Topic: Gold vs bitcoin - page 3. (Read 12291 times)

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

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.

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

Buy Gold puts :-)

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.

But you can't eat Bitcoins.

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

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

(Source)

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.

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.

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.

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.

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).

The Singularity?

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.

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

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.

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

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

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