DoomDumas
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January 29, 2013, 03:36:04 PM |
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Bitcoin is the new gold.
+1 ![Cheesy](https://bitcointalk.org/Smileys/default/cheesy.gif) I bet on parity with gold within much less than a decade !
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Akka
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January 29, 2013, 03:48:30 PM |
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Bitcoin is the new gold.
+1 ![Cheesy](https://bitcointalk.org/Smileys/default/cheesy.gif) I bet on parity with gold within much less than a decade ! ![Huh](https://bitcointalk.org/Smileys/default/huh.gif) 1 BTC = 1 Gold what? Oz? Ton? Liter?
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Qoheleth
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January 29, 2013, 05:07:44 PM |
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I'm just poking some fun into the arbitrary "this currency is backed by X..." discussion. I enjoy asking goldbugs who are critical of a digital what they think their gold is "backed by." Hopefully it gets them thinking about what exactly makes currency valuable. I also stack PMs, so I can totally understand why it's tough to see the same level of value in a digital currency.
Yeah, gold has some usefulness as a conductor and at looking pretty, but in the end, most of its bullion value comes from the same place as the value of any other currency on the planet: the bizarre self-fulfilling prophecy called "confidence in future value". It's just that gold is an order of magnitude older than any modern currency, which means that even though it's not current money, it's the literal gold standard for confidence in future value due to historical evidence. Of course, if nanotechnological alchemy ever gets invented the only thing you'll be able to trust to give you scarcity is mass and math. But that's a big "if". ![Wink](https://bitcointalk.org/Smileys/default/wink.gif)
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If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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phatsphere
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January 29, 2013, 05:10:16 PM |
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Bitcoin is backed by mathematics. What's gold backed by?
physics edit: and printed fiat is backed by chemistry (the special print ink and so on)
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Herodes
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January 29, 2013, 05:40:04 PM |
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Bitcoin is backed by mathematics. What's gold backed by?
physics edit: and printed fiat is backed by chemistry (the special print ink and so on) Continued with this line of thought, I assume toilet paper is backed by shit ?
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iCEBREAKER
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January 29, 2013, 06:05:34 PM |
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Yeah, gold has some usefulness as a conductor and at looking pretty, but in the end, most of its bullion value comes from the same place as the value of any other currency on the planet: the bizarre self-fulfilling prophecy called "confidence in future value". It's just that gold is an order of magnitude older than any modern currency, which means that even though it's not current money, it's the literal gold standard for confidence in future value due to historical evidence.
It's not just age and history. Silver, gems, and seashells were used long before gold, yet are now demonetized. Consider why this is so: There is more evidence available from physics, economics, and psychology, etc., to justify the "confidence in future value" of gold than anything else. Gold's unique properties, which create its unparalleled inherent utility, are not "bizarre" or a "self-fulfilling prophecy." The backing process must end somewhere; it cannot be turtles all the way down. The only way to stop the infinite regression is with a self-backing money of intrinsic value. The same reasoning applies to bitcoins. When you get all confused, simply repeat Gengix's Mantra: " Gold is closest to money from a physical perspective. Bitcoin is closest to physical gold from a monetary perspective." ![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2F1dtLNSN.png&t=665&c=FVp74fbgmktp0g) See that point in the middle? That's where inherent utility becomes intrinsic value. And vice versa.
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| "The difference between bad and well-developed digital cash will determine whether we have a dictatorship or a real democracy." David Chaum 1996 "Fungibility provides privacy as a side effect." Adam Back 2014
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Richy_T
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January 29, 2013, 06:39:33 PM |
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Bitcoin is the new gold.
