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Title: Comparing bitcoin to gold Post by: Erdogan on December 01, 2013, 04:19:29 AM We approach gold parity says some, comparing a unit of bitcoin to a unit of gold is nonsensical says others.
So what is the unit of gold? Is it the ounce, why not ton, kilogram, gram or grain? In the same style, it is nonsensical to compare a bitcoin to a dollar. Why not a cent? Same goes for any other currency. Comparing the value of the total bitcoin supply to the total value of some other money supply could make some sense. The value of all bitcoins to the value of all gold. What about the gold that is stored in central banks and thus removed from circulation. What about the gold that is not yet extracted from the ground? With a gold price at USD 5000, I guess the gold supply could increase by 10% per year easily, currently about 2% per year. Comparing the value of all bitcoins to the value of all dollars? Base money or some extended dollar supply that includes credit denominated in dollars? Probably base money, as there is not much credit denominated in bitcoins currently. Bitcoin lending, even fractional reserve, is conceivable. Hopefully, lending will be fully backed by bitcoins, in the sense that a deposit and a loan will have equal timeframes, and no government deposit insurance. Imagine a world where investment is done with saved money. What a concept. There was a thread where the value of all bitcoins where compared to smaller fiat currencies. A most interesting thread. |