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Explodicle
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October 25, 2011, 02:48:26 PM
 #21

No the cost of production are approaching higher values, you have to look at the overall picture over the next decades this will be true for both bitcoin and gold.

Your wrong.  Gold production costs are only rising because companies are chasing the high price of gold.  The insane (and stupid) 3x, 4x, 5x multiplier between retail prices and production is causing gold companies to open more speculative mines.  Who cares if your costs rise 20% if you can sell instantly sell 100% of what you mine for 400%+.

Gold has no intrinsic value.  There is no evidence (based on 100+ year gold & production prices) that gold prices & production are aproaching each other.  Gold trades completely beyond any production fundamentals.  When people are scared they buy gold.  When gold is flat due to low fear and they see stocks, bonds, real estate, and other estates posting gains year after year people sell it.

Gold has numerous times in the past trade BELOW production cost and many times (like today) traded at insane multiples to production cost.  Your belief that either production or price are aproaching the other is false.

Gold does have intrinsic value. It can be used to create goods like necklaces and electrical wiring.
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October 25, 2011, 03:24:42 PM
 #22

Gold fails this axiom (form the article)

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Money should be difficult or impossible to replicate at a cost less than its cost of manufacture even by the most efficient means possible. That is, production costs (aka "intrinsic value") should approximate face value; seigniorage should be minimal to nil.

Gold trades @ $1600 an ounce and today with current technology can be produced for <$550.  It is not valid as a currency by the definitions of your article.

Emphasis mine.

Mining gold is not replication, just like mining bitcoins is not replication. Paper money can be fairly cheaply replicated, provided you have the correct equipment or a functional facsimile.
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October 25, 2011, 03:29:36 PM
 #23

Your missing the point.  Gold isn't a currency but if it was the cost to mint a coin is negligble.  What prevents counterfitting is the scarcity of supply and thus mining costs not coinage costs.
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October 25, 2011, 03:42:35 PM
 #24

Your missing the point.  Gold isn't a currency but if it was the cost to mint a coin is negligble.  What prevents counterfitting is the scarcity of supply and thus mining costs not coinage costs.

Never said anything about currency, and I don't want to get into semantic arguments.

What prevents counterfeiting is that it's fairly easy to determine if an object is made of gold or something else.

What enforces scarcity is that mining is difficult (and only gets more so as we mine the easy deposits), and that nobody has found a way to transmute a worthless substance into gold for less than the cost of mining.
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October 25, 2011, 03:46:30 PM
 #25

Yeah Bitcoin would be also a possibility in a nanotech world, no question about it but I can't see how gold fails it according to your argument. But I think that has been pretty well described in the article.

I'm just telling you Bitcoin is different than Gold in 2 things:
At first Bitcoin needs consensus not to replace it with another cryptocurrency, gold is unique in its own right.
Gold mining is dependent upon technology and scarcity while Bitcoins scarcity is predetermined over time. 'Peak Bitcoin' occured at the genesis block Peak gold is occurring now or in a few decades depending on estimations.

The problem is the synergy between those 2. Bitcoin was a free for all at the beginning while during the early historical gold rushes miners didn't haul tons of it out one at a time with a pick axe.
This little seemingly insignificant 'error' might be the death sentence for bitcoin we are seeing this now with the emergence of alternate cryptocurrencies.
I can't see this threat disappearing in the near future and while it might not seem threatening now it could very well become so at some point.


So much for that, has nothing to do with Gold and why Goldbugs will not abandon it though.

take a look at this thread where we debate the merits of Bitcoin vs Gold heavily.

https://bitcointalk.org/index.php?topic=35956.0
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October 25, 2011, 03:53:53 PM
 #26

Never said anything about currency, and I don't want to get into semantic arguments.

What prevents counterfeiting is that it's fairly easy to determine if an object is made of gold or something else.

What enforces scarcity is that mining is difficult (and only gets more so as we mine the easy deposits), and that nobody has found a way to transmute a worthless substance into gold for less than the cost of mining.

Well the post was about currency.  Gold @ >$1600 when it can be mined @ <$550 isn't a currency.  It's price is based on fear not scarcity.  Gold selling @ 3x+ its cost to produce has more in common with diamonds than true scarcity.
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October 25, 2011, 04:20:45 PM
 #27

anti-bitcoin mostly because they can't hold it

Actually,  I suspect they are anti-bitcoin not because they can't hold it... but they can't get ahold of them using what they know.

They can't go to the coin shop and buy them
They can't tell their broker to "buy SLV and BTC"  because BTC doesn't exist as an ETF.
They can't use their credit card to buy them.

Want to make bitcoins a true commodity,  we need a BTC ETF ...    similar to this like for silver silver.

http://finance.yahoo.com/q?s=SLV

It works is rather simple.   The number of shares roughly equals the number of ounces of silver they have.   So they buy and sell silver ounces to equal what they have,  their "stock"  price is roughly the spot price of silver.

Their broker can buy SLV like a normal stock,  and at the same time they "technically own" silver..  abit paper silver.

Do that with bitcoins and that ETF would have to start sucking bitcoins into their reserve to match whatever the demand is.    Hence sending the price upwards and widening the market to anyone that has a 401k plan.

http://finance.yahoo.com/etf/education/01



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October 25, 2011, 04:23:18 PM
 #28

anti-bitcoin mostly because they can't hold it

Actually,  I suspect they are anti-bitcoin not because they can't hold it... but they can't get ahold of them using what they know.