+1 ![Cheesy](https://bitcointalk.org/Smileys/default/cheesy.gif) I bet on parity with gold within much less than a decade ! ![Huh](https://bitcointalk.org/Smileys/default/huh.gif) 1 BTC = 1 Gold what? Oz? Ton? Liter? How about a new comparison thread? Bitcoin is on parity with an X made of gold... Currently it looks to be a "Disney Dee Bee Pin" (Whatever that is). ![](https://ip.bitcointalk.org/?u=http%3A%2F%2Fi.ebayimg.com%2Ft%2FDISNEY-DEE-BEE-SOLID-GOLD-DISCOVERY-QUEST-THINKEE-PIN-%2F10%2F%21BkdmhLgCGk%7E%24%2528KGrHqYOKiYEsnul0o3%2529BL%2528oQtBeH%21%7E%7E_35.JPG&t=665&c=otXgN1gv3Yhb8g) Personally, I'm holding out for a gold toilet. ![](https://ip.bitcointalk.org/?u=http%3A%2F%2Fstellakheine.files.wordpress.com%2F2011%2F08%2Fsolid-gold-toilet-for-the-rich.jpeg%3Fw%3D253%26h%3D300&t=665&c=2u0H4ROxIIFeYQ)
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Akka
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January 29, 2013, 06:45:38 PM |
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Personally, I'm holding out for a gold toilet. ![](https://ip.bitcointalk.org/?u=http%3A%2F%2Fstellakheine.files.wordpress.com%2F2011%2F08%2Fsolid-gold-toilet-for-the-rich.jpeg%3Fw%3D253%26h%3D300&t=665&c=2u0H4ROxIIFeYQ) Pah, a toilet if an Gold Object, than I go for the real deal: ![](https://ip.bitcointalk.org/?u=http%3A%2F%2Fmimg.ugo.com%2F201008%2F54944%2Fcuts%2Fgold-death-stars_288x288.png&t=665&c=IhAsY2wD3-u3tg) A solid gold death star, muahahaha. But enough OT picture spamming now
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Qoheleth
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January 29, 2013, 07:52:24 PM Last edit: January 29, 2013, 08:10:51 PM by Qoheleth |
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iCEBREAKER, I suspect we're working under conflicting definitions. It's not just age and history. Silver, gems, and seashells were used long before gold, yet are now demonetized. If silver is "demonetized", so is gold. Seashells ain't scarce anymore, and historically were used by cultures that got physically steamrolled later (so their cultural norms didn't control). Gems ain't fungible or scarce. Gold's unique properties, which create its unparalleled inherent utility, are not "bizarre" or a "self-fulfilling prophecy." Which properties do you mean? Is it just the scarcity/fungibility/divisibility trifecta? Because it seems to me like, to some extent, those are required for something to function as money at all. The backing process must end somewhere; it cannot be turtles all the way down.
The only way to stop the infinite regression is with a self-backing money of intrinsic value. Disagree, although that's possibly because we're using different definitions of "backing". To me, "backing" is one source of confidence in a currency's future value - that it is guaranteed by some trusted authority to be exchangeable 1:1 for some good that's already considered valuable. So, silver certificates are backed by silver, because silver is already considered valuable and the government promises to give you silver if you turn in a silver certificate. Liberty Reserve was backed by gold because NotHaus promised that you could redeem them for gold in his Idaho warehouse. You could even say that stock ETFs are backed by their stock basket. But currency confidence can come from other sources. USD, for example, functions as a currency because it's fungible, divisible, and (relatively) scarce, and people are confident they can buy stuff with it tomorrow. It's not "backed" by anything, other than, perhaps, anti-debt (that is, the government guarantee that if you are in debt, including tax debt, you can throw dollars at the debt to extinguish it). But people have confidence in its buying power (out of habit, the presence of an established economy, and if nothing else, tax obligations), so they use it and it works. Gold's got scarcity, divisibility, and fungibility, and people are confident it'll still be worth a lot tomorrow. Why are they confident it'll still be worth a lot tomorrow? Because it's been worth a lot for as long as anyone can remember, because the scarcity is defined by physical law, because culturally we think of gold as a symbol of wealth, and because it has some (niche) practical use that would make it useful even without its monetary properties. But I'd argue that those non-monetary practical uses constitute only a small portion of what makes it valuable in the eyes of people in general. It's mostly psychological, cultural, and based on its history of past value.
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If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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iCEBREAKER
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January 30, 2013, 05:25:18 PM |
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If silver is "demonetized", so is gold.
Which properties do you mean? Is it just the scarcity/fungibility/divisibility trifecta? Because it seems to me like, to some extent, those are required for something to function as money at all. Central banks never stopped using gold as money. They buy/trade/hoard gold and count it on their balance sheets. Not so for silver. I'm using Aristotle's 4-pronged definition of a good money, requiring it to be durable/portable/fungible/independent. To me, "backing" is one source of confidence in a currency's future value - that it is guaranteed by some trusted authority to be exchangeable 1:1 for some good that's already considered valuable. So, silver certificates are backed by silver, because silver is already considered valuable and the government promises to give you silver if you turn in a silver certificate. Liberty Reserve was backed by gold because NotHaus promised that you could redeem them for gold in his Idaho warehouse. You could even say that stock ETFs are backed by their stock basket.
But currency confidence can come from other sources. USD, for example, functions as a currency because it's fungible, divisible, and (relatively) scarce, and people are confident they can buy stuff with it tomorrow. It's not "backed" by anything, other than, perhaps, anti-debt (that is, the government guarantee that if you are in debt, including tax debt, you can throw dollars at the debt to extinguish it). But people have confidence in its buying power (out of habit, the presence of an established economy, and if nothing else, tax obligations), so they use it and it works.
