sunnankar, i see you won't respond to my questions about gold. that's ok. your non response is actually quite revealing to me as i would've expected a vociferous defense of gold like i get from miscreanity. GO BITCOIN!
I must have missed the question; perhaps you did not have my attention
. But I see several reasonable arguments for analysis when it comes to Bitcoin.
From a monetary science
analysis I see gold and bitcoin as opposite sides of the same coin, both are after all decentralized peer-to-peer currencies, and like most monetary systems through the ages; cattle and salt, gold and silver, etc. Thus, gold is good for transferring wealth over time
and Bitcoin for transferring wealth over distance
. Both are sterile
assets although bitcoin is more sterile than gold because gold has alternative uses such as industry. As sterile assets their increase in relative price is merely a transfer of wealth that has already been produced and is currently stored in some asset to the holders of the sterile assets.
From a venture capital
analysis I see an argument for Bitcoin as an open-sourced startup, think about if Facebook or Skype had publicly traded stock from their inception
, as it is both the blood (gold, FRN, Euros, Yen, etc.) and the veins (banks, credit cards, Paypal, etc.). As such it would move from being a mere sterile asset to a productive asset with 100% retained earnings and constant but predictable dilution (mining reward).
One thing just about everyone with any sense of what is going on in the current financial and monetary systems agrees on is that the system is FUBARed. What is used as currency is not going to be used as currency much longer. The time horizon could be a decade or two though but that is a tiny amount of time considering the current system is a five hundred year old
relic. Will it be replaced by a new gold or silver system or standard? Will it be replaced by Bitcoin or something similar? Will modern civilization and society collapse due to the inability to continue the specialization of labor? I do not
know those answers and doubt anyone does because the human action has not been decided yet.
But using either or both analysis Bitcoin offers a tremendous
ability for the economy to be more efficient and generate wealth by, as tvbcof pointed out, reducing or eliminating counter-party risk
and allowing the specialization of labor to continue even more efficiently because of its ability to transfer value over distance and is resistent to violent censorship. This is a HUGE problem in our current economy, financial and monetary systems. A symptom are the huge international trade imbalances. Solving this issue and the double-spend issue, which is the tremendous innovation Bitcoin does, can result in a ton of wealth saving and generating results. Tied along with this, but beyond the scope of this response, would be the advancement of triple entry bookkeeping
that is made possible, the capital formation that will result and renders the current system obsolete much like double entry bookkeeping rendered single entry bookkeeping obsolete.
But unlike gold which is a tangible element and can never become worthless the Bitcoin network is censorship resistant
, but not impervious
, and could be compromised and all addresses become worthless, instantly. Some actor, like a government not necessarily acting out of profit motive, could use excess computer capacity and decimate the current blockchain. So, I do think there is reason to be cautious and not move or keep too much wealth stored in it. But that depends on each individual's risk horizon. When I first waded into Bitcoin is was around $0.05. Thus, an allocation of .5% of my net worth would result in it more than doubling.
Sure, there is a very speculative bullish argument to be made for just about any figure you could pull out of your agama tail (glad to see you have a sense of humor
). A million dollars isn't cool
. Not even a billion dollars is cool anymore. You know what's cool, a trillion dollars.
For example, Skype sold for $8.5B 9 years after inception. In 2016 a similar valuation would put bitcoins at about $540 each. June 2012 seasonally adjusted M2 was 9,944.5B
. That is about $25/person in cash balances. Assuming the valuation of bitcoins in 2016 is equal to the average american (400m) has $25 of value in bitcoins then that would be 400,000,000*25=$10,000,000,000,000/15,000,000 or about $663,000,000 per bitcoin
So, how does one value a bitcoin? Good luck. Credit Suisse estimates global wealth at $231 Trillion
and if there is a massive transfer of wealth as a result of Bitcoin adoption then you will no longer be an agama but a Godzilla! Much like an iceberg flipping so likewise I could see Bitcoin resulting in the rise of a new super-class and world order. This would not be unlike what happened during the transition from the Agricultural Age to Industrial Age; the time would just be compressed from hundreds of years to a few decades due to the rapid adoption of technology.
But one thing is for sure, the world is transitioning from the Industrial Age to the Information Age and for those on the cutting edge of this evolution: This is our time