Gold vs bitcoin

[grondilu]

I guess this poll is self-explanatory.  Please vote.

[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.

[asdf]

bitcoin can be transfered electronically, gold can't. gold can be traded physically, bitcoin can't. otherwise, for the purposes of money, they are the same, but due to this distinguishing feature, they each serve different markets for money: the physical and the electronic.

Gold and bitcoins are complementary.  Both have different uses and both are usefull.

[dust]

bitcoin can be transfered electronically, gold can't. gold can be traded physically, bitcoin can't. otherwise, for the purposes of money, they are the same, but due to this distinguishing feature, they each serve different markets for money: the physical and the electronic.

Gold and bitcoins are complementary.  Both have different uses and both are usefull.

Bitcoin can be traded physically (flashdrives, printed certificates).  I agree with your vote though.

[grondilu]

bitcoin can be transfered electronically, gold can't. gold can be traded physically, bitcoin can't. otherwise, for the purposes of money, they are the same, but due to this distinguishing feature, they each serve different markets for money: the physical and the electronic.

I totally agree and I couldn't write it better.

[Steve]

I agree with asdf.  But a more interesting question to me is whether bitcoins (or something very similar to bitcoins) would ever be worth more than gold (meaning the total value of all bitcoins has more purchasing power than the total value of all gold).  Bitcoins are more convenient and much easier and cheaper to secure than gold, so I think it's possible.  IIRC, I calculated that if you took half the value of all gold and assigned it to bitcoins, a bitcoin's value would be in the realm of $150,000.

[asdf]

bitcoin can be transfered electronically, gold can't. gold can be traded physically, bitcoin can't. otherwise, for the purposes of money, they are the same, but due to this distinguishing feature, they each serve different markets for money: the physical and the electronic.

Gold and bitcoins are complementary.  Both have different uses and both are usefull.

Bitcoin can be traded physically (flashdrives, printed certificates).  I agree with your vote though.

True. I was coming more from the angle that bitcoins depend on the internet and computers to be useful, but gold doesn't have this problem.

[Pieter Wuille]

bitcoin can be transfered electronically, gold can't. gold can be traded physically, bitcoin can't. otherwise, for the purposes of money, they are the same, but due to this distinguishing feature, they each serve different markets for money: the physical and the electronic.

Gold and bitcoins are complementary.  Both have different uses and both are usefull.

Bitcoin can be traded physically (flashdrives, printed certificates).  I agree with your vote though.

Gold can be traded physically without the buyer needing to trust anyone - he can verify it himself (though it would require some tools, like a weighing scale)

Bitcoins can be traded electronically without the buyer needing to trust anyone - he can verify it himself (though it would require some tools, like a full bitcoin client)

Gold can be traded electronically by using digital tokens representing ownership of a physical amount of gold, but it requires trust in the issuer of the token.

Bitcoins can be traded physically by using physical tokens representing ownership of an electronic amount of bitcoins, but it requires trust in the issuer of the token.

[jtimon]

bitcoin can be transfered electronically, gold can't. gold can be traded physically, bitcoin can't. otherwise, for the purposes of money, they are the same, but due to this distinguishing feature, they each serve different markets for money: the physical and the electronic.

Gold and bitcoins are complementary.  Both have different uses and both are usefull.

Bitcoin can be traded physically (flashdrives, printed certificates).  I agree with your vote though.

Gold can be traded physically without the buyer needing to trust anyone - he can verify it himself (though it would require some tools, like a weighing scale)

Bitcoins can be traded electronically without the buyer needing to trust anyone - he can verify it himself (though it would require some tools, like a full bitcoin client)

Gold can be traded electronically by using digital tokens representing ownership of a physical amount of gold, but it requires trust in the issuer of the token.

Bitcoins can be traded physically by using physical tokens representing ownership of an electronic amount of bitcoins, but it requires trust in the issuer of the token.

Exactly. They're in some sense equivalent, but one physical and the other "electronic".
Thus bitcoin has the same flaws that gold has.

[Steve]

Thus bitcoin has the same flaws that gold has.

And what might those flaws be?

[tiberiandusk]

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.

[benjamindees]

Gold can be used to make Bitcoins but not vice-versa.

[jtimon]

Thus bitcoin has the same flaws that gold has.

And what might those flaws be?

They lead to liquidity premium for loans:

http://www.finanzcrash.com/english/aberrations.html

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

http://wikilivres.info/wiki/The_Natural_Economic_Order

[Steve]

Thus bitcoin has the same flaws that gold has.

And what might those flaws be?