Gold's got scarcity, divisibility, and fungibility, and people are confident it'll still be worth a lot tomorrow. Why are they confident it'll still be worth a lot tomorrow? Because it's been worth a lot for as long as anyone can remember, because the scarcity is defined by physical law, because culturally we think of gold as a symbol of wealth, and because it has some (niche) practical use that would make it useful even without its monetary properties. But I'd argue that those non-monetary practical uses constitute only a small portion of what makes it valuable in the eyes of people in general. It's mostly psychological, cultural, and based on its history of past value.
The US dollar is backed by oil. Demand for dollars is solely a function of the fact that our paper statelets (Saudi Arabia, Kuwait, etc.) only accept US$ for oil. Absent petrodollar hegemony it will collapse. This process is already well underway. Gold is backed by gold, via fungibility. The circularity is a feature, not a bug. "Backed by" has nothing to do with confidence. Backing refers to a guaranteed exchangeability. EG, I could issue bonds backed by worthless Zimbabwe dollars, or seashells.
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Piper67
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January 30, 2013, 08:57:20 PM |
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... The US dollar is backed by oil. Demand for dollars is solely a function of the fact that our paper statelets (Saudi Arabia, Kuwait, etc.) only accept US$ for oil.
Absent petrodollar hegemony it will collapse. This process is already well underway.
What do the Arabs get in exchange for those dollars? Presumably they get cars (Europe), big-screen TVs (Korea) and smart phones (China) among other things. Thus the support has to be widespread, otherwise the Arabs would quickly get disillusioned with their piles of worthless green paper that don't buy them anything. No, the Dollar is backed by The American Dream(TM). Over the course of decades the US empire enjoyed a virtuous circle of "outsourced inflation" and wealth acquisition -- freshly printed bank notes got sent overseas, and other countries gladly handed over their material goods because the US Dollar was something special. It truly was the long con. So what changed? The US ran out of new places to conquer. Exchange rate disparities could be exploited for a while and the US (and other "first world" countries) still enjoyed cheap labour from "third world" countries. But now even that has dried up. The US got too big and spoiled and now they're struggling to re-adjust. "Backed by" has nothing to do with confidence.
It has everything to do with confidence. Agreed. One could even theorise that the history of colonialism and empire is really the history of currency running out of places to hide ![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif)
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iCEBREAKER
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January 30, 2013, 09:40:56 PM |
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What do the Arabs get in exchange for those dollars? Presumably they get cars (Europe), big-screen TVs (Korea) and smart phones (China) among other things. Thus the support has to be widespread, otherwise the Arabs would quickly get disillusioned with their piles of worthless green paper that don't buy them anything. No, the Dollar is backed by The American Dream(TM). Over the course of decades the US empire enjoyed a virtuous circle of "outsourced inflation" and wealth acquisition -- freshly printed bank notes got sent overseas, and other countries gladly handed over their material goods because the US Dollar was something special. It truly was the long con. So what changed? The US ran out of new places to conquer. Exchange rate disparities could be exploited for a while and the US (and other "first world" countries) still enjoyed cheap labour from "third world" countries. But now even that has dried up. The US got too big and spoiled and now they're struggling to re-adjust. "Backed by" has nothing to do with confidence.
It has everything to do with confidence. The ruling class Arabs getting the dollars also get security guarantees, keeping their puppet regimes safe from the oppressed citizens. That's the deal. Dollars buy less gold, cars, TVs, and phones every day. Those goods are also for sale in other currencies. The artificial demand for US dollars is due only to petrodollar hegemony. The US has not run out of places to conquer. You need to keep up with developments in Africa. Backed By != Valuable Because Backed By = Guaranteed Exchangeable For There is often some overlap, but don't let that confuse you. ![Wink](https://bitcointalk.org/Smileys/default/wink.gif)
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| "The difference between bad and well-developed digital cash will determine whether we have a dictatorship or a real democracy." David Chaum 1996 "Fungibility provides privacy as a side effect." Adam Back 2014
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mr chong
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January 31, 2013, 02:02:50 AM |
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Gold is real and you can hold it in your hand and most importantly it does not need electricity or the Internet to exist. If there is any shortage of electricity to power computers or other devices needed to get to bitcoins or to run the servers it needs to run the block chain or the Internet then bitcoin no longer exist. Gold has been treasured for centuries because if its durability, something bitcoin does not have as long as it depends on electricity and the Internet to survive.
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notme
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January 31, 2013, 02:21:59 AM |
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Gold is real and you can hold it in your hand and most importantly it does not need electricity or the Internet to exist. If there is any shortage of electricity to power computers or other devices needed to get to bitcoins or to run the servers it needs to run the block chain or the Internet then bitcoin no longer exist. Gold has been treasured for centuries because if its durability, something bitcoin does not have as long as it depends on electricity and the Internet to survive.
It depends on one computer with one copy of the blockchain surviving until the internet is brought back up if you have your bitcoins backed up on paper.
