The Illusion of the Infallibility of Gold as Money

[Bruce Wagner]

Why does everyone rave so much about gold....?

I've heard things said like:

    "Bitcoin is the 'gold standard' of digital currency."

    "Bitcoin is not suitable as the money of the future because it is not backed by gold."

I only wish that Gold was backed by something as secure as Bitcoin.

So you think Gold is the ultimate infallible material as physical money....?

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An Example of a Precious Metal That Became Common

Up until the late 1800's, Aluminum was extremely valuable due to the fact that it was very hard to procure.  It was, in fact, more valuable than gold!  Bars of aluminum were exhibited alongside the French crown jewels at the Exposition Universelle of 1855.  Napoleon Bonaparte was said to have a special set of aluminum utensils only to be used by his most esteemed guests.  His gold utensils were for more casual occasions!  Also, atop the Washington Monument sits an almost 3 kg pyramid of aluminum, placed as a symbol of how strong and wealthy the U.S. was.

In 1886, the Hall-Heroult process was invented as cost-effective way to produce aluminum. Since then, the value of aluminum has been significantly reduced.

Still wanna invest in bullion bars of aluminum?

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Another Example of Technology as Game Changer

Synthetic diamond is diamond produced in a technological process; as opposed to natural diamond, which is created in geological processes. Synthetic diamond is also widely known as HPHT diamond or CVD diamond, denoting the production method, High-Pressure High-Temperature synthesis and Chemical Vapor Deposition, respectively.

The properties of synthetic diamond depend on the details of the manufacturing processes, and can be inferior or superior to those of natural diamond; the hardness, thermal conductivity and electron mobility are superior in some synthetic diamonds (either HPHT or CVD). Consequently, synthetic diamond is widely used in abrasives, in cutting and polishing tools and in heat sinks. Electronic applications of synthetic diamond are being developed, including high-power switches at power stations, high-frequency field-effect transistors and light-emitting diodes. Synthetic diamond detectors of ultraviolet (UV) light or high-energy particles are used at high-energy research facilities and are available commercially. Because of its unique combination of thermal and chemical stability, low thermal expansion and high optical transparency in a wide spectral range, synthetic diamond is becoming the most popular material for optical windows in high-power CO2 lasers and gyrotrons.

Both CVD and HPHT diamonds can be cut into gems and various colors can be produced: clear white, yellow, brown, blue, green and orange. The appearance of synthetic gems on the market created major concerns in the diamond trading business, as a result of which special spectroscopic devices and techniques have been developed to distinguish synthetic and natural diamonds.
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So, do you think that gold (or any other precious metal or gem) is immune to new technology...   technology that could manufacture it artificially, or find massive reserves of it?

I think there might even be a HIGHER chance of that happening...  BEFORE technology is able to crack the cryptography of bitcoin.

Of course, as the saying goes:   "Perception is Reality."

So, if people BELIEVE that gold will preserve its value and that nothing can change that...  Well, that will help gold.

However, if they come up with a way to manufacture gold as cheaply as Snickers bars...  Gold will be in trouble.

I only wish Gold was backed by something as secure as Bitcoin.

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[hugolp]

Gold has been already synthesized. The "only" problem is that the amount of energy needed to synthetize gold costs several orders of magnitud higher than the gold you get. So basically its an impossible way. And it will be for a long time.

Now, I have strongly supported and publicited bitcoin and I have no problem with gold. There is no need for bitcoin and gold to become "enemies". I think gold is one of the best candidates to be money. But I oppose a government mandated gold standard. Just let the currencies compete and let people freely choose which one they want to use. Gold and bitcoin can coexists.

[Bruce Wagner]

There is no need for bitcoin and gold to become "enemies". ... Gold and bitcoin can coexists.

Yes, of course.  My post was really only to give people some "food for thought".   To make people think...  If the value of gold were to continue to increase...  and the cost of energy to go down...  It is possible that gold could be manufactured for less than it's "worth".   

Of course, next year's technology will change everything.   Nothing is forever.

That was my point...

I also wonder, with the exponential advancement in computing power, will bitcoin's cryptography become hackable.   If so, that'll be the end of it.   Nothing is forever.

[FlyingMoose]

Bitcoin has its dangers too.  What if someone cracks one of the algorithms or, probably more likely, finds a defect in the protocol?  I think this is much more likely than someone figuring out how to make gold.

[MoonShadow]

Bitcoin has its dangers too.  What if someone cracks one of the algorithms or, probably more likely, finds a defect in the protocol?  I think this is much more likely than someone figuring out how to make gold.

We actually do know how  to make gold, but it's just incrediblely expensive and dangerous to do.  The only threat to the value of gold is a process that reduces the energy input and dangerous nature of doing so.  This might actually be possible, if starting with an element that is heavier than gold itself, such as depleted uranium.  If it were possible, I'd be all for it, since gold has numerous industrial uses that are limited only by gold's cost.

The economic monetary systems would adjust.

[kiba]

Make gold? Why not mine nearby asteroids for gold?

[MoonShadow]

Make gold? Why not mine nearby asteroids for gold?

I'm sure we will get there eventually, as a species, if we aren't wiped out by one of those asteroids first.

[kiba]

Make gold? Why not mine nearby asteroids for gold?

