I think there are many similarities between gold and Bitcoin. Crypto literature often portrays gold as just a shiny metal. But I think gold was the start of a tech revolution: metal technology. I wrote a post on this:

How Gold Became Money and How Bitcoin Can Become Money

https://bitflate.org/post/2019/11/29/how-gold-became-money.html

Mining update: Bitflate just passed 80k blocks and 4 million coins in circulation.

Block: 80k
Supply: 4 million
Difficulty: 5M

80k block here:
https://explorer.bitflate.org/block/00000000000007f7709693f82eb7ef89cb5a11b200aab7ddb3cb2432fed91d6a

Reminder: Bitflate reward will halve from 50 to 25 at 210k blocks (10 million coins). It is designed to give more coins to early adopters. Still plenty of time to get coins before we reach 10 million coins.

0: 50 (10 million)
1: 25 (15 million)
2: 12.5
3: 6.25 (end of halving)
4: 6.56 (start of inflation 7%)
5: 7.02
6: 7.51
7: 8.04
8: 8.60
9: 9.20
10: 9.85 (30 million)

Mining update: Bitflate just passed 80k blocks and 4 million coins in circulation.

Block: 80k
Supply: 4 million
Difficulty: 5M

80k block here:
https://explorer.bitflate.org/block/00000000000007f7709693f82eb7ef89cb5a11b200aab7ddb3cb2432fed91d6a

Reminder: Bitflate reward will halve from 50 to 25 at 210k blocks (10 million coins). It is designed to give more coins to early adopters. Still plenty of time to get coins before we reach 10 million coins.

0: 50 (10 million)
1: 25 (15 million)
2: 12.5
3: 6.25 (end of halving)
4: 6.56 (start of inflation 7%)
5: 7.02
6: 7.51
7: 8.04
8: 8.60
9: 9.20
10: 9.85 (30 million)

> 5. Volatility will minimize as the public at large becomes less sensitive to everything the media spews out and as more users adopt it.

I wrote a post to explain why volatility will not stop for Bitcoin. It is increasingly moving into being a Store of Value. That will prevent it from being a currency.

https://bitflate.org/post/2019/11/24/bitcoin-will-not-be-a-medium-of-exchange.html

Bitcointalk discussion on the topic:

https://bitcointalk.org/index.php?topic=5204233.0

I'm not making a case against Bitcoin as money. I'm searching for a way for Bitcoin to become money. Bitcoin already has a use case, digital gold. But for it to become widespread money, we are not there. People have been searching for use cases through things that are built on top of Bitcoin: 2nd layer, side chain, smart contracts. There's Litecoin as digital silver. People are trying to make "better" altcoins.

My point is we've been searching in the wrong direction. For gold, it wasn't the jewelry use case that made gold money. It was the "dumb" metals like copper, bronze, and iron.

I think this is a misinterpretation of gold history. Gold had been money before it showed up in written history. We really didn't know why it became money. Its origin is somewhat mysterious. So we came up with trivial explanations like a random choice, beauty, and scarcity. We need to see gold in the context of the metal revolutions. Gold and the metal revolutions really gave those innovators economic and political advantages. It's not a random choice of using gold as money.

Bitcoin was digital cash. Then its narrative changed to digital gold. It has not matched gold's value. Bitcoin is more like a collectible now. I think this is similar to gold. People who first found gold use it as a collectible.

I kinda did:


I think gold is no longer relevant because we can better manage fiat currencies. In the 20th century, we developed better communication networks. We departed from the Gold Standard in the 1970s. This is around the time when computers started to take over.

I agree with your take on fiat rise. Chinese dynasties introduced paper money to move away from gold. People disliked the Gold Standard since its start. But we weren't able to move away from. It always came back. I think it's possible that gold will make a comeback along with Bitcoin.

I'm the developer for Bitflate, a crypto with constant inflation of 7%. I bought Bitcoin in 2018. I started investigating the idea for Bitflate in 2019. I think Bitflate has potential. Even though it has 7% inflation, it doesn't print money arbitrarily. If demand grows faster than supply, its price will increase. I'm a long-term holder of Bitcoin and Bitflate. I guess I can call myself a developer/investor. This is not investment advice. Do you own research.

1. Why there are still investors in the new altcoins project? For what they invest if they know new altcoins are only about risks and losses?

I think crypto is in a winter, possibly a long winter. It started after the 2017 crash. Some people think that Bitcoin halving will recover the market. But I don't have high hope. I think existing investors are just holding on to their bags and promoting their coins. They hope Bitcoin recovery can lift the market.