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Richy_T
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January 31, 2013, 03:00:21 AM |
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These are not unsolved problems either. Mesh networking is surely on the way and limited power independence will arrive in good time (without the need for government to throw money at it, I'll add).
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Roger_Murdock
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January 31, 2013, 05:48:04 AM |
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Gold is real and you can hold it in your hand and most importantly it does not need electricity or the Internet to exist. If there is any shortage of electricity to power computers or other devices needed to get to bitcoins or to run the servers it needs to run the block chain or the Internet then bitcoin no longer exist. Gold has been treasured for centuries because if its durability, something bitcoin does not have as long as it depends on electricity and the Internet to survive.
Bitcoin is real and you can hold it in your brain. And I'd argue that bitcoins are more durable than gold. (Can you make backup copies of your gold?) The bottom line is that people who claim that gold is better than Bitcoin because it's "physical" are confusing cause and effect. Gold's corporeal nature is a bug, not a feature. But it was that corporeal nature that enabled gold to function as a decentralized money (what you really care about). Decentralization is critical to prevent manipulation / debasement by a centralized issuer. But that decentralization came at a cost: gold is (from a modern perspective) terribly inefficient as a medium of exchange. On the other end of the spectrum, modern electronic fiat is a much more transactionally efficient money. But that just trades one problem for another (and larger) one. Centralized currencies give tremendous power to the issuer. And power corrupts. Bitcoin is not revolutionary because it's "digital" or "virtual" (so are the vast majority of dollars). And Bitcoin is not revolutionary because it's decentralized (so is gold). Bitcoin is revolutionary because it's BOTH.
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Richy_T
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January 31, 2013, 03:17:19 PM |
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Gold is real and you can hold it in your hand and most importantly it does not need electricity or the Internet to exist. If there is any shortage of electricity to power computers or other devices needed to get to bitcoins or to run the servers it needs to run the block chain or the Internet then bitcoin no longer exist. Gold has been treasured for centuries because if its durability, something bitcoin does not have as long as it depends on electricity and the Internet to survive.
Bitcoin is real and you can hold it in your brain. And I'd argue that bitcoins are more durable than gold. (Can you make backup copies of your gold?) The bottom line is that people who claim that gold is better than Bitcoin because it's "physical" are confusing cause and effect. Gold's corporeal nature is a bug, not a feature. But it was that corporeal nature that enabled gold to function as a decentralized money (what you really care about). Decentralization is critical to prevent manipulation / debasement by a centralized issuer. But that decentralization came at a cost: gold is (from a modern perspective) terribly inefficient as a medium of exchange. On the other end of the spectrum, modern electronic fiat is a much more transactionally efficient money. But that just trades one problem for another (and larger) one. Centralized currencies give tremendous power to the issuer. And power corrupts. Bitcoin is not revolutionary because it's "digital" or "virtual" (so are the vast majority of dollars). And Bitcoin is not revolutionary because it's decentralized (so is gold). Bitcoin is revolutionary because it's BOTH. You also can't eat gold. If things get so bad that the Bitcoin network is inoperable, you'll be taking your sackful of gold (you bought real gold and not certificates, right?) over to the neighbors to trade for food and they'll shoot you as a threat (and then take your gold). Water, food & ammunition are hedges against such a scenario (though there's a slight issue with that third one at the moment).
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misterbigg
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January 31, 2013, 04:18:33 PM |
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You also can't eat gold. That's why its good to have a large quantity of Bitcoins, but at the same time have some gold and silver buillion (one ounce coins) to spend in an emergency if the Internet is unavailable for a period of time. For example, after an EMP (electromagnetic pulse).
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Richy_T
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January 31, 2013, 05:27:01 PM |
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You also can't eat gold. That's why its good to have a large quantity of Bitcoins, but at the same time have some gold and silver buillion (one ounce coins) to spend in an emergency if the Internet is unavailable for a period of time. For example, after an EMP (electromagnetic pulse). Exactly. Diversification is the key. We watched that "Doomsday Preppers" series recently and couldn't believe the people who prepared for one specific type of event to the exclusion of any others, often when it would only take a slight modification to their strategy to be more generally prepared. Hyper-focus and obsession need to be guarded against.
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Puppet
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January 31, 2013, 05:57:58 PM |
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Bitcoin is backed by mathematics. What's gold backed by?
Scarcity, its industrial uses and the fact that it looks nice? Gold isnt scarce once you look beyond our tiny planet. A single smallish asteroid could contain far more gold than can ever be mined on earth. Eros alone is estimated to contain 20,000 million tonnes of gold and similar amounts platinum and other metals. And there countless such asteroids. All those gold bugs better hope Deep Space Industries and its competitor (forgot the name) dont go anywhere. But whatever they end up mining up there, it wont be bitcoins ![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif)
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