I'm sure we will get there eventually, as a species, if we aren't wiped out by one of those asteroids first.

If we could build a tower for launching spaceships, we can reduce the cost of escaping earth's gravity.

[MoonShadow]

Make gold? Why not mine nearby asteroids for gold?

I'm sure we will get there eventually, as a species, if we aren't wiped out by one of those asteroids first.

If we could build a tower for launching spaceships, we can reduce the cost of escaping earth's gravity.

We've been thirty years from "Fountain of Paradise" for as long as I have been alive.

http://en.wikipedia.org/wiki/Space_elevator

Although we actually have the tech to do this, just not the capital or political will...

http://en.wikipedia.org/wiki/Launch_loop

[grondilu]

So, do you think that gold (or any other precious metal or gem) is immune to new technology...   technology that could manufacture it artificially, or find massive reserves of it?

Yes, I think gold is immune to new technology, at the very least for a few centuries.

But even if cheap gold synthesis was possible,  it is a very huge hypothesis.  And above all :  it is not present reality.   Personaly, I prefer base my investments strategies on actual reality, instead of science fiction.

[FreeMoney]

So, do you think that gold (or any other precious metal or gem) is immune to new technology...   technology that could manufacture it artificially, or find massive reserves of it?

Yes, I think gold is immune to new technology, at the very least for a few centuries.

But even if cheap gold synthesis was possible,  it is a very huge hypothesis.  And above all :  it is not present reality.   Personaly, I prefer base my investments strategies on actual reality, instead of science fiction.

Suppose we can produce gold at very low cost, what awesome applications could it be used for? Surely not roads, like they do in heaven. Cups would be moderately less likely to tip over if their bases were made of gold. Maybe cups with gold hemispheres on the bottom would become popular. I'm pretty sure I would want to use gold silverware.

[SmokeTooMuch]

Guess more poeple could afford a gold tooth crown then.
I guess the main advantage will be in the medical sector.

[Bitquux]

The thing with aluminum is it's like the 3rd most abundant element in the earth's crust. It's the process of extracting it that was difficult with older technology. Gold actually has a rarity. That said, I'm not a huge believer in gold, either. But then I don't have any. Of course, I don't have much of anything, dollars included.   

[MoonShadow]

Suppose we can produce gold at very low cost, what awesome applications could it be used for? Surely not roads, like they do in heaven. Cups would be moderately less likely to tip over if their bases were made of gold. Maybe cups with gold hemispheres on the bottom would become popular. I'm pretty sure I would want to use gold silverware.

You would want to use silver silverware, silver has surface anti-bacterial properties, which is why it was made into eating utensils for centuries.

Gold does not corrode, so it makes a wonderful contact conductor, even though silver has a lower natural resistance.

Gold is not toxic to human life, as lead, uranium, thorsium and a great many other heavy elements happen to be, so it can easily replace a number of those other elements in things that need to be dense, such as ships ballast weights, exercise weights, radiation shielding, etc.

Gold is also a soft metal, so is a better bullet material than lead, copper or berrillium.

Gold also can be spread so thin, that it's semitransparent, and has the natural ability to filter dangerous light frequencies, as well as other forms of radiation, when used in this way.  The first spacewalk suits had gold plated visors for this very reason.

If atomized, gold atoms can be charged and shot through electromagneticly charged screens, and be used as a particularly efficient reactionary mass for electric ion drives on space ships, whenever that comes to pass.  The heavier the charged particle, the more efficient the ion drive can be.


Gold is resistant to chemical reactions, so gold can be very effective as a liner for dangerous or otherwise corrosive chemical storage tanks.

Those are just a few possibilities off the top of my head.

[Anonymous]

If someone cracked SHA hashes there would be more to worry about than bitcoin.

[FlyingMoose]

Guess more poeple could afford a gold tooth crown then.
I guess the main advantage will be in the medical sector.

I think the gold is only a small portion of the expense of dental work, it wouldn't be much different in price.

[FlyingMoose]

The thing with aluminum is it's like the 3rd most abundant element in the earth's crust. It's the process of extracting it that was difficult with older technology. Gold actually has a rarity. That said, I'm not a huge believer in gold, either. But then I don't have any. Of course, I don't have much of anything, dollars included.   

There's quite a bit of gold in seawater, if we found an easy way to filter it out, the market would probly drop quite a bit.

Also, I believe there's a significant amount in the earth's core, but we're not currently able to drill that deep.

Making gold is like cracking encryption, quite difficult.

Finding gold from an alternative source is like finding a defect in the protocol -- much more likely.

[hugolp]

Suppose we can produce gold at very low cost, what awesome applications could it be used for? Surely not roads, like they do in heaven. Cups would be moderately less likely to tip over if their bases were made of gold. Maybe cups with gold hemispheres on the bottom would become popular. I'm pretty sure I would want to use gold silverware.

If we get to a point where the price is energy make it worth to synthetize gold then probably we dont need a monetary system or for that case even an economy anymore. It will be really a post scarcity world.

[grondilu]

If we get to a point where the price is energy make it worth to synthetize gold then probably we dont need a monetary system or for that case even an economy anymore. It will be really a post scarcity world.

I thought that too but couldn't express it that well.

[Anonymous]

If they can get nanotechnology down to an atomic level they could just replicate stuff that we need.