Ranking Bitcoin as Money vs Gold and vs Paper Money

[BitProdigy]

There are 7 properties that make a thing good money they are:

1) Medium of Exchange.
2) Unit of Account.
3) Portability.
4) Durability.
5) Divisibility.
6) Fungibility.
7) Store of Value.

On a scale of 1 to 10 for each, 10 being perfect, 1 being horrible, how would you rank gold, paper money, and bitcoin in these areas?

For paper money I have:

1) Medium of Exchange. = 8
2) Unit of Account. = 10
3) Portability. = 8
4) Durability. = 4
5) Divisibility. = 6
6) Fungibility. = 10
7) Store of Value. = 2

Paper Money is a score of 6.9 therefore.

For Gold I have:

1) Medium of Exchange. = 5
2) Unit of Account. = 8
3) Portability. = 5
4) Durability. = 10
5) Divisibility. = 7
6) Fungibility. = 8
7) Store of Value. = 10

Gold has a score of 7.5 therefore.

For Bitcoin I have:

1) Medium of Exchange. = 9
2) Unit of Account. = 8
3) Portability. = 10
4) Durability. = 10
5) Divisibility. = 10
6) Fungibility. = 10
7) Store of Value. = 9

Bitcoin has a score of 9.4 therefore.

Do you agree with my scores? What are yours and why??

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[botany]

You will be pilloried if you say that Bitcoin's score on "Store of Value" is 9.
Given the volatility of bitcoin, its score on this parameter should be really low. There are a lot of people who have lost money on bitcoins in the last one and a half years.

[BitProdigy]

You will be pilloried if you say that Bitcoin's score on "Store of Value" is 9.
Given the volatility of bitcoin, its score on this parameter should be really low. There are a lot of people who have lost money on bitcoins in the last one and a half years.

Only because they panic sold and didn't hold. Technically speaking, bitcoin is a superior store of value to gold because of it's controlled supply and hard limit. It is scarcity that makes a thing a good store of value, and bitcoin is more scarce than gold could ever be considering we could find new ways to mine gold or find new gold veins or mine gold from other planets dramatically increasing the supply and thus collapsing the price and value of gold. Bitcoin can never increase in supply, 21 million is a hard cap, and so it is a better store of value.

Bitcoin is never going to drop all the way down to "free". As you can see, it is holding value very well, just because people bought bitcoin at the top of a speculative peak rally and panic sold after it found an equilibrium at a much lower price does not mean that bitcoin is poor store of value.

The only reason I give bitcoin a 9 for store of value and not a ten because there is the possibility of a huge EMP blast from the sun or some other catastrophe that knocks out all electronic devices on earth and makes bitcoin worthless. Aside from that one very unlikely scenario, bitcoin the a better store of value than gold, so I stand by my 9 rating.

[futureofbitcoin]

Not sure all of those factors can be weighed evenly (like divisibility) and there's another thing that's important: difficulty of counterfeiting.

Cash:

1) Medium of Exchange. = 9
2) Unit of Account. = 10
3) Portability. = 9
4) Durability. = 4
5) Divisibility. = 9
6) Fungibility. = 10
7) Store of Value. = 2
Counterfeit = 4

Gold:

1) Medium of Exchange. = 7
2) Unit of Account. = 10
3) Portability. = 4
4) Durability. = 10
5) Divisibility. = 4
6) Fungibility. = 10
7) Store of Value. = 7
Counterfeit = 9

btc:

1) Medium of Exchange. = 9
2) Unit of Account. = 10
3) Portability. = 9
4) Durability. = 5
5) Divisibility. = 10
6) Fungibility. = 5
7) Store of Value. = 7
Counterfeit = 9

[odolvlobo]

Bitcoin is not a great store of value (5) and it's a terrible unit of account (2). I would give Bitcoin a score of 8.0. I expect it to improve in the future.

[Mickeyb]

There are 7 properties that make a thing good money they are:

1) Medium of Exchange.
2) Unit of Account.
3) Portability.
4) Durability.
5) Divisibility.
6) Fungibility.
7) Store of Value.

On a scale of 1 to 10 for each, 10 being perfect, 1 being horrible, how would you rank gold, paper money, and bitcoin in these areas?

For paper money I have:

1) Medium of Exchange. = 8
2) Unit of Account. = 10
3) Portability. = 8
4) Durability. = 4
5) Divisibility. = 6
6) Fungibility. = 10
7) Store of Value. = 2

Paper Money is a score of 6.9 therefore.

For Gold I have:

1) Medium of Exchange. = 5
2) Unit of Account. = 8
3) Portability. = 5
4) Durability. = 10
5) Divisibility. = 7
6) Fungibility. = 8
7) Store of Value. = 10

Gold has a score of 7.5 therefore.

For Bitcoin I have:

1) Medium of Exchange. = 9
2) Unit of Account. = 8
3) Portability. = 10
4) Durability. = 10
5) Divisibility. = 10
6) Fungibility. = 10
7) Store of Value. = 9

Bitcoin has a score of 9.4 therefore.

Do you agree with my scores? What are yours and why??