I see fatigue with the market. Investors are not eager to listen to new projects. The top investment funds are not very active. I convinced some miners to mine Bitflate coins. Some of them are cashing out. I buy their coins back. I still invest time and money in Bitflate. The cost is low. I suppose Bitflate miners and holders make their risk/reward calculation.

2. Who are those developers that always create new altcoins projects? Don't they know that most new projects just ended with failure?

I created Bitflate because I don't see Bitcoin can ever be stable for transactions. Its limited supply is extreme. Its price will always be volatile. I think inflation can create a new category of cryptocurrency. It'll create a cryptocurrency that we can use for transactions.

There is a chance that Bitflate will fail. If that's the case, the world would be either: (1) hyperbitcoinization or (2) Bitcoin speculation and fiat currencies. I don't think (1) hyperbitcoinization is going to happen. So we'll forever be (2) speculating Bitcoin and use fiat for transactions. I think both options are pretty terrible. I look forward to a future when we can use crypto to pay for stuff. I haven't seen a viable path to a crypto future. I will conclude my Bitflate experiment when I see a promising idea.

In the meantime, I continue to run Bitflate. Join Bitflate community if you're interested. https://discord.gg/utnEyp8

Again, this is not investment advice. Do you own research.

I want to bump up this topic. Ray Dalio recently made a recent comment about Bitcoin. He doesn't think Bitcoin is money. It's neither Store of Value nor Medium of Exchange. He sees more potential in stablecoins like Libra but thinks they're far away.

https://u.today/billionaire-ray-dalio-on-bitcoin-and-stablecoins-possibly-never

I highlighted the crypto emerging markets in my OP. I think the future will have a variety of currencies ranging from centralized to decentralized. Check out my project Bitflate, https://bitflate.org. It aims to be a decentralized "somewhat" stablecoin.

Bitcoin is considered "hard" money. It's powerful and revolutionary. But when I think about other assets like gold or oil, Bitcoin is more like fun money. People bled to get gold. Governments send armies to fight for and protect oil wells. If we were all brainwashed into believing a future of only 21 million coins as money, I agree that would be a dystopia. But humans are not that stupid. I think the future will have a bunch of currencies ranging from centralized to decentralized. Each design has its own tradeoff. I made a diagram to illustrate the possibilities.



This future is pretty exciting for me. It'll be good for Bitcoin too.

I think Bitcoin's price is manipulated by Bitcoin whales: investors, funds, miners. It does not take much money to manipulate the market. If you have a fund with a few hundred million dollars, you can move price. Politicians and governments can also easily manipulate Bitcoin's price. Think of the Chinese President's comment and how many influencers run after it to pump price.

Small and individual investors who fall for speculation and FOMO, they'll lose money. You can't outwit the guys with deep pockets. The way to win for small investors is to hold long-term. If you don't hold long-term, your money will flow into the whales' pockets.

Original Post: https://bitflate.org/post/2019/11/29/how-gold-became-money.html

Gold has been a valuable commodity since ancient times. When gold showed up in written history, it was already a valuable commodity [3]. Societies had used it as money. We don’t exactly know how it became money. There are hypotheses [1].

- Scarce: Its supply is more limited than other chemical elements. You cannot easily extract it. The mining process has become intensive over time.
- Beautiful: Gold is beautiful. It is soft and easy to mold. It makes good jewelry.
- Unique atomic structure: Gold has a unique chemical structure. It doesn’t rust or interact with other chemical elements.

These hypotheses are reasonable. They make a good case for gold as money. But human’s obsession with gold is strange. It permeated across societies. Closer examination shows these hypotheses are flawed.

- Scarce: There are many other rare chemical elements. Silver is scarce.
- Beautiful: Gold has a yellow color. While we perceive it as beautiful, gold has probably influenced our view on its beauty. Its color is not desirable in some applications. For example, we like silverware more than golden silverware.
- Unique atomic structure: We didn’t have the tool and knowledge to examine gold chemical properties before it became money thousands of years ago.

These hypotheses seem like afterthoughts. We try to stitch together some ideas that help us explain why gold became money. There are even more bizarre theories. We’re innately made to like gold. The gods make gold to seduce humans. Gold came from outer space [2].

