Topic: Gold vs bitcoin (Read 12323 times)

Your third link is broken, unless you intended us to read about waterbeds or textiles.

In digital age?? Hmmm ... noooooo... impossssssibbbllllee...

Btc = digital
gold = physical.
I dont think btc can replace gold

Bitcoin and Gold are both useful;Bitcoin is new and is the future and Gold had value since the humans found it and use it and will continue to have value.I am for both!

I just hope there will be no more war time
And price of BTC will skyrocket with growth of its popularity.

♥BTC

i agree
but gold price will skyrocketing when war time, idk where will BTC price go to when war time
better split our investment, gold and BTC.

This is a point!
And maybe some pepole would consider why it is better to invest into BTC than into GOLD

nice
bitcoin : gold currency in digital age

Just created an image for you to show you my opinion



Hehe

While this is technically true, you seem to be drastically underrating its utility as a digital means of exchange. Let's just say that at this point, until something superior comes along, bitcoins will continue to have significant value.

Wow, that was from keynes? Maybe we should all read him after all. Maybe I do some day.
I stick with this one:

"Gesell's chiefwork is written in cool and scientific terms, although it is run through by a more passionate and charged devotion to social justice than many think fit for a scholar. I believe that the future will learn more from Gesell’s than from Marx’s spirit."
—John Maynard Keynes

I like Gesell's critique to Marx a lot. I've read some small parts from Mises's, but I want to read that whole book.

also...


As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.

Some expensive bio-weapons avaliable today :
If Those can buy these.
Then I will call it a currency!

Right, because paper money is impossible to counterfeit.  
I don't believe there are many counterfeiters who go to the trouble of making convincing fakes of gold bullion just to replace .9% of the gold with something else, unless you're talking about debasement by the official issuer. It's worth noting that tungsten and gold have almost identical densities though. Tungsten is very difficult to machine or cast but it can be formed using powder metallurgy techniques. That doesn't mean that a fake with high tungsten content would be undetectable, only that measuring the size and weight would not be enough. Then again, try doing anything with bitcoins without using sophisticated technology.

Unlike bitcoin, gold could be easily forged
Will you tell the difference between 99.99 % and 99% gold?
That's one of the reasons gold was replaced by printed money in circulation

Merged mining is already developed and is going to start to be used soon. I think that is going to be very good for namecoin but not bad for bitcoin.

Agreed.  It's quite a vague assertion, though.  But it has profound truth in it.  IMHO.

But I don't think that the model can be copied so easily as you might think.  Sure, one can take the code and compete, but then you are starting from a community much smaller than even Bitcoin.  As the system presently exists, security and value come from the network effects.  So any particular merchant or consumer is going to favor the established blockchain, even when he doesn't really know why this is in his own interests, because some will understand this, and the ignorant user will use whatever he has greatest exposure to.  This will always be bitcoin unless and until a competitor with a distinct advantage can be developed, and such an advantage cannot be one that bitcoin itself cannot reasonablely assimulate.  In the long run, I think that we will see both specialized parrallel solutions such as namecoin, and regional solutions.  Yet I think that they will all be tied back into the main bitcoin blockchain in some fashion that allows the other smaller chains to 'piggy back' on the security model of the main blockchain.  But then this kind of co-dependency also solidifies Bitcoin's main chain as the common thread, and thus bitcoin as the currency of international Internet trade.

Money, in its essence, is an information technology.

The informational content is value.

In hindsight, it will be obvious that the internet has come up with a superior form of money ... it may not be bitcoin though.

The community is relatively small and two years is not all that long.  See what Facebook did to MySpace as an example.  And MySpace was significantly more entrenched in the mainstream public than Bitcoin currently is but that didn't make much of a difference.   


I agree.


If Bitcoin does become even moderately successful, I don't see how it would not happen.  Where profit can be had, competition will grow.  I find it hard to believe that an open source project that has no protection (via patents, trademarks, etc.) would not garner competition.  The barriers to entry are just too low.

The two year headstart is also a bit of a misnomer.  Growth was rather stagnant for the majority of that time, with a high rate of growth over more recent periods.  Really Bitcoins major advantage is being first to market and having a small geek community base.  First to market doesn't matter if the model can be copied and the Bitcoin community is nominal in scale.  I'd be curious to hear of any serious barriers to entry by a competing crypto-currency because I don't see any.

Considering the shear efficiency of a digital instant message, SMS, an email, or the like; all of which are protocols that can use any form of IP connection as transport infrastructure, including modems over ham radios; I consider the breakdown of bulk transportation a more likely event than the persistant breakdown of the Internet.  It's become so important and so effective a form of communication, that every urban area in the world is going to have someplace in the city supported by some group of people to maintain an effective connection to the rest of the world digitally.  Even if that just means that some places can only get 14.4 kbaud over a well protected ham radio setup powered by a solar array scrounged from those highway traffic displays.  Even a mad max scenario still has the fiber optic cables in the ground, so nothing short of a human extinction level event is going to stop the Internet now, and in not much longer, that will include Bitcoin.  Hell, there are already ham radio sats that use IP protocol.  If it can run on an android phone, bitcoin can probably run on a satelite.

