How Gold Became Money and How Bitcoin Can Become Money

Wintersoldier

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Quote from: karanggatak on December 09, 2019, 08:46:54 PM

before knowing human gold used a barter system in buying and selling. then humans develop and find gold. gold is a type of metal that has good characteristics, does not rust, has a good color and is easy to shape. so almost everyone likes gold. because everyone likes it, gold is used as a medium of exchange
and became a currency. And later, fiat money and gold were discovered. At present gold is no longer used as a measurement tool. so I am optimistic that when bitcoin and cryptocurrency are in bulk then crypto will probably replace fiat money.

It could be possible in a sense that bitcoin has its own practical purpose just like gold has. In comparison, Gold is used to build different products such as computer CPU, jewelries, and can also be used as a currency to store money. In bitcoin, it has a practical purpose in a sense that people are directly using it as a means of transaction, and also as an investment where they keep their money into. Thus, both Gold and Bitcoin share similar practical purpose, it is highly evident that bitcoin today could be as important as gold.

Murat

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This type of comparison between gold and Bitcoin is not brought any special importance to this platform because both have different acceptability to the different users, you can't compare between Gold and Bitcoin because Gold is the established element of investment or saving whether the Bitcoin is still struggling for its existence, I also want to say that Gold has been used as a precious material from the very beginning of the human civilization but Bitcoin is not like that, Bitcoin is only used on the Internet platform but Gold is using wherever you go around the world, so I don't like the comparison between Gold and Bitcoin.

karanggatak

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before knowing human gold used a barter system in buying and selling. then humans develop and find gold. gold is a type of metal that has good characteristics, does not rust, has a good color and is easy to shape. so almost everyone likes gold. because everyone likes it, gold is used as a medium of exchange
and became a currency. And later, fiat money and gold were discovered. At present gold is no longer used as a measurement tool. so I am optimistic that when bitcoin and cryptocurrency are in bulk then crypto will probably replace fiat money.

matchi2011

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Few people only have Gold that's why this turn valuable then you become very good look in the shine of this like everytime you wear this

Then in Bitcoin many use this as a payment method worldwide because of low fees then as an investment tools and of course no regulator so there's a lot of reason why this turn money now like because of the different transaction another thing we can save this in our own wallet

With Bitcoin functionalities and with the support of many investors and users Bitcoin become valuable assets. From that same with how gold went thru, the people who understand the system will also be the same person that will bring Bitcoin to be use as how fiat system had been used. The concept will be able to materialize as there's value upon this assets.

FaithInCrypto

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Gold has been around for years now, my grandma and mother really loves jewelry so I could say that I grew up with it. Let's say that gold has a proven track record since it exists many years before and even without fiat you can actually buy something using gold as long as it is real gold and it is accepted by most establishments, mainly pawnshops Grin

I haven't seen someone bravely pay their commodities using gold though as it needs to be exchanged to fiat first.

For Bitcoin, in my opinion, the market is still young for it. In my country, establishments who accept it is very rare Grin

Probably if Bitcoin remains stable and would be around for years, we can definitely use it as money or form of payment just like gold.

th3nolo

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Quote from: dnprock on December 09, 2019, 05:25:26 PM

I'm not making a case against Bitcoin as money. I'm searching for a way for Bitcoin to become money. Bitcoin already has a use case, digital gold. But for it to become widespread money, we are not there. People have been searching for use cases through things that are built on top of Bitcoin: 2nd layer, side chain, smart contracts. There's Litecoin as digital silver. People are trying to make "better" altcoins.

My point is we've been searching in the wrong direction. For gold, it wasn't the jewelry use case that made gold money. It was the "dumb" metals like copper, bronze, and iron.