They lead to liquidity premium for loans:

http://www.finanzcrash.com/english/aberrations.html

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

http://wikilivres.info/wiki/The_Natural_Economic_Order

Nonsense...that's just the deflation argument again...I think that question has been sufficiently debated in other threads.

[jtimon]

Thus bitcoin has the same flaws that gold has.

And what might those flaws be?

They lead to liquidity premium for loans:

http://www.finanzcrash.com/english/aberrations.html

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

http://wikilivres.info/wiki/The_Natural_Economic_Order

Nonsense...that's just the deflation argument again...I think that question has been sufficiently debated in other threads.

Liquidity premium exist even with inflation. Although it may be related, is not the deflation argument.
If you can quote a nonsense from the book maybe you can open my eyes.
Yes it is being discussed in other threads.
Maybe you don't need to criticize Gesell with arguments because he's not an austrian economist and that's all you need to know about him. Keynes said "I believe that the future will learn more from Gesell’s than from Marx’s spirit"? Then you don't want to even read the book because Keynes didn't say a single truth. I don't want to put words in your mouth, but It seems to me that most people in this forum are very closed to other monetary ideas that differ from the austrian school view.

[FreeMoney]

  ...Keynes didn't say a single truth. 

"In the long run we're all dead"?

[Vandroiy]

Bitcoin is more versatile, but gold will probably remain more stable for a long time. Gold also has the advantage that it's shiny.

If I ever get rich, I might trade some for gold as fallback. Not a lot, just a few percent. For the case some madman cuts the trans-Atlantic cables or fucks up power supply. Can't pay in BTC without functioning internet.

[MoonShadow]

  ...Keynes didn't say a single truth. 

"In the long run we're all dead"?

The Singularity?

[Steve]

Bitcoin is more versatile, but gold will probably remain more stable for a long time. Gold also has the advantage that it's shiny.

If I ever get rich, I might trade some for gold as fallback. Not a lot, just a few percent. For the case some madman cuts the trans-Atlantic cables or fucks up power supply. Can't pay in BTC without functioning internet.

Diversification is always a good idea.  It also happens to be one of the things the deflationistas overlook.  Even if you think bitcoin has a bright future, it's not very prudent to put everything you have saved into it.  Just as it wouldn't be prudent to put everything into gold, silver, or some stock or a particular bond.  Bitcoin being a deflationary currency isn't a problem because people won't want to put everything they have into that currency...and if everyone did put everything into it, it's a sure bet that it will experience a period of devaluation as people realize that fact and start to diversify out of bitcoin.  Deflationistas also overlook the fact that loans don't have to be made in terms of bitcoins...you could just as well loan someone an amount of bitcoins sufficient to purchase a loaf of bread with the repayment being enough bitcoins to purchase two loaves of bread (the repayment might even be fewer bitcoins than were loaned if there is sufficient appreciation in the value of bitcoin...but there's still value in that loan for the lender in that the lender has diversified some risk out of bitcoins and into the borrower and to the extent that the borrower is a good risk, they lender has locked in a real gain that is not dependent on what the value of the currency might do).

[jtimon]

Bitcoin is more versatile, but gold will probably remain more stable for a long time. Gold also has the advantage that it's shiny.

If I ever get rich, I might trade some for gold as fallback. Not a lot, just a few percent. For the case some madman cuts the trans-Atlantic cables or fucks up power supply. Can't pay in BTC without functioning internet.

Diversification is always a good idea.  It also happens to be one of the things the deflationistas overlook.  Even if you think bitcoin has a bright future, it's not very prudent to put everything you have saved into it.  Just as it wouldn't be prudent to put everything into gold, silver, or some stock or a particular bond.  Bitcoin being a deflationary currency isn't a problem because people won't want to put everything they have into that currency...and if everyone did put everything into it, it's a sure bet that it will experience a period of devaluation as people realize that fact and start to diversify out of bitcoin.  Deflationistas also overlook the fact that loans don't have to be made in terms of bitcoins...you could just as well loan someone an amount of bitcoins sufficient to purchase a loaf of bread with the repayment being enough bitcoins to purchase two loaves of bread (the repayment might even be fewer bitcoins than were loaned if there is sufficient appreciation in the value of bitcoin...but there's still value in that loan for the lender in that the lender has diversified some risk out of bitcoins and into the borrower and to the extent that the borrower is a good risk, they lender has locked in a real gain that is not dependent on what the value of the currency might do).

Very interesting. I didn't thought about loans denominated in other things in a deflationary/inflationary (or just risky) context, but it makes a lot sense.