4 ms·

> Bitcoin is not competing with gold, it's basically competing with "I owe you" notes, managed by some central entity. You could argue that those "I owe you" no

by Ologn 11y ago

> Bitcoin is not competing with gold, it's basically competing with "I owe you" notes, managed by some central entity. You could argue that those "I owe you" notes have value, but maybe so does distributed transactions. As I said, it would take too long to fully explain why Bitcoins have less value than dollars and euros (of course last year, EUR/USD was 1.35, today it's 1.09, but the problems of Greece etc. are a little tangential...) Dollars had no inherent value in 1970 - you could trade dollars for gold, but it was still just a promissory note - I'd rather have an ounce of gold in my hand than a note promising me an ounce of gold. What does the phrase "gold reserve" mean ( https://en.wikipedia.org/wiki/Gold_reserve https://en.wikipedia.org/wiki/Gold_reserve )? The USA golds 8000 tons of gold in Fort Knox (and in NYC's Federal Reserve building). Why? Why does it do this? It must cost a lot to hold all that gold. The reason it does is because that gold implicitly (but not explicitly) backs the US dollar. If the dollar began crashing tomorrow, Obama could go on TV and say he was opening the vaults of Fort Knox and would exchange dollars for gold. Gold doesn't have any special properties, it's just convenient to use a currency, any commodity trade would do. Even with economic dips, people don't think about the things underlying economic confidence in the face of potential collapse - but governments do think about these long term things, and major changes in policy always indicate changes in thinking ( http://www.nytimes.com/2013/01/17/business/global/german-central-bank-to-repatriate-gold-reserves.html http://www.nytimes.com/2013/01/17/business/global/german-cen... ).

celticninja 11y ago
Gold price has been falling for the last few years. Even with all this economic uncertainty and recession it has not had the usual uptick you would expect to see if people considered it a safe haven. In addition it seems likely that there is far less gold in Fort knox than there should be. They could not actually open the doors to Fort knox to exchange for dollars because at that stage the game it up. They just keep them closed and tell everyone their gold is safe and secure.
koonsolo 11y ago
A lot of Greeks probably regret having euro's in their bank account. Just of today they are sure their money won't vaporize into nothing, but their banks still restrict transactions. If there was a grexit, their money would have just been lost, and for the rest of Europe, the impact on the euro would be felt. That's the disadvantage of storing your personal value inside a central governed banking system. Don't you think Greeks currently see value in a distributed currency system, that lies outside of anyone's influence, especially that of the government? Do you think they will trust their banks for the next decade(s)? You say you rather have an ounce of gold in your hand, but what gives gold its price? As always supply and demand. The price of gold, the 'price' of dollars and euros, and the price of bitcoins is based on supply and demand. Bitcoin will only go to $0 if there is 0 demand. And in my opinion, the possibility of that happening is a big as the possibility that bitcoin will revolutionize the way we pay and receive 'money'.
alwillis 11y ago
>The USA golds 8000 tons of gold in Fort Knox (and in NYC's Federal Reserve building). Why? Why does it do this? It must cost a lot to hold all that gold. The reason it does is because that gold implicitly (but not explicitly) backs the US dollar. If the dollar began crashing tomorrow, Obama could go on TV and say he was opening the vaults of Fort Knox and would exchange dollars for gold. Seriously? Those 8000 tons of gold, priced at today’s price of 1144.45 as of a few minutes ago, have a value of $296,002,697,361.7893--a little under $300 billion. Sorry, but $300 billion just isn’t a lot of money in the grand scheme of things. To put that in perspective, the market capitalization of just one company (Apple) is just over $723 billion dollars. The gross domestic product (GDP) of the United States is over $17 trillion. If we have some kind of financial crisis, $300 billion in gold (obviously the price would increase in the event of a real crisis) isn’t going to go very far in a $17 trillion dollar economy. The point: the dollar isn’t backed in any way, shape or form by the gold the U.S. holds. We should be more concerned about the dollar than bitcoin—$100 in 1900 was worth only $3.48(!) in 2012: http://observationsandnotes.blogspot.com/2011/04/100-year-declining-value-of-us-dollar.html http://observationsandnotes.blogspot.com/2011/04/100-year-de... History shows us that all fiat currencies (so far) eventually go to zero. Final thought: Bitcoin may or may not survive long term, but not because the concept of a cryptocurrency is unsound or that blockchains don’t work. Bitcoin has proven its value is based on its usefulness and flexibility: the ability to transfer value of any amount to anyone else anywhere else in minutes without needing permission and at little or no cost. Bitcoin is the prototype, not the final product. Besides bringing blockchain technology to the world, bitcoin is an invention that can’t be uninvented now that it’s here. The same way a Mac user from 1984 might not recognize a Retina iMac today, we will have some type of cryptocurrency that will be mainstream and accepted at some point in the not too distant future. It may not be bitcoin (though it’ll still be around) but some successor that addresses some of its weaknesses and builds on its strengths. Final final thought: bitcoin is already a fairly big deal in developing countries where regular people are unbanked. It’s also a big deal in countries with unstable currencies, some of which have already gone to zero once or twice: http://bitcoinfilm.org/documentaries/ http://bitcoinfilm.org/documentaries/.

