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June 27, 2011, 01:38:49 PM |
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Sick and tired of watch those "back it with gold" or "gold is better" or, even worse, "gold is the primary currency" threads?
Well, those may come only from those who fail to understand what is gold and what is a currency/bullion.
Let's start to what is a currency: A currency is a symbolic value we attribute to things, so we can trade specific things by converting them into that abstract symbolic value which the seller than can convert into another specific thing he needs from someone else. Otherwise we would need to direct trade and expect the one holding what we need/want was willing to trade it for something we've - on most cases this just means trade will be a pain and most likely fail.
To set this symbolic value many things had been used along the ages, the oldest still in use in the Euro-Asiatic region (keep this in mind before you think gold to always be a currency, outside Euro-Asia gold had only use for jewelery, reason why you don't find Mayan gold coins, nor Inca gold coins nor sub-saharian ancient gold coins) is gold. But that's the only trade value of gold: Being old in the market and other than be resilient to erosion, has pretty few to none of other "that special" properties and nothing has any intrinsic value.
Because we live in a "money sees, monkey does" world, by being old as currency, gold, gives its speculators some sort of extra-confidence; like saying «if gold hadn't failed for all these centuries, it will not fail now». But the speculative market is just that, speculation, there're no safe winnings not even with gold, for someone to buy low and sell high, someone else had to buy high and sell low.
Bitcoin is yet new, as the technology needed for it to exists is also new itself. But there's no reason to back one currency with another just because the other is older.
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