Topic: Bitcoin Vs Gold Vs USD (Read 256 times)

"gold-backed currency", honestly this made my day. You forgot to mention that it is only backed at approximatelly 3%, and that is propably to much.

to expalain why fiat is the biggest crap on earth I will explain how banks happen to exist.

The history of banks
In a town back some centuries, people made some trades with goods, let say you had a 10 cats, but wanted a dog. You could go to the a person with a dog and offer him 10 cats. Really crappy situation if the guy with the dog, doesn´t like cats. So people started to use some kind of currency, and it were some metalls (like copper, silver), but finally gold, because it is rare and looks nice. So the guy with the 10 cats sold his cats for 10 gold coins, and then bought the dog of the guy with this 10 gold coins. Everything was fine  

People who had lets say one million gold coins feared that they were robbed and furthermore it was quite uncomfortable to carry around gold, it´s very heavy. So some guy built a big safe and offered people to store their gold. Of course people had to get a receipt that they stored gold in the bank, and tada fiat currencies were born. So for example in ancient times if you had 1$, you could go to the bank and say, my gold please, and you got your gold which you gave the bank.

After no time, the guys at the bank had a bunch of brilliant ideas

• they could give out loans with the money other people gave them
• they could give a small interest for all people who gave them money, to get even more money to give out more loans
• and finally the worst thing, they could give out so much more receipts for gold (= $) because no one wanted his gold, everybody traded with the receipts, in other words with the depts the bank had by them

In the first place banks feared a so called bank run, thats when suddenly a bunch of people realizes that the receipts are crap, and want their gold back. In this case the bank couldn´t give back all the gold because for example the only have 10% of the promised gold.

What role does the bitcoin play here ?
The bitcoin is exactly like gold, you just can´t create more than those 21 million (or all the gold on earth), you just can mine more but mining gets harder (and no it is not a coincidence that the word mining fits for Gold an bitcoin) after some time.

In my opinion there is one big advantage of Gold and BTC.
Advantage of Gold: In case of a millenium bug (all electronical devices break at the same time, in case of f.e. a big sunstorm or a coordinated EMP attack) you can still trade with gold like nothing happened.
Advantage of Bitcoin: It is so much more convinient, you can trade with everyone around the world in just minutes. (I am just hoping the network solves the scaling problem fast)

and yea, pls move this to economics

Please move this thread to economics, it's not supposed to be in currency exchange.

In my opinion, bitcoin is the new "gold standard". Each has its advantages and disadvantages. Fiat is controlled by a government, probably the least favourable out of the three on this list. Gold is too bulky to deal with when you have thousands of kilograms of it stored in a vault, and if you want to buy just a cup of coffee with gold it is pretty much impossible to do that. But obviously, gold has been proven to be a store of value over many centuries and it's probably not going to change much in the near future.

But bitcoin is certainly sort of like digital gold. It is like gold, because both have limited amounts, and they are both decentralized. However, it is much more convenient and cehaper than gold.

In many ways, these three is the triumvirate of the contemporary financial world. Each one of them demonstrates an age and each one of them has its own value. Bitcoin is the most recent and contemporary currency which usually called as a cryptocurrency. On the other hand, Gold has its own value from ancient time. USD is the currency that shapes significant amount of present economy.

Without any exception, these all three has numerous positive advantages, but there is no exception in disadvantages too. Let’s take a look at the positive and negative aspect of these currencies in contrast of each other.

Gold Standard

Gold is valuable from ancient time, it is rare and that’s why precious. In the contemporary time, the value of gold is kept in the center of all valuable goods, and with this, we have gold-backed currency. The currency that has been standardized on a fixed quantity of Gold, maintains stable exchange rate. Moreover, the gold-backed currency is immune to manipulation by financial institutions like world bank, governments, etc.

Unfortunately, not all the currencies are totally standardized and backed up by the gold. There is not any effective way to verify the gold exist in sufficient amount, precisely the audits can be corruptible. There is a certain way by which it can be manipulated.

Another major disadvantage of a gold-backed currency is regarding the future. It has been estimated that in the future the precious metals including Gold will not be rare and available in large amount. Many companies like Planetary Resources possess a huge amount of fortunes and they are planning to mine asteroids.

USD

USD has significant importance in the international economic system. The currency has enough physical availability, and it can be withdrawn easily from the bank next to you. USD used to be backed by the gold, but now it is completely fiat, which is a pro as it allows the metal to availed for the commercial purpose. Moreover, USD is flexible and digitally available.
The most notable disadvantage of USD is that the power of creation is acquired by a small group. It has significant interference by the government and political disorders. For instance, take look on the civil war and comprehend the fall of the dollar, moreover, you can also see the 2008 financial crisis.