Comparing Bitcoin with gold is not ideal, moving gold is too expensive, you need protection to move gold, plus you have to pay exaggerated commissions and there is always a price difference for buying and selling that makes you lose money if you want to sell instantly. Gold is only interesting to buy/sell digitally and that's not gold, so Bitcoin is better.

dnprock

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Quote from: th3nolo on December 09, 2019, 04:48:19 PM

Quote from: dnprock on December 04, 2019, 01:26:12 PM

We’ve been through the Gold Standard. Economists and politicians are not eager to return to gold-backed currencies. In the digital age, we can create reliable banking networks of fiat currencies. Central bankers find digital currencies easier to manage than gold-backed systems. Bitcoin supporters pitch the Bitcoin Standard. It is digital native and supposed to be better than the Gold Standard. To make the case for Bitcoin, people downplay gold. Gold is just a shiny and scarce metal that people use for decoration.

But Bitcoin is still searching for its use case. We see gold was money. One of its prominent applications is jewelry. We conclude that jewelry is the secondary market that drives gold demand. From this conclusion, crypto builders think there may be a similar secondary market for Bitcoin. Our ignorance of gold history creates a gap. We have not found the missing puzzle piece.

Bitcoin has a quite definite use case, it was created to be a superior alternative to fiat currencies, it is not necessary to try to reinvent the wheel. It is reliable, hard money that cannot be censored.

What else do you want from a currency?

Quote from: dnprock on December 04, 2019, 01:26:12 PM

It took gold and metallurgy 30,000 years to transition humans away from stone tools. We’re still very early with Bitcoin.

We are still in the early phases, I still do not understand how there are people who want to find hard money elsewhere, it is the last chance they have to take the train to the success of several generations.

I'm not making a case against Bitcoin as money. I'm searching for a way for Bitcoin to become money. Bitcoin already has a use case, digital gold. But for it to become widespread money, we are not there. People have been searching for use cases through things that are built on top of Bitcoin: 2nd layer, side chain, smart contracts. There's Litecoin as digital silver. People are trying to make "better" altcoins.

My point is we've been searching in the wrong direction. For gold, it wasn't the jewelry use case that made gold money. It was the "dumb" metals like copper, bronze, and iron.

th3nolo

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Quote from: dnprock on December 04, 2019, 01:26:12 PM

We’ve been through the Gold Standard. Economists and politicians are not eager to return to gold-backed currencies. In the digital age, we can create reliable banking networks of fiat currencies. Central bankers find digital currencies easier to manage than gold-backed systems. Bitcoin supporters pitch the Bitcoin Standard. It is digital native and supposed to be better than the Gold Standard. To make the case for Bitcoin, people downplay gold. Gold is just a shiny and scarce metal that people use for decoration.

But Bitcoin is still searching for its use case. We see gold was money. One of its prominent applications is jewelry. We conclude that jewelry is the secondary market that drives gold demand. From this conclusion, crypto builders think there may be a similar secondary market for Bitcoin. Our ignorance of gold history creates a gap. We have not found the missing puzzle piece.

Bitcoin has a quite definite use case, it was created to be a superior alternative to fiat currencies, it is not necessary to try to reinvent the wheel. It is reliable, hard money that cannot be censored.

What else do you want from a currency?

Quote from: dnprock on December 04, 2019, 01:26:12 PM

It took gold and metallurgy 30,000 years to transition humans away from stone tools. We’re still very early with Bitcoin.

We are still in the early phases, I still do not understand how there are people who want to find hard money elsewhere, it is the last chance they have to take the train to the success of several generations.

electronicash

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All over history our ancestors are fascinated with gold but story was that its the alien that seeks help they created humans to do the labor of mining gold for their purpose. People are offering gold to gods. And study shows that when gold are heated in a microwave, a component of it travels fast allowing time travel. But this is going to be a fictional story to you. I've read an article about China about to create a gold backed currency too.

Quote from: dnprock on December 09, 2019, 02:24:03 PM

Quote from: pooya87 on December 08, 2019, 11:27:03 PM

but there is a big difference here that is overlooked. gold wasn't money in first place. instead some day people decided to use it as money and then after some time they gave up and stopped doing it. in comparison, bitcoin was designed to be money and it has been considered money from the first day. and people have been trying to use it as money ever since. then some people came along and decided to use it for other reasons such as day trading, store of value,...

