, any other currency with a spot price will do just as well. There is no reason to believe bitcoin will have any greater use as a currency in the future than it does now. And unlike gold, it has no historical lock-in as a long-term store of value. No one is "stuck" with it, it is easy to verify transfer, and it is a totally liquid market (even at 3 AM on bank holidays) that is not held up by any printed prices or industrial uses. It doesn't even have basic exchange mechanisms such as halting trading. The spot price of Bitcoin can collapse overnight. Unlike gold, there is just anything holding it up long-term. It's a bit like pokemon cards, beanie babies, or pogs. Sure it can have value for a while, but as it doesn't see adoption as a currency, has no alternative or basic uses (less than these three examples in fact), and is very easy to move away from - there is no reason to suppose this will not happen. Bitcoin for a while was the only currency with its particular properties. But that is far from true anymore.

3pt14159 13y ago

The medium for exchange grows in value as a side effect of productivity increases and increased faith in its continued stability. Government fiat money counteracts this mechanism of value growth through inflation. Some argue that this leads to a net benefit to the economy, but if Bitcoin is the currency of the world in the future, then it will gain value as the whole production of mankind grows. And unlike gold, it cannot be synthesized with very large amounts of energy.