In this post, I want to discuss the rise of gold in a different view. I think gold rise as money is related to the rise of metallurgy. Waves of innovation in metal technology destroyed and created empires. Gold is invaluable money because it is at the center of metallurgy.

The Rise of Gold

The first metal that humans interacted with appears to be gold. Small amounts of natural gold had been found in present-day Spain during the late Paleolithic period, around 40,000 BC. The Paleolithic period is known as the Old Stone Age. Gold was the metal that enabled humans to move away from stone tools. This is an important development. After the Paleolithic period, we went through Upper Paleolithic (Late Stone Age), Mesolithic & Neolithic (End of Stone Age), Chalcolithic (Copper Age), Bronze Age, Iron Age. Subsequent developments in human history were marked by advances in metallurgy.

Early metallurgists started their learning by interacting with gold. Then they learned how to manipulate other metals. Gold is rare enough that it became valuable to metallurgists. There is not enough gold to mass-produce gold tools. It’s rare and shiny. It became a decorative metal, a symbol for prestige and power. Gold is often seen as jewelry. But it is really a display of metal technology advancements. When metallurgists created their tools or weapons, they would decorate the items with gold. Metallurgists were the engineers that help ruling elites destroy and create empires.

Vietnamese folklore told a story of king An Duong Vuong [5]. He ruled the ancient Vietnamese people during the Iron Age. The story said that An Duong Vuong possessed a magical crossbow. With this weapon, he was able to resist the Chinese invasion. History also mentioned Cao Lo, his weaponry engineer [6]. An Duong Vuong was finally defeated when his enemy stole his magical crossbow. His kingdom fell apart and was subjected to Chinese domination for the next 10 centuries. The thief was his Chinese son-in-law. The magical crossbow was likely a metaphor. It may be a metal technology that gives the Vietnamese king superior weapons.

Metal development was an important driver in human history. Gold was at the center of that development. The metallurgy engineers and ruling elites were obsessed with gold. Normal people followed. Gold became the most valuable form of money.

Bitcoin and Gold

Fast forward to the 21st century, gold was slowly fading away. Fiat currencies used to be backed with gold. But the Gold Standard had hit world economies many times. During the Great Depression of the 1930s, gold rigidity spread recessions to many countries. In 1971, facing a shortage of gold reserve, the United States terminated convertibility of the US dollar to gold. This event ended the gold influence on monetary policies.

Crypto literature pitches Bitcoin as digital gold, an emerging alternative to gold. Bitcoin design imitates gold features. It has a limited supply of 21 million coins. The coins are created through a mining process that consumes electricity. In some ways, Bitcoin is better than gold. It does not require physical storage. We can transfer bitcoins almost instantly. In other ways, Bitcoin is worse than gold. Bitcoins are not physical. We can’t use bitcoins for anything other than holding. We rely on economic ideologies to justify Bitcoin’s role in the market.

We’ve been through the Gold Standard. Economists and politicians are not eager to return to gold-backed currencies. In the digital age, we can create reliable banking networks of fiat currencies. Central bankers find digital currencies easier to manage than gold-backed systems. Bitcoin supporters pitch the Bitcoin Standard. It is digital native and supposed to be better than the Gold Standard. To make the case for Bitcoin, people downplay gold. Gold is just a shiny and scarce metal that people use for decoration.

But Bitcoin is still searching for its use case. We see gold was money. One of its prominent applications is jewelry. We conclude that jewelry is the secondary market that drives gold demand. From this conclusion, crypto builders think there may be a similar secondary market for Bitcoin. Our ignorance of gold history creates a gap. We have not found the missing puzzle piece.

Search for Bitcoin Metallurgy

We’ve been looking in the wrong place. Jewelry is just the surface of gold rise. It’s a minor application that came out of metallurgy. It is not the secondary market that drove gold demand. Gold became money because it was an important part of metallurgy. It was the symbol of the metal revolutions.

From this insight, we should think about the equivalence of metallurgy for Bitcoin. Bitcoin has similar traits. It is technology. There is an ecosystem of hardware and software around Bitcoin. If Bitcoin were to be like gold, it would be the money that powers the next technology revolutions. Advance in the Bitcoin technology ecosystem may produce new use cases for Bitcoin. The “Blockchain, not Bitcoin” projects did not produce new use cases. They may have gone too far and became detached from Bitcoin. Successful applications may not have much to do directly on Bitcoin. But maybe, they will need to interact with Bitcoin like the way other metals interact with gold.

It took gold and metallurgy 30,000 years to transition humans away from stone tools. We’re still very early with Bitcoin.