I think this is a misinterpretation of gold history. Gold had been money before it showed up in written history. We really didn't know why it became money. Its origin is somewhat mysterious. So we came up with trivial explanations like a random choice, beauty, and scarcity. We need to see gold in the context of the metal revolutions. Gold and the metal revolutions really gave those innovators economic and political advantages. It's not a random choice of using gold as money.

Bitcoin was digital cash. Then its narrative changed to digital gold. It has not matched gold's value. Bitcoin is more like a collectible now. I think this is similar to gold. People who first found gold use it as a collectible.

Gold is rare and can be used to adorn individual like the kings and queens which is why its valuable in history and they were traded and turned useful to barter. Before fiat were declared by Nixon to be just fiat, money was backed by gold. Bitcoin is backed by the power/electricity staked by miners by POW to make it secure.

dnprock

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Quote from: pooya87 on December 08, 2019, 11:27:03 PM

but there is a big difference here that is overlooked. gold wasn't money in first place. instead some day people decided to use it as money and then after some time they gave up and stopped doing it. in comparison, bitcoin was designed to be money and it has been considered money from the first day. and people have been trying to use it as money ever since. then some people came along and decided to use it for other reasons such as day trading, store of value,...

I think this is a misinterpretation of gold history. Gold had been money before it showed up in written history. We really didn't know why it became money. Its origin is somewhat mysterious. So we came up with trivial explanations like a random choice, beauty, and scarcity. We need to see gold in the context of the metal revolutions. Gold and the metal revolutions really gave those innovators economic and political advantages. It's not a random choice of using gold as money.

Bitcoin was digital cash. Then its narrative changed to digital gold. It has not matched gold's value. Bitcoin is more like a collectible now. I think this is similar to gold. People who first found gold use it as a collectible.

dnprock

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Quote from: teosanru on December 09, 2019, 10:26:23 AM

Quite interesting post but what you forgot to mention is yow gold seized to become money. It even isn't used as a commodity backing money. Let me explain what is the reason behind Fall of Gold

After a few years of using gold in almost every economy no matter how ancient it has been. Governments and kingdoms faced one single problem which was increasing population but less resources. To correct this imbalance they began to take war with neighbouring kingdoms which are richer and looted their wealth. But there were kingdoms which took the other path too. Which was adulteration. The coins of gold were adulterated a bit everytime they came back the government and government minted them again. This process was repeated multiple times and the quantity of gold was each time decreased. Now, Problem here was that governments will always suffer problem of shortage of resources. This is why fiat was introduced. Even if Bitcoin becomes currency for few years governments will once again face a similar problem after a few years.

I kinda did:

Quote

Fast forward to the 21st century, gold was slowly fading away. Fiat currencies used to be backed with gold. But the Gold Standard had hit world economies many times. During the Great Depression of the 1930s, gold rigidity spread recessions to many countries. In 1971, facing a shortage of gold reserve, the United States terminated convertibility of the US dollar to gold. This event ended the gold influence on monetary policies.

...

We’ve been through the Gold Standard. Economists and politicians are not eager to return to gold-backed currencies. In the digital age, we can create reliable banking networks of fiat currencies. Central bankers find digital currencies easier to manage than gold-backed systems.

I think gold is no longer relevant because we can better manage fiat currencies. In the 20th century, we developed better communication networks. We departed from the Gold Standard in the 1970s. This is around the time when computers started to take over.

I agree with your take on fiat rise. Chinese dynasties introduced paper money to move away from gold. People disliked the Gold Standard since its start. But we weren't able to move away from. It always came back. I think it's possible that gold will make a comeback along with Bitcoin.

POM

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Very interesting read. Thanks for sharing.

As you said, we are still very early on with Bitcoin... it is hard to predict what it will really become. But so far, Bitcoin has been standing against the test of time: 10 years is not long, but at the same time, 10 years today would be equivalent to many and many decades of before, as technology advances exponentially.