Gold isn't a very good conductor, really.  Both silver and copper are better.  The only property that gold bests the others on, with regard to electronics, is that gold does not corrode.  Thus, gold's conductivity is the same whether it is encased in a protective plastic insulation or spends 100 years at the bottom of the sea.  The written records thing isn't particularly special either.  Lead is just as useful as a archival print medium as gold is, and under the right conditions, hemp paper is superior to both.

This is only relevant if you think there's a non-trivial possibility of humanity reverting to a state where electronic transactions are not possible (or are rare), versus continuing to progress towards just about every transaction being electronic.

Gold is good for making shiny things, electrical components, and written records that will last centuries. Bitcoin is good for transfering value from one person to another over the internet.

Maybe a good idea would be get some gold, roll it into sheets, encode your bitcoin wallet onto it and then bury it in a secure box where only you know how to find it?

+1. I'm sick of people arguing "Gold is money because it has intrinsic value due to industrial uses....etc, etc." That's absurd. Probably 99% of gold's value is non-industrial; ie, its scarcity and other properties (historical inertia, being a huge one). Does it really matter if 1% versus 0% of some scarce item's value comes from industrial applications? Not really, people...

The hard part to replicate about bitcoin is the community.  It took two years to build up the community, and I think that it would be difficult to replicate that just by tweaking the code a bit and starting a parrallel blockchain.  That said, anyone is welcome to try it.  If it has features that make it superior to bitcoin, it would probably eventually win.  However, they must be features that are obviously superior to a large percentage of the Internet using population.  I don't really think that is going to happen, myself.  Bitcoin is already very resiliant to attack as well as increasingly useful to Joe Android User in 1st world nations.  There are competing smartphone clients that allow in person transactions (with Internet available) and I don't think it's a far leap before smartphones can transact in person sans Internet via Dash7, ad-hoc wifi or NFC.  Nor do I think we are very far from a system that caters to regular cell phones via SMS or the like, a la M-Pesa; which is actually a huge leap for people in 2nd & 3rd world urban areas, although it might not be quite so useful for 1st world urban areas such as Toyko.  Still, it seems to work out pretty well in NYC.

The bitcoin system is the miners, you can't just fabricate a new community and for that reason it will be very hard to compete with Bitcoin unless you have a compelling improvement.

You are correct.  I think my other point is much more important though.  I am referring to the fact that the bitcoin system can be replicated over and over again to create an identical product with a different name.  The only thing scarce about bitcoin is the name bitcoin.  Is that enough?  I find it on the edge of impossible for it to last long term, but I could certainly be wrong.  I honestly hope I am wrong but I just don't see it happening. 

Exactly.  There are some here that are way too black and white.  You don't have to be long Bitcoin and short everything else, there is such a thing as a happy medium.  Bitcoin is still an experiment in its infancy. 

Gold's industrial uses are negligible as compared to it's monetary use value.  Granted, if gold were the price of silver, there would be a lot of uses for it pop up, but realisticly one must consider the industrial use value and the monetary use value as independent variables.  All the industrial use value of gold provides is a backstop against catastrophic monetary value collapse, which bitcoin does not have.  Silver does have many industrial uses for which there is no viable alternative, which is not the case for gold's industrial uses.  For example, silver is both toxic to many forms of bacteria, making it a valuable medical material; while also being fairly non-toxic to human life, contrary to almost all other heavy metals.  Gold is not toxic either, but nor does it have any other chemical properties of note, since it's non reactive.  This does make gold a good choice for conductive connectors, particularly in corrosive environments, but there are other solutions that exist for that.

They are not comparable.

Gold has industrial and aesthetic use.  It has real world use outside of just being a store of value. 
Bitcoin is nothing.  It has one use, and that is to exist and be exchanged. 
 
Gold is unique.  There is not a system or method that can be used to create another metal that is like gold with its properties and scarcity.
Bitcoins themselves are unique, but they method used to create them can be duplicated by millions of computer savy people around the world.  Just change the name and start over.  IE Namecoins.

A good metaphor here is my feces.  Every time I produce one it is unique(scarce), but that by itself doesn't give it value.  It also takes me some good healthy food and nutrients to produce it.  But guess what?  That is my problem.  I can't convert that feces back to food so why would anyone care that it took me a $50 filet mignon to make it.  Doesn't matter to them.  That is kind of how I see bitcoins lol.   

Trying to compare bitcoins to gold is living in fantasy land. 

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?

Correction: Gold and silver are money, Bitcoins are 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.

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.

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

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.

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. 

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

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.

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.

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.

And what might those flaws be?

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

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.

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.

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.

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

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

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.

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 guess this poll is self-explanatory.  Please vote.