References

[1] Why do we value gold? https://www.bbc.com/news/magazine-25255957

[2] Does gold come from outer space? https://www.bbc.com/news/magazine-22904141

[3] History of gold https://onlygold.com/facts-statistics/history-of-gold/

[4] History of Metallurgy https://en.wikipedia.org/wiki/Metallurgy#History

[5] An Duong Vuong https://en.wikipedia.org/wiki/An_D%C6%B0%C6%A1ng_V%C6%B0%C6%A1ng

[6] Cao Lo https://en.wikipedia.org/wiki/Cao_L%E1%BB%97

Hi everyone,

Mining update: Bitflate just passed 70k blocks and 3.5 million coins in circulation.

Block: 70k
Supply: 3.5 million

70k block here:
https://explorer.bitflate.org/block/00000000000005fe0653cf7b41e38160dde2134c1c2fccd3a02a5cf6f9f1b9cf

Reminder: Bitflate reward will halve from 50 to 25 at 210k blocks (10 million coins). It is designed to give more coins to early adopters. Still plenty of time to get coins before we reach 10 million coins.

0: 50 (10 million)
1: 25 (15 million)
2: 12.5
3: 6.25 (end of halving)
4: 6.56 (start of inflation 7%)
5: 7.02
6: 7.51
7: 8.04
8: 8.60
9: 9.20
10: 9.85 (30 million)

Hi everyone,

Mining update: Bitflate just passed 70k blocks and 3.5 million coins in circulation.

Block: 70k
Supply: 3.5 million

70k block here:
https://explorer.bitflate.org/block/00000000000005fe0653cf7b41e38160dde2134c1c2fccd3a02a5cf6f9f1b9cf

Reminder: Bitflate reward will halve from 50 to 25 at 210k blocks (10 million coins). It is designed to give more coins to early adopters. Still plenty of time to get coins before we reach 10 million coins.

0: 50 (10 million)
1: 25 (15 million)
2: 12.5
3: 6.25 (end of halving)
4: 6.56 (start of inflation 7%)
5: 7.02
6: 7.51
7: 8.04
8: 8.60
9: 9.20
10: 9.85 (30 million)

Halving does not cause price deflation. The only sure halving does is to cut reward in half. That translates to less supply. Regarding price, you need to consider its demand. I think this is where the discussion gets confusing. If demand for a coin dropped, its price would drop too. Price is an equilibrium point of supply and demand.

In the case of Litecoin, its demand drops faster than its supply halving. Therefore, its price drops. Bitcoin may experience a similar decline if it fails to keep up its demand. But Bitcoin may benefit from deteriorating macroeconomics.

On the other hand, price can rise with inflating supply. If the demand for an inflating coin rises faster than inflation, its price will rise.

I think there's a chance that Bitcoin will fork into a low inflation rate (0.5% to 1%) and a zero inflation (current). Both Bitcoin chains remain Store of Value. In the low inflation chain, some portion of fees gets shifted to mining.

> Are you saying that because today people use fiat instead of Bitcoin, it's a proof that the law is working?

Yes. People use fiat because they know that its supply inflates while Bitcoin supply eventually stops.

In Gresham's law, bad money drives out good money. If authority decreed silver coins and copper coins have the same value, people would keep silver coins and use copper coins. They keep to good money and dispose the bad money. So the medium of exchange currency would be the copper coins. It's easy to interpret Gresham's law for metal coins because we can compare them like apple-apple. For other types of currencies, we need a different interpretation.

I think of Gresham's law as less desirable money drives out more desirable money. The law does not imply good money is useless, it's the other way. Good money doesn't circulate because they are more desirable. Bitcoin's design of limited supply makes it desirable money. Its use case is Store of Value. People are hodling bitcoins. They're exchanging their fiat currencies for bitcoins. Fiat is less desirable.

I think Gresham's law does apply to cryptocurrencies. Fiat currencies are the bad coins that people circulate. People will always use some kind of "bad" coins for transactions. In countries like Venezuela, they rather have USD than Bitcoin. When you don't have life necessities, you can't really worry about a Store of Value.

Bitflate is in an early stage of development. I think it has a chance. It departs from the SoV narrative. But I have not been able to convince many people about Bitflate. I do not recommend treating Bitflate as an investment. It'd be very risky. Early adopters get more coin rewards. Do your own research.