If we look past the idea of making quick money, Bitcoin offers a different solution to our financial system: an alternative to this inflationary process that eats away people's buying power (and lower-income individuals will feel that the most). In this case, I believe that the intangibility of Bitcoin works in its favor, as it won't become, as gold did, a physical object that demonstrates wealth.

teosanru

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tambok

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Quote from: airdnasxela on December 09, 2019, 09:24:06 AM

Quote from: chaoscoinz on December 09, 2019, 08:11:51 AM

I don't think Bitcoin will ever be money or legal tender. I think it acts better as a store of value digital asset. I think that the current monetary financial system in place isn't going to go anywhere anytime soon. I'm thankful for them even allowing Bitcoin to thrive a little, because in order to kill Bitcoin, you simply ban crypto trades against fiat, and the system and watch the market deflate. But this isn't the issue, they are playing it safe for now!

Bitcoin can be an alternative. It is more possible than being the main currency. Just like gold, Bitcoin have value that can be treasured and store for the future. Even though I want Bitcoin to be accepted widely, it's still hard to believe that crypto can be the main use for transactions.
Just like what I have mentioned, they don't have to become a money as long as they have value, that's already enough.

Since the beginning, the native people believes that 'gold' is the money made by God, so they are really valuing it too much that if you have a lot of gold, means you are really rich, and then as the decades is passing by, the way money is evolving but the gold is still there, as we continue to adopt this and considered this as our golden treasure .

airdnasxela

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Quote from: chaoscoinz on December 09, 2019, 08:11:51 AM

I don't think Bitcoin will ever be money or legal tender. I think it acts better as a store of value digital asset. I think that the current monetary financial system in place isn't going to go anywhere anytime soon. I'm thankful for them even allowing Bitcoin to thrive a little, because in order to kill Bitcoin, you simply ban crypto trades against fiat, and the system and watch the market deflate. But this isn't the issue, they are playing it safe for now!

Bitcoin can be an alternative. It is more possible than being the main currency. Just like gold, Bitcoin have value that can be treasured and store for the future. Even though I want Bitcoin to be accepted widely, it's still hard to believe that crypto can be the main use for transactions.
Just like what I have mentioned, they don't have to become a money as long as they have value, that's already enough.

Mulann2

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Well from the number of online and offline stores that already accept btc as a means of transaction, i would say btc is more money than gold, although am just speaking from my own little observation, i haven't come across any online merchant that accept gold for payment but there are several that already accept btc.

chaoscoinz

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I don't think Bitcoin will ever be money or legal tender. I think it acts better as a store of value digital asset. I think that the current monetary financial system in place isn't going to go anywhere anytime soon. I'm thankful for them even allowing Bitcoin to thrive a little, because in order to kill Bitcoin, you simply ban crypto trades against fiat, and the system and watch the market deflate. But this isn't the issue, they are playing it safe for now!

sheenshane

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In the first place, there are no ending comparisons about these two valuable stuff. But I believed in you that Bitcoin is good than the gold.
Here is I can show you how the infographic explains with regards to the Bitcoin and gold comparison, bitcoin-vs-gold-infographic. There are a lot of discussions about this and I agree on what OP stated above and bitcoin has an advantage among the gold.

Here are a few advantages of Bitcoin shown the image and you can read the link for further information.

source:

Darooghe

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I think Bitcoin and cryptocurrencies are still young and very small. maybe Bitcoin will be digital gold, maybe it will be currency. It's hard to tell this early in the game. what Bitcoin can do will depend on the features added in the years to come. but I personally believe bitcoins true value and future lies much more as an asset class then as a currency to be spent. It'll be more like gold then local currency. It's deflationary nature will strongly discourage it's use as a currency, and it's properties as a store of value and inflation hedge make it a far more natural fit then as a traditional means of exchange.

slaman29

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I find gold ugly actually. I don't mind silver but as precious metals go, shiny things don't attract me. My grandparents love gold, so I get it, but look around you and ask which millennial finds gold attractive?

Mining gold hasn't become more intensive over time, it has slowed down in many countries. And outside the planet are asteroids full of gold.

BTW gold does tarnish under certain circumstances.

Bitcoin is digital. Doesn't need to care about any of these.

Topic: How Gold Became Money and How Bitcoin Can Become Money (Read 328 times)