Bitcoin and Gold

[OROBTC]

...

About the only other place I hang out at more than here is zerohedge.com, a well known and influential financial website  (my handle over there is "DoChenRollingBearing").  It is, of course, quite possible that Zero Hedge may be discussed here all the time here, but I (a newb) have not seen this yet so I thought I would ask for bitcointalk discussion of gold and BTC.

ZH is a fairly libertarian yet suspicious kind of place, but a great playground maybe the best!  One thing I do not understand is the relative hostility to Bitcoin there at ZH.  I am in the camp that BTC and gold complement each other nicely, gold for insurance (and maybe a big "FOFOA" style pop (to "$55,000" / oz -- a discussion for "ANOTHER" day...)) and BTC for certain transactional and capital movement advantages (and the possibility of a big price pop somewhere down the line).

Disclosure: I love gold!

There are quite a few who like both BTC and gold there, but a rather high number who like gold, but hate BTC (eg, calling it a "ponzi", etc.).  I see the logic of some who have not looked much at BTC, but other wise am kind of baffled that Bitcoin has not gotten a better reception at ZH.

So, let me turn this around...:

What are the views of many of you here at BTCTalk about gold?  Do you own it (the real thing, not "paper gold")?  Where do some you stand re owning gold?

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[KenJackson]

When you say "not 'paper gold'", do you mean gold commodity ETFs like IAU and GLD?  Why the distinction?

I own some IAU, and am planning to buy more, but I wouldn't think of buying real gold and storing it in my house.  The ETF seems safer and more convenient.  I don't believe end-of-civilization arguments in which some people hype the benefits of physical gold in hand.

I've been paying attention to bitcoin for years, but only just now bought my first small amount.  I think gold and bitcoin have some similarities, but greater differences.

[pungopete468]

Hey,

I support gold, BTC, and other real-world useful commodities.

Compared with conventional commodities, BTC is extemely complex. It really doesn't fit under the category of a commodity or a currency. It's not something that most people can learn about in an evening; especially if they don't have some previous understanding about cryptography or data encryption in general.

Just to clarify, Bitcoin isn't a ponzi scheme. People who reach the conclusion that it's a ponzi are grasping at straws. It's very similar to the invention of the internet; people make generalizations about things that they don't understand. The world was flat once, etc...

Bitcoin is a protocol, the code was invented and released as an open-source project. It's been tested against attack for the last 5 years with no holes discovered (being open-source gives attackers and developers access to the code equally.) The protocol is riding on the back of a global P2P network with more processing power than 300 times that of the top 500 most powerful super computers in the world combined. The encryption method is SHA-256; if it's ever broken, the last thing anybody would be worried about is BTC. SHA-2 is used to secure things like nuclear launch codes, military secrets, etc... There are much bigger fish in those waters than just a few Bitcoins.

All of the recent security issues aren't protocol related; they are either custom wallet implementation related, internal theft of BTC that was given to a person or business in trust that they will be returned upon request, or negligence of the owner to secure them properly (You wouldn't store a gold bar on the front seat of your car). If you don't take precautions you're susceptible to people stealing your stuff. (BTC is much more secure than gold when care is taken to secure it. Nobody can claim it by force without your involvement where gold can be stolen or appropriated.)

Bitcoin isn't a currency; it's a decentralized distributed autonomous public ledger of accounting. It's a wealth and ownership trading platform that has uses far exceeding the limitations of currency or commodity.

Bitcoin isn't a doomsday hedge; it doesn't rely on economies collapsing or on replacing existing currencies to appreciate in value. Once the infrastructure is further developed it will become more user friendly, more intuitive, and it will be utilized by many different avenues outside of the financial sector. Bitcoin is an emerging technology that will be built on and developed over time; the world will be moved and it will be epic.

[christiancoin]

I've worked in the gold and silver business for years.  I've had the privilege of seeing exactly how people felt about precious metals and why they were buying them.  I got to feel the ups and downs in the physical market and compare them to the paper market.  Btw...I bought and sold on a fairly large scale.

I can tell you that a LARGE number of my customers were buying gold and silver in preparation for chaos and a US dollar collapse.  I believe them too because so far history has shown that to be the case.  I assumed that when gold and silver came down, I would have the opportunity to buy a lot of the gold and silver back that I had sold.  That wasn't the case.  Largely, people didn't liquidate their physical holdings.  It wasn't just my business either.  It was industry wide.  

During that time, I also saw an enormous detachment from the physical and paper world (I can't recall the exact dates right now).  Gold and silver were seemingly getting crushed in the paper market but the physical demand was crazy.  If I could have gotten my hands on more silver at the time I could have sold it all.  It simply wasn't to be found.  Why?  If the paper market is getting crushed the physical should follow.  At least that's the way it generally worked before.  How could the physical be so hard to find if the paper market is in a sell off?

