Gold vs bitcoin

[AgMiner]

I wish there was another option like "Gold is money and bitcoins are currency". Bitcoins aren't crap, just another currency. The properties of currency are: it must be a medium of exchange, portable, fungible, durable, and a unit of account. Bitcoins have all of these properties. The only difference between currency and money is that money has to store value over long periods of time. Gold cannot be created, as it is an element on the periodic table; there is as much gold on the planet as there has ever been or will ever be. That fact along with its rarity makes gold money. Bitcoins can be created, which makes them a currency; a very effective currency, but just a currency. I personally like bitcoins as they are an effective tool for gaining wealth, but they are not a store of wealth.

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[theymos]

Gold cannot be created, as it is an element on the periodic table; there is as much gold on the planet as there has ever been or will ever be.

Gold can and has been created in particle colliders and nuclear reactors, and it occasionally comes to Earth from meteors. More importantly, gold is constantly being introduced to the market through mining. In 100 years, Bitcoin will have less monetary inflation than gold.

[grondilu]

More importantly, gold is constantly being introduced to the market through mining. In 100 years, Bitcoin will have less monetary inflation than gold.

Gold and bitcoins, as any commodity, follow the same exponential rule for extraction.

Gold started to be extracted long before bitcoins were.  Therefore I'm pretty sure gold will always have a lower monetary inflation than bitcoins.  I believe a few maths could prove it.

[theymos]

This doesn't look like an exponential reduction...

(Source)

[mmortal03]

The only difference between currency and money is that money has to store value over long periods of time. Gold cannot be created, as it is an element on the periodic table; there is as much gold on the planet as there has ever been or will ever be. That fact along with its rarity makes gold money. Bitcoins can be created, which makes them a currency; a very effective currency, but just a currency. I personally like bitcoins as they are an effective tool for gaining wealth, but they are not a store of wealth.

Given that only 21 million bitcoins can ever be created, wouldn't they, on the contrary, fit your definition of money?

[tomcollins]

The only difference between currency and money is that money has to store value over long periods of time. Gold cannot be created, as it is an element on the periodic table; there is as much gold on the planet as there has ever been or will ever be. That fact along with its rarity makes gold money. Bitcoins can be created, which makes them a currency; a very effective currency, but just a currency. I personally like bitcoins as they are an effective tool for gaining wealth, but they are not a store of wealth.

Given that only 21 million bitcoins can ever be created, wouldn't they, on the contrary, fit your definition of money?

But you can't eat Bitcoins.

[Ulysses]

If bitcoin will be a success (e.g. 10% of US economy), than i think it will demonetize gold relatively quickly, so gold's price will be around industrial use price. This is the same effect, that happened to silver in 19-20th century.

[S3052]

If bitcoin will be a success (e.g. 10% of US economy), than i think it will demonetize gold relatively quickly, so gold's price will be around industrial use price. This is the same effect, that happened to silver in 19-20th century.

Buy Gold puts :-)

[tomcollins]

If bitcoin will be a success (e.g. 10% of US economy), than i think it will demonetize gold relatively quickly, so gold's price will be around industrial use price. This is the same effect, that happened to silver in 19-20th century.

Betting on something 2 years old with 10,000 users vs. something with 5,000 of history seems like a bad mistake IMO.

[abyssobenthonic]

If bitcoin will be a success (e.g. 10% of US economy), than i think it will demonetize gold relatively quickly, so gold's price will be around industrial use price. This is the same effect, that happened to silver in 19-20th century.

Betting on something 2 years old with 10,000 users vs. something with 5,000 of history seems like a bad mistake IMO.

Past performance is no indication of future results.

That said, I don't think gold is likely to ever fully demonetize to the extent that it trades at intrinsic value.

[grondilu]

That said, I don't think gold is likely to ever fully demonetize to the extent that it trades at intrinsic industrial/mettalurgic value.

Corrected.  Best is to avoid the expression "intrinsic value" as it is quite controversial here.

[marcus_of_augustus]

Gold almost demonetized in the mid 1990's dropping to below production cost ... at US$256 ... the remonetization of gold and silver in the last 10 years has been the financial story of the last 30 years. The MSM has missed the rise until recently and completely missed the fiat currency crises of confidence driving the rises.