There's a chance that Bitcoin will become a medium of exchange. But there's no indication. My argument could be flawed. You can keep pitching Bitcoin as MoE. That's either delusional or scamming others.

Original Post: https://bitflate.org/post/2019/11/26/bitcoin-immaculate-conception-and-original-sin.html



From time to time, especially when the price is down, the crypto sphere will go into war against each other. Someone usually triggers war by saying controversial things. The hottest debates happen between Bitcoin (BTC) and Ethereum (ETH) or Bitcoin (BTC) and Bitcoin Cash (BCH). Occasionally, we see Bitcoin SV (BSV) enters the debate. When I first got into crypto, I looked at Ethereum. Then I learned and bought Bitcoin. I see outrageous claims from both communities. With Ethereum, it’s a programmable Store of Value that will reinvent the world’s finance and save the bankless humans. With Bitcoin, it’s digital gold and money that will eventually replace all of the world’s money. The visions are grand. Both coins over promise and under deliver. I see Bitcoin remains a speculative asset and Ethereum is a crypto research project. The crypto space is plagued with scams.

The tit-for-tat arguments escalate quickly. Crypto communities sometimes feel like religions. Some people declare their religious zeal to their communities. Tuur Demeester, an influential Bitcoin analyst, recently released The Bitcoin Reformation paper. Reformation is a reference to the Western Christianity movement in the 16th century. There’re many ways to attach religious stories to Bitcoin.

Immaculate Conception

Bitcoin was started by an anonymous programmer, Satoshi Nakamoto. He/she/they released the Bitcoin whitepaper, worked on the code for a few years, then disappeared. Up until this day, we don’t have a clear idea about Satoshi’s identity.

Satoshi’s identify and disappearance created mysteries around Bitcoin. There’s lots of room for interpretation. Some find similarities with the Christian Bible story of Jesus Immaculate Conception. Translating that story to Bitcoin, we can interpret Bitcoin as a gift from God. Satoshi was either God or His Messenger. Satoshi came to Earth to deliver Bitcoin. It is supposed to cure the financial ill in our society.

Bitcoin origin was attributed to a higher power. Its creation was perfect in both design and timing. Bitcoin is the start of a new chapter in human history. Bitcoin is an Immaculate Conception.

The story is powerful. It creates a strong narrative. Bitcoin is destined to have infinite value. First, it will become digital gold. Then it will conquer all of the world’s money. Bitcoin will destroy all the financial trickery that plagued human society.

Original Sin

When I first came to Bitcoin, I was baffled by its mysteries. Bitcoin’s religious interpretation is appealing. Perhaps, God did come to Earth and delivered Bitcoin to humanity. I dug deeper and learned more. I think there is another religious story around Bitcoin: the Original Sin. In this story, the Original Sin was committed by Satoshi. When he/she/they released the Bitcoin whitepaper, its title indicated Bitcoin as A Peer-to-Peer Electronic Cash System. As Satoshi worked on Bitcoin, its narrative changed to digital gold. Satoshi promised us digital cash. But he/she/they gave us digital gold.

When Satoshi disappeared, it is up to people to interpret the intention. The Bitcoin community remains attached to the digital gold narrative. Its supporters claim once Bitcoin reaches critical mass, it will become digital cash. The narrative is to become the Store of Value first, the Medium of Exchange later. However, some people took a scriptural interpretation of the Bitcoin whitepaper. They want Bitcoin to be digital cash. They forked to Bitcoin Cash with bigger block size. The idea is to make Bitcoin work for everyday transactions.

Satoshi wanted to reinvent money. To make the monetary incentive work, he may have inadvertently switched to digital gold. It’s a hack to get something to work for now. Then we can worry about making Bitcoin for everyone later. I think Original Sin is an interesting story. It explains why crypto is plagued with scams. They all have their origins in the confusion between digital cash and digital gold.

Baptism

Bitcoin is an exciting study case for religion. It shows us how the intermingling of an Immaculate Conception and an Original Sin can be the origin of a new change. Religious stories can give us hints of solutions.

Humans squabbled over these conflicting claims for thousands of years. The conflicting stories were written to the Bible. Crypto communities continue to attack each other and make outrageous claims. I think the Bible also contains stories that can help us find a cure. Bitcoin may have started with an Immaculate Conception and an Original Sin. The world is full of contradiction. Whatever happened, we are here with cryptocurrencies. The problem is not ours. We can “baptize” ourselves and move forward. Without forgiveness, we can never make peace with others and with ourselves.