So, I actually have a point.  Gold and silver have "forces" keeping it down.  It is not beneficial for some people if gold goes too high.

That being said...it won't stay down forever.  I would wait to get in until it breaks out of it's current range (especially silver).  

[Mikcik]

Im talking about gold and silver here:

https://bitcointalk.org/index.php?topic=421484.0

[thezerg]

orobtc: yes lots of btcers hold PMs.  read gold collapsing bitcoin up thread
ken: wrt phys vs. paper its not just a SHTF event;  the USD is valid for "ALL debts public and private".  In a gold deflation event you'll either get your USD equivalent or get a chapter 11 headline.  if you get usd I bet it will be quite hard due to various shenanigans to ACTUALLY then buy an equiv amount of phys.

[Peter R]

Welcome to bitcointalk OROBTC.  I've always enjoyed reading your comments are Zerohedge.  

I believe gold and bitcoin are compliments, and a diversified portfolio should contain both.  Gold has thousands of years of history as money, while bitcoin has transactional properties that make it apt for the information age.  I expect bitcoin to perform much better % wise over the coming years, but I recognize that it may have more risk to the downside too.  

I believe most skeptics at Zerohedge simply haven't taken enough time to really learn what bitcoin is due to some sort of mental obstinance (a mental obstinance I see time and time again when it comes to bitcoin).  

[aminorex]

the level of trolling and sockpuppetry at zh is mind boggling.  part of the btc hate is political agenda, part is professional astroturf, part is dunning-kruger snark, part is talking the gold book, part is old man luddism.

allowing zh too much influence on you thought process is harmful to your wallet.  in the long run that will probably change. 

Shtf in some sense in the US in1907, 1933, 1971.  I seriously doubt USD,EUR,JPY,RMB exist as we know them today, come 2018.

By design BTC is electronic gold.  Far safer and more portable than metal.  The implementation has proven remarkably adequate to the vision so far.

[snakebit]

Before discovering Bitcoin, I was very much a gold bug as a means of preserving my wealth knowing the value of my fiat has been devalued around 98% of its value. But due to the fact I'm in the process of living overseas, I've had to reduce my PM holdings and I currently hold more BTC than PMs. It's a much easier way of transporting wealth abroad without alerting any of the "authorities".

I agree with aminorex, the amount of trolling and just plain ignorance in regards to the overall technology of Bitcoin on ZH is mind boggling. Then again, the quality of discussions on ZH has deteriorated over the years. Though the same can be said of here. I don't really concern myself with skeptics given I heard the same kind of skepticism when the internet was in its early stage.

Speaking of which OROBTC, I am a fan of your posts on ZH as DCRB, and I wish you well on your venture south of the equator. Do you happen to know if fonestar is on this forum?

[F-bernanke]

Yes, I visit Zerohedge daily, but don't post there (I do agree with most your comments I read there, DoChenRollingBearing).

I love gold, and have a Physical stack of Gold maples and krugerrands. I have read all of FOFOA's papers.

But i have more faith in bitcoin then in gold to be honest. Gold will continue to get raped by the banksters. Although they will try to do this with BTC, at the end of the day it is more easy to take delivery of BTC then it is of gold, so it will be harder to fractional reserve (or rehypothecate) it.

I own some IAU, and am planning to buy more, but I wouldn't think of buying real gold and storing it in my house.  The ETF seems safer and more convenient.  

This is exactly the problem with gold. They can just sell it many times over when nobody takes delivery.

[ShireSilver]

I'm in the "gold and bitcoin complement each other" crowd, and I'm also thinking that we are actually in the collapse. I don't think the collapse is a singularity type event, but a slow reorganization of the economy similar to the change from an agrarian to an industrial economy.

I love bitcoin for online and in person digital transactions, but its not so good for in person anonymous cash-like transactions. Gold and silver, especially in my favorite form of Shire Silver (https://shiresilver.com), is great for in person anonymous transactions but sucks for online and digital.

I'm also wishing people would stop trying to make physical bitcoins intended for use in trade - they can never properly handle the trust issue. They might be great for interesting cold storage, but as trade pieces they fail. To be more clear, physical gold and silver can be trusted for in person exchanges, but not for online. Bitcoin can be trusted for online, but not physical exchanges.

[KenJackson]

I love gold, and have a Physical stack of Gold maples and krugerrands (5 ounces).

..., but I wouldn't think of buying real gold and storing it in my house.  The ETF seems safer and more convenient. 

This is exactly the problem with gold. They can just sell it many times over when nobody takes delivery.

What you describe is fraud.  That's a potential pitfall of dealing with any online banking or financial institution.