by Ologn 11y ago

celticninja 11y ago

Gold price has been falling for the last few years. Even with all this economic uncertainty and recession it has not had the usual uptick you would expect to see if people considered it a safe haven. In addition it seems likely that there is far less gold in Fort knox than there should be. They could not actually open the doors to Fort knox to exchange for dollars because at that stage the game it up. They just keep them closed and tell everyone their gold is safe and secure.

koonsolo 11y ago

A lot of Greeks probably regret having euro's in their bank account. Just of today they are sure their money won't vaporize into nothing, but their banks still restrict transactions. If there was a grexit, their money would have just been lost, and for the rest of Europe, the impact on the euro would be felt. That's the disadvantage of storing your personal value inside a central governed banking system. Don't you think Greeks currently see value in a distributed currency system, that lies outside of anyone's influence, especially that of the government? Do you think they will trust their banks for the next decade(s)? You say you rather have an ounce of gold in your hand, but what gives gold its price? As always supply and demand. The price of gold, the 'price' of dollars and euros, and the price of bitcoins is based on supply and demand. Bitcoin will only go to $0 if there is 0 demand. And in my opinion, the possibility of that happening is a big as the possibility that bitcoin will revolutionize the way we pay and receive 'money'.

alwillis 11y ago

>The USA golds 8000 tons of gold in Fort Knox (and in NYC's Federal Reserve building). Why? Why does it do this? It must cost a lot to hold all that gold. The reason it does is because that gold implicitly (but not explicitly) backs the US dollar. If the dollar began crashing tomorrow, Obama could go on TV and say he was opening the vaults of Fort Knox and would exchange dollars for gold. Seriously? Those 8000 tons of gold, priced at today’s price of 1144.45 as of a few minutes ago, have a value of $296,002,697,361.7893--a little under $300 billion. Sorry, but $300 billion just isn’t a lot of money in the grand scheme of things. To put that in perspective, the market capitalization of just one company (Apple) is just over $723 billion dollars. The gross domestic product (GDP) of the United States is over $17 trillion. If we have some kind of financial crisis, $300 billion in gold (obviously the price would increase in the event of a real crisis) isn’t going to go very far in a $17 trillion dollar economy. The point: the dollar isn’t backed in any way, shape or form by the gold the U.S. holds. We should be more concerned about the dollar than bitcoin—$100 in 1900 was worth only $3.48(!) in 2012: http://observationsandnotes.blogspot.com/2011/04/100-year-declining-value-of-us-dollar.html http://observationsandnotes.blogspot.com/2011/04/100-year-de... History shows us that all fiat currencies (so far) eventually go to zero. Final thought: Bitcoin may or may not survive long term, but not because the concept of a cryptocurrency is unsound or that blockchains don’t work. Bitcoin has proven its value is based on its usefulness and flexibility: the ability to transfer value of any amount to anyone else anywhere else in minutes without needing permission and at little or no cost. Bitcoin is the prototype, not the final product. Besides bringing blockchain technology to the world, bitcoin is an invention that can’t be uninvented now that it’s here. The same way a Mac user from 1984 might not recognize a Retina iMac today, we will have some type of cryptocurrency that will be mainstream and accepted at some point in the not too distant future. It may not be bitcoin (though it’ll still be around) but some successor that addresses some of its weaknesses and builds on its strengths. Final final thought: bitcoin is already a fairly big deal in developing countries where regular people are unbanked. It’s also a big deal in countries with unstable currencies, some of which have already gone to zero once or twice: http://bitcoinfilm.org/documentaries/ http://bitcoinfilm.org/documentaries/.