I agree with the most of your scores except with the store of value. Bitcoin is a terrible store of value at the moment because of its volatility. As the adoption grows, Bitcoin will be less and less easy to move and manipulate, it will be less volatile and store of value characteristics will be more attractive.

[n2004al]

To tell the truth I don't understand your votes. Why the paper money have 8 as medium of exchange and gold 5 and bitcoin 9. Maybe 1% of the people know bitcoin and even less of them use it as a medium of exchange. How is possible that the vote given to bitcoin (which is used only in internet by such few people) is higher than the paper money which is used widely by 100% of the people in everyday actions. The other people are stupid that don't use bitcoin but the paper money. But if yes in which way they can buy the bread? To not speak for gold which is used by no one as a medium of exchange.

Me seems very strange and incomprehensible classification this one.

[g1974ak]

Even for me this classification have no sense. Where is made and which criteria are used to build it. To many votes seems without meaning and agree with n2004al about what him has told. Seems that the author has an affection for bitcoin and give votes in favor of it. Bitcoins is good but never cannot substitute the paper money. Maybe will be complementary with it but this it will be enough.

[randy8777]

Bitcoin is not a great store of value (5) and it's a terrible unit of account (2). I would give Bitcoin a score of 8.0. I expect it to improve in the future.

can you explain what makes you say bitcoin is not a great store of value? is the current volatility the problem, or is it something else?

[Amph]

Bitcoin is not a great store of value (5) and it's a terrible unit of account (2). I would give Bitcoin a score of 8.0. I expect it to improve in the future.

can you explain what makes you say bitcoin is not a great store of value? is the current volatility the problem, or is it something else?

it's volatility, but it does not make sense to take into account that value for now, because bitcoin hasn't reached mainstream, by any means, in theory bitcoin store of value property should be very good in the future if the coin will survive

[odolvlobo]

Bitcoin is not a great store of value (5) and it's a terrible unit of account (2). I would give Bitcoin a score of 8.0. I expect it to improve in the future.

can you explain what makes you say bitcoin is not a great store of value? is the current volatility the problem, or is it something else?

I feel it is not a good store of value because it has little to no utility, other than as a medium of exchange. Its value currently depends on the whims of the people that use it and could evaporate at any time. Anyway, "store of value" is not well-defined so I expect many different opinions.

The volatility makes it a poor unit of account.

[Erdogan]

Medium of exchange, store of value and unit of account are the functions of money.

The other things are properties that are relevant for those functions, better properties means that the money type can fullfill its functions better. Portability, Durability, Divisibility, Fungibility. You can add unfalsifiability, hideability, unconfiscability and remotetransferability, properties where bitcoin fare excellently.

Being well known, or recognizability (as money) is one where bitcoin currently is not so good. Also cultural trustability is rather bad, gold however being totally ingrained in art, literature and story telling.

[BitProdigy]

I agree with the most of your scores except with the store of value. Bitcoin is a terrible store of value at the moment because of its volatility. As the adoption grows, Bitcoin will be less and less easy to move and manipulate, it will be less volatile and store of value characteristics will be more attractive.

Many people have disagreed that bitcoin deserves a (9) for Store of Value. Let me explain myself:

The properties that makes something a good store of value are predictable supply, and scarcity. Bitcoin does those perfectly, way better than gold. We could someday in the future tow a comet to earth with more gold and silver on it than has ever been mined on the planet crashing the price of gold and silver instantly. This could never happen to bitcoin because it has a hard limit guaranteed by math. There will never be more than 21 million, so it's value storage properly is very very high.

The only reason I do not give bitcoin a (10) is because there is the slight possibility of either an EMP blast from the sun that knocks out all electronic devices on the planet at once, or some super computer is invented that breaks the cryptography of bitcoin. If were not for those two things, I would give bitcoin a solid (10) for Store of Value.

The common rebuttal has been that bitcoin is not a good store of value because of it's current volatility, but volatility within the first 10 years of it's invention is no argument against it's Storage of Value properties. Let's say you stored all of your wealth in bitcoin in the year 2011, do you think you would say that bitcoin has done a good job of storying your value? Yes!!

You would only think bitcoin is a poor store of value if you bought at the peak of a speculative rally, but even then, I submit that if you stored all of your wealth into bitcoin at $1200 per coin this was not a bad thing, wait 5 years, 10 years, 20 years and come back and tell me if bitcoin has done a good job storing your value! Indeed, bitcoin is perfectly limited, and therefore has near perfect value storage properties.

[BitProdigy]

To tell the truth I don't understand your votes. Why the paper money have 8 as medium of exchange and gold 5 and bitcoin 9. Maybe 1% of the people know bitcoin and even less of them use it as a medium of exchange. How is possible that the vote given to bitcoin (which is used only in internet by such few people) is higher than the paper money which is used widely by 100% of the people in everyday actions. The other people are stupid that don't use bitcoin but the paper money. But if yes in which way they can buy the bread? To not speak for gold which is used by no one as a medium of exchange.

Me seems very strange and incomprehensible classification this one.