Those who tout physical gold often say that when the dollar collapses and there's violence in the streets, you can at least still buy food with your real gold in hand.  I question that. 

I just checked pcgs.com and the lowest price gold coin I could find there was a grade 3 Indian $2.5 for $250.  So the bubble bursts, the dollar is worthless and I walk into the grocery store with a small old coin, face value $2.50, and I claim it was worth 100 times its face value before the collapse, so I should be able to get a whole trunkfull of groceries for it now.

I think I'd be hard pressed to find a grocer that would give me one bag of groceries for it.  And these days it costs me $50 to fill the gas tank on my car, so how can I get $200 in change if I convince the gas station guy to take it?

[ShireSilver]

I think I'd be hard pressed to find a grocer that would give me one bag of groceries for it.  And these days it costs me $50 to fill the gas tank on my car, so how can I get $200 in change if I convince the gas station guy to take it?

The solution is obvious: https://shiresilver.com/catalog/gold_twentieth_gram_card 

[KenJackson]

The solution is obvious: https://shiresilver.com/catalog/gold_twentieth_gram_card 

I went to that site and searched for merchants and found there isn't anyone within 2000 miles of me that takes Shire cards as payment.  It's a nice concept, but even bitcoin is more widely accepted.

Also, the guy in the video confesses he uses a "silly straw" to measure out the gold on his picnic table.  That's not encouraging.

[ShireSilver]

The solution is obvious: https://shiresilver.com/catalog/gold_twentieth_gram_card 

I went to that site and searched for merchants and found there isn't anyone within 2000 miles of me that takes Shire cards as payment.  It's a nice concept, but even bitcoin is more widely accepted.

Also, the guy in the video confesses he uses a "silly straw" to measure out the gold on his picnic table.  That's not encouraging.

LOL, I'm the guy in the video, and using a silly straw helps me to make them inexpensively. In fact, anyone can make their own - that's one of the points of it. That allows its production to be more decentralized, as in anyone can start their own version for their area. Instructions are on the site. I've called it the drug dealer model of production and distribution in that if enough people are doing it then there's no point going after them since you'd never stop it.

And just like with bitcoin, the merchant network is really what makes it valuable. Its just that with bitcoin it has an inherent virality and ease of Internet use that makes getting lots of web based merchants on board, whereas Shire Silver is physical and needs locals promoting it. If I had a tenth as many people half as devoted to Shire Silver as bitcoin has, there'd probably be hundreds of places near you accepting it.

[lnternet]

The solution is obvious: https://shiresilver.com/catalog/gold_twentieth_gram_card 

cool stuff. very hard for this to get any traction, but very nice idea and effort.

[KenJackson]

In fact, anyone can make their own - that's one of the points of it. That allows its production to be more decentralized, as in anyone can start their own version for their area. Instructions are on the site.

Interesting.

In centuries gone by, merchants could accept coins with little fear of being fleeced because the coin's issuer, the government, stood by it's weight and purity and therefore its value.

But with this decentralized model, what's to prevent a cheat from pouring or drawing his own thinner silver and gold or to make alloys with a less expensive metal?  And who's to track down the cheat?  Surely not ShireSilver.  So it's up to the merchant to be able to discern real gold and silver from fakes and in the right amount.

If we are to believe the movies, prospectors in California and Alaska would walk into the general store and place a few nuggets of gold on the scale.  The merchant would weigh it and accredit the prospector's account so he could buy his grub and supplies.  It was up to the merchant to know the difference between real gold and fools gold or other cheating.

So do you advocate the return to the days where it's up to each of us to discern if the money is real?


This discussion reinforces something.  The most shocking and significant aspect of bitcoin is the extent to which the possibility of cheating has been eliminated.

[_Miracle]

I like physical precious metals, real estate and bitcoins; in my control. You can buy fractional or full troy ounces of precious metals sealed by trusted sources in convenient credit card sized containers (Pamp Suisse comes to mind). If you think carrying around a pound of gold is inconvenient, I would ask...have you ever seen a woman's purse? Joking but seriously ;-)

For you ShireSilver: I'm not sure in which country you reside but Bernard Von NotHaus is a good example to take note of when creating a community currency (in the U.S.). Also I believe there are people who can "eyeball" specific weights of many substances but it may be best to get a gram scale (or whatever equivalent is appropriate) for your "weights and measures" especially given that there are actual agencies whose purpose is to confirm weights and measures http://www.nist.gov/pml/wmd/....wild. Right? I believe you could build a reputation of trust within a community and applaud those types of alternatives and wish you success in that.