They can't go to the coin shop and buy them
They can't tell their broker to "buy SLV and BTC"  because BTC doesn't exist as an ETF.
They can't use their credit card to buy them.

Want to make bitcoins a true commodity,  we need a BTC ETF ...    similar to this like for silver silver.

http://finance.yahoo.com/q?s=SLV

It works is rather simple.   The number of shares roughly equals the number of ounces of silver they have.   So they buy and sell silver ounces to equal what they have,  their "stock"  price is roughly the spot price of silver.

Their broker can buy SLV like a normal stock,  and at the same time they "technically own" silver..  abit paper silver.

Do that with bitcoins and that ETF would have to start sucking bitcoins into their reserve to match whatever the demand is.    Hence sending the price upwards and widening the market to anyone that has a 401k plan.

http://finance.yahoo.com/etf/education/01




+1

this is a great idea and someone should implement it.  would be a huge winner IMO.
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October 25, 2011, 08:30:50 PM
 #29

Gold does have intrinsic value. It can be used to create goods like necklaces and electrical wiring.

We have different definitions of intrinsic. To me, it means essential to whatever you are comparing it to. Necklaces and electrical wiring are nice, but not even close to having intrinsic value to humans. The things that have intrinsic value to humans are those that are absolutely required to survive, i.e. essential. Air has intrinsic value to humans. Gold's value is subjective.

Whether or not gold is essential to our survival as a species, it is essential to our culture that we have created for ourselves, we use gold in Industry, Medicine, Computers, Electronics, and Jewelry. The value of Gold is not going down until we are able to synthesis gold or we encounter gold outside our planet. But I agree, Gold's value is subjective.

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October 25, 2011, 08:34:07 PM
 #30

Gold does have intrinsic value. It can be used to create goods like necklaces and electrical wiring.

We have different definitions of intrinsic. To me, it means essential to whatever you are comparing it to. Necklaces and electrical wiring are nice, but not even close to having intrinsic value to humans. The things that have intrinsic value to humans are those that are absolutely required to survive, i.e. essential. Air has intrinsic value to humans. Gold's value is subjective.

Whether or not gold is essential to our survival as a species, it is essential to our culture that we have created for ourselves, we use gold in Industry, Medicine, Computers, Electronics, and Jewelry. The value of Gold is not going down until we are able to synthesis gold or we encounter gold outside our planet. But I agree, Gold's value is subjective.

Gold intrinsic value is almost insignificant.  Gold industrial uses are roughly 300 tons per year.  Even with no recycling currently mined gold would be enough for all industrial uses for next 300 - 500 years.  Gold is easily recycled so we likely could support all industrial uses of gold without mining a single gram ever again.  Gold mining is currently in excess of 2500 tons per year roughly 8x industrial uses and almost all of that will never be used for any industrial uses.

 
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October 25, 2011, 11:41:46 PM
 #31

i still think Bitcoin is the digital equivalent of gold and will eventually be perceived as such.
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October 26, 2011, 01:36:04 AM
 #32

Fine, me thinks Bitcoin is the digital equivalent of diamonds and it is actually perceived as such.  Grin

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October 26, 2011, 06:19:44 PM
 #33

Fine, me thinks Bitcoin is the digital equivalent of diamonds and it is actually perceived as such.  Grin

It can't be diamonds... there is a reason that you can't value a currency on diamonds... because each diamond isn't the same.  

It's far easier to say "here's 2 ounces of gold" ~$3100  or "here's 2 bitcoins"  ~$5 bucks  or "here's 2 ounces of silver" ~$62

VS:

Here are 2 diamonds,  one is a VS2 color K 1/2 carat (round cut), the other is a VS1 C color and 1/3 carat (cushion cut)

You can't measure that easily because there is no such thing as a standard diamond.   Hence the problem with diamonds in terms of a currency...   you can have valuable diamonds...  you just can't have 200 of the same exact value diamond,  because that doesn't exist.




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October 26, 2011, 06:26:41 PM
 #34

I didn't compare it to this aspect of diamond, in which case you are of course right.

However both diamonds and bitcoin receive their scarcity from being in the hands of relatively few people which purposefully control the market to give them higher value.

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October 26, 2011, 06:52:18 PM
 #35

However both diamonds and bitcoin receive their scarcity from being in the hands of relatively few people which purposefully control the market to give them higher value.

Wrong. Bitcoins are scarce (not infinite) because the algorithm to create Bitcoins (generation subsidy) tends toward zero and is published (open source).

Diamonds are not truly scarce, since they can be synthesized at or near the cost of mining them naturally.
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October 26, 2011, 07:01:10 PM
 #36

However both diamonds and bitcoin receive their scarcity from being in the hands of relatively few people which purposefully control the market to give them higher value.

Wrong. Bitcoins are scarce (not infinite) because the algorithm to create Bitcoins (generation subsidy) tends toward zero and is published (open source).

Diamonds are not truly scarce, since they can be synthesized at or near the cost of mining them naturally.

Why are you people always nitpicking on the sematics?
Bitcoins are tightly controlled by the upper 1% of participants with a total percentage ever sold on the market (also equals spending in current paradigm) of 3%.

97% of all bitcoins are hoarded period.
Again, other details are just semantics not really relevant to the analogy.

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Gerald Davis


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October 26, 2011, 07:02:11 PM
 #37

What makes you think all hoarders make up only 1% of users?
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October 26, 2011, 07:03:29 PM
 #38

Blockexplorer.

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October 26, 2011, 07:04:37 PM
 #39

Space Shuttle

(Sorry I thought we were just posting random words).
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