These rating are not about which is the post popular used today. If it were the question, "which is the most used medium of exchange today" of course the answer would be paper currency. But that is not the question.

The rating is based on which is better at the function. Which performs the task the best. If I want to send one million dollars to India, I will have to use Western Union who will charge me a fee and ask me for all of my personal information and the process will take several days. If I want to send one million bitcoins to India, they arrive in seconds, no fees, no middle man taking a cut, and no risking of my personal information. So as far as performing the function as a medium of exchange, Bitcoin outperforms paper money.

[OROBTC]

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BitProdigy

I think that your analysis is a good start as well as good entertainment (I mean that nicely, intellectual entertainment).

Circumstances will change the ratings of each of paper money, gold and BTC.  For example, a .gov crackdown on BTC purchases (perfectly possible) would change some of the BTC ratings.  GROSS "Ctrl + P" would devalue currency, there are those who state that money printing (electrons anyway) is WAY UP, but the reason for no infation is that money velocity has cratered (people are buying less stuff).

IMO, holding some proportion of each "form of money" is a good idea.  Some CA$H (real long-green cash), some gold and some BTC.  How much of each also depends on personal circumstances...  The very wealthy would likely step-up relative amounts of gold vs. cash for example.  The rich might buy more BTC as well.

So, this is a complicated discussion!  Your analysis is a jumping off point...  A good one, but just a start.

[n2004al]

To tell the truth I don't understand your votes. Why the paper money have 8 as medium of exchange and gold 5 and bitcoin 9. Maybe 1% of the people know bitcoin and even less of them use it as a medium of exchange. How is possible that the vote given to bitcoin (which is used only in internet by such few people) is higher than the paper money which is used widely by 100% of the people in everyday actions. The other people are stupid that don't use bitcoin but the paper money. But if yes in which way they can buy the bread? To not speak for gold which is used by no one as a medium of exchange.

Me seems very strange and incomprehensible classification this one.

These rating are not about which is the post popular used today. If it were the question, "which is the most used medium of exchange today" of course the answer would be paper currency. But that is not the question.

The rating is based on which is better at the function. Which performs the task the best. If I want to send one million dollars to India, I will have to use Western Union who will charge me a fee and ask me for all of my personal information and the process will take several days. If I want to send one million bitcoins to India, they arrive in seconds, no fees, no middle man taking a cut, and no risking of my personal information. So as far as performing the function as a medium of exchange, Bitcoin outperforms paper money.

Agree with your reasoning but don't agree with the your factors which affect your question. When you measure something you must take in your reasoning ALL the factors which affect the picture and not only one. You take which performs better the tasks. But you forget which is most used in the everyday life. And this is most important compare to yours. If we will take in consideration ALL the factors mine reasoning is more close to the reality. So more reasonable.

[g1974ak]

I must tell that theoretical  things don't cost so much in practice because don't affect maybe at all the real life. In this kind of view all the point giuven above must be seen in the practical view and not in theoretical one. Don't have to much importance I think.

[greBit]

Your rankings for bitcoin sound good in theory but taking it in a practical perspective and comparing values now, I think as a medium of Exchange, it is really good. As a Unit of Account, i feel its terrible. Yes, its portable, hell let's even go and call it durable. Divisibility is one of the best, fungibility? Not very good at that, right now yeah? As a store of value, I don't really think so its good because bitcoin seems to be too volatile at the moment. We gotta keep pushing it, it will be better

[BitProdigy]

Your rankings for bitcoin sound good in theory but taking it in a practical perspective and comparing values now, I think as a medium of Exchange, it is really good. As a Unit of Account, i feel its terrible. Yes, its portable, hell let's even go and call it durable. Divisibility is one of the best, fungibility? Not very good at that, right now yeah? As a store of value, I don't really think so its good because bitcoin seems to be too volatile at the moment. We gotta keep pushing it, it will be better

I think volatility only affects the Unit of Account property, I don't agree that it affects Store of Value over long periods of time.

Why do you say bitcoin is not fungible? Bitcoin has perfect fungibility opposed to gold that can be mixed with other metals and have a tungsten core and you'd never know.

[greBit]

Your rankings for bitcoin sound good in theory but taking it in a practical perspective and comparing values now, I think as a medium of Exchange, it is really good. As a Unit of Account, i feel its terrible. Yes, its portable, hell let's even go and call it durable. Divisibility is one of the best, fungibility? Not very good at that, right now yeah? As a store of value, I don't really think so its good because bitcoin seems to be too volatile at the moment. We gotta keep pushing it, it will be better

I think volatility only affects the Unit of Account property, I don't agree that it affects Store of Value over long periods of time.

Why do you say bitcoin is not fungible? Bitcoin has perfect fungibility opposed to gold that can be mixed with other metals and have a tungsten core and you'd never know.

Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. That is, it is the property of essences or goods which are capable of being substituted in place of one another.

Bitcoin keeps a history of every coin and hence they are not fungible or designed to be so. Indeed the difference between freshly minted coins and coins that have passed through many hands are part of the system. Agreed that the appropriate response should be found but Bitcoins are not fungible.