No I would not hold gold or precious metal certificates ( I love physical gold and platinum, silver, copper...collectable coins, beautifully minted bars) If I could afford and assess art properly those would be a source of investment for me, classic vehicles will be someday. For now I have 20 trillion and one Zimbawee dollars matted and framed, hanging on my wall as an artful reminder and seriously considering the Tesla inflationary bill as a multi-purpose collectable/reminder. Stocks: Yes
Interest in a private company or my own company: Yes

I don't think in terms of gold OR bitcoin, I wonder why it has taken money so long to catch up with technology. Bitcoin or something like it seems simply overdue.

*Financial flatlanders have failed long enough 

[ShireSilver]

In centuries gone by, merchants could accept coins with little fear of being fleeced because the coin's issuer, the government, stood by it's weight and purity and therefore its value.

But with this decentralized model, what's to prevent a cheat from pouring or drawing his own thinner silver and gold or to make alloys with a less expensive metal?  And who's to track down the cheat?  Surely not ShireSilver.  So it's up to the merchant to be able to discern real gold and silver from fakes and in the right amount.

Branding. People trust government's currency in large part because it has the government's branding. The market can figure out which brands are trustworthy and which ones aren't.

Plus, with the small denominations much of the cost is in the manufacturing. Replacing the precious metal with faked metal wouldn't create much profit. You'd have to mass produce them on a large scale for it to be worth your time, and if someone can do that why not just do it legitimately? You'd be much safer and likely to make more in the middle to long term. To put it another way, it would take too much effort to do a pump-n-dump to be worth it.

If we are to believe the movies, prospectors in California and Alaska would walk into the general store and place a few nuggets of gold on the scale.  The merchant would weigh it and accredit the prospector's account so he could buy his grub and supplies.  It was up to the merchant to know the difference between real gold and fools gold or other cheating.

So do you advocate the return to the days where it's up to each of us to discern if the money is real?

This discussion reinforces something.  The most shocking and significant aspect of bitcoin is the extent to which the possibility of cheating has been eliminated.

Yes, I do advocate the return to the days when people took responsibility for themselves. And yes, it does point out that the bitcoin protocol does make accepting that responsibility much easier, at least for technically inclined folks. But the cases like Mt Gox do show that people still need to be aware of how the system really works, in that if you don't control the private keys you don't control the bitcoins.

Also, to use your prospecting example, people didn't just accept nuggets by weight. Gold dust was easy enough to accept by weight because the pieces were so small that counterfeiting them was (at the time) essentially impossible. Gold dust was also probably discounted somewhat based on the risk the merchant thought he was taking. Larger nuggets would be assayed before being accepted.

[ShireSilver]

I like physical precious metals, real estate and bitcoins; in my control. You can buy fractional or full troy ounces of precious metals sealed by trusted sources in convenient credit card sized containers (Pamp Suisse comes to mind). If you think carrying around a pound of gold is inconvenient, I would ask...have you ever seen a woman's purse? Joking but seriously ;-)

Yes, the sealed containers are one way to go. They don't have denominations as small as I do, and they are significantly thicker. Some of them don't seem like they would handle the wear and tear of everyday wallet usage though, so I don't recommend it.

My cards are meant for use in typical everyday transactions, such as buying a cup of coffee to getting groceries.

For you ShireSilver: I'm not sure in which country you reside but Bernard Von NotHaus is a good example to take note of when creating a community currency (in the U.S.). Also I believe there are people who can "eyeball" specific weights of many substances but it may be best to get a gram scale (or whatever equivalent is appropriate) for your "weights and measures" especially given that there are actual agencies whose purpose is to confirm weights and measures http://www.nist.gov/pml/wmd/....wild. Right? I believe you could build a reputation of trust within a community and applaud those types of alternatives and wish you success in that.

Shire Silver is a direct response to the arrest of my friend Bernard. I started working on it two days after he was arrested. It became obvious that there needed to be a way to make money that could be decentralized in its production and distribution so there would be no headquarters to attack.

I got involved with the Liberty Dollar in 1999. Since then, with all the precious metal transactions I have seen, and being an early mover to the Free State I have seen a lot, I have only seen one person actually bother to weigh any. He was weighing junk silver as he accepted it, and accepting it for the exact spot value of each coin's silver weight. Most people just accept silver coins with a cursory look over. After all, its really not worth their time to put much effort into looking for counterfeits for a $2 transaction. IMHO the brand acceptance is far more important than any time consuming testing individuals can do.

I don't think in terms of gold OR bitcoin, I wonder why it has taken money so long to catch up with technology. Bitcoin or something like it seems simply overdue.

Agreed. It did take me longer than I'd like to come around to accepting bitcoin. But I also still don't see it as fulfilling all possible monetary uses. There is still a place for physical sound money - that's where Shire Silver comes in.