Topic: If Bitcoin were Gold (Read 1916 times)

I had to re-read the second page of this thread 3 times to catch the sarcasm here.


Your comparison was correct, but arbitrary.

Using your logic (but with a different unit for gold), 171,300 Tonnes of gold exist for every 12,730,000 Bitcoins. This makes one ton of gold 74.3 times more rare than one Bitcoin.

Re. "arbitrary unit":
Not intended as technical jargon, simply as "arbitrarily chosen unit."  I'm from Russia, we use the metric system, the troy ounce sounds as archaic and anachronistic to me as cubit would (i'm guessing here) sound to you.  Further, unlike gram, which is the basic unit of mass in the metric system, the ounce is one of many units of mass in the imperial system (you don't have miliounces, kiloounces etc,. etc -- you have grains, pounds etc., etc).

So you might as well go for grains.  Or pounds.  Or cubits.

Re.  "For every 1 unit of Bitcoin (that is 1 BTC, 100,000,000 satoshis) in existence,  there are 457 troy ounces of gold in existence.":
That's fine.  For every Satoshi there's 470/100,000,000 troy ounces.  The equation remains correct, it represents the same thing, only with Satoshi as the basic unit of Bitcoin, Bitcoin is suddenly 100,000,000 times more common.  See why I want to keep BTC instead of bit as a standard?

Don't devalue muh Bitcoin

I agree that that my entire comparison is extremely limited in its usefulness, and in no way has really any applicable usage except as a thought exercise about the potential growth case for bitcoin. It has never been the point of this thread to make any sort of actual real world prediction.


To your argument about arbitrary units; BTC and troy ounces of gold are the exact opposite of arbitrary, they are measurable and verifiable. In the case of bitcoin it is mathematical / programmatical fact. (to see what an actual arbitrary unit is: http://en.wikipedia.org/wiki/Arbitrary_unit )


Don't you realize that 1 Bitcoin = 1,000 mBTC, 1 Bitcoin = 1,000,000 bits? 1 Bitcoin = 100,000,000 satoshis?
These aren't interchangable terms, if you don't understand what a bitcoin is and how it is generated, and how many will be generated, I recommend you read up on it because it is fascinating.


My argument is 100% factual, verifiable, measurable and non-arbitrary. Let me put it in different words and see if you still have a problem with my statement.

For every 1 unit of Bitcoin (that is 1 BTC, 100,000,000