The market is on the hunt for better money, with oppressive financial regulations, effective capital controls and rapacious govt.s stymying global commerce in a futile effort to protect their discredited fiat currencies and central banking failed models from the free market for money which has marked them down hugely.

A proven, digital currency that has all or many of the requisite properties to qualify as sound money could be monetised very rapidly in the current global currency market environment. Gold and silver will not be immune from such a competitor, although less so than the fiat currencies imo.

[mmortal03]

The only difference between currency and money is that money has to store value over long periods of time. Gold cannot be created, as it is an element on the periodic table; there is as much gold on the planet as there has ever been or will ever be. That fact along with its rarity makes gold money. Bitcoins can be created, which makes them a currency; a very effective currency, but just a currency. I personally like bitcoins as they are an effective tool for gaining wealth, but they are not a store of wealth.

Given that only 21 million bitcoins can ever be created, wouldn't they, on the contrary, fit your definition of money?

But you can't eat Bitcoins.

Instead of a sweet tooth, you must have a gold tooth!

[Steve]

If bitcoin will be a success (e.g. 10% of US economy), than i think it will demonetize gold relatively quickly, so gold's price will be around industrial use price. This is the same effect, that happened to silver in 19-20th century.

I don't think gold will ever be demonetized.  It's the best physical form of money and the utility of that combined with a need to be diversified means it should always remain valuable as money (short of some kind of cost effective alchemy).  Bitcoins or something substantially like bitcoins should take a similar role as gold in the digital world.  Government bonds on the other hand are a different matter. 

[CoinOperated]

Gold almost demonetized in the mid 1990's dropping to below production cost ... at US$256 ... the remonetization of gold and silver in the last 10 years has been the financial story of the last 30 years. The MSM has missed the rise until recently and completely missed the fiat currency crises of confidence driving the rises.

The three main components of the gold price are (a) industrial or jewelry use / production cost, (b) monetary as a medium of exchange for trade (c) monetary for investment.   A good point above that in the 1990s (a) dominated.  However, it is not as simple as that.  Even at $256 there is a monetary component.  99.x% of the gold is mined in economies with fiat currencies.  The costs of mining and local taxes are paid primarily in those fiat currencies.  Therefore there is still a monetary factor in (a) "industrial use" with gold producing countires chosing not to inflate their currencies to make mining profitable at USD256 and thereby further increasing supply and reducing the gold price.

To better understand the monetary component of gold you would have to look at its trade value in various economies,  ie how many horses, cars or haircuts can I exchange for an ounce of gold.  Interestingly that will fluctuate widely from country to country.  The same logic could be applied to bitcoins but without any direct industrial use for BTC it simplifies the analysis somewhat.

[ThiagoCMC]

I hope they both crash. But long after they kill the central banks.
I hope something better (yes, even better than bitcoin) will come.

I call it: resource-based economy, from The Venus Project...

[jtimon]

I hope they both crash. But long after they kill the central banks.
I hope something better (yes, even better than bitcoin) will come.

I call it: resource-based economy, from The Venus Project...

I meant another form of money. Since I want interest to disappear, I would say we need either non scarce money (like LETS and Ripple) or free money (money that rots like freigeld and freicoin).
In my opinion there's nothing wrong with the free market (that we don't have). Anyway, there's a topic for the RBE.

[deuxmill]

The only advantage gold has over bitcoin that I can see is that gold does have practical uses. It is very useful in electronics and as shielding on spacecraft. Bitcoins can't be made into anything but they still fulfill a need which is all you need for a successful currency.

That is an advantage over gold. Not being able to turn it in something useful makes it closer to a currency , because currency is meant to be traded for something useful. Gold is great to store value , so will be bitcoin. Gold started being used in industry just recently and still ain't heavily used so it represents just a small percentage of the price . Gold's "advantage" is that is physical , and quite hard to destroy . Bitcoin is just a digital form of gold.

[nanamin]

Correction: Gold and silver are money, Bitcoins are currency.

[jtimon]

Correction: Gold and silver are money, Bitcoins are currency.

According to what definition of money? I'm confused, bitcoin is so close to gold to me that I cannot find a definition that leaves precious metals in and bitcoin out.
I guess the usd is neither money with that definition.
Is Ripple money, a currency or none of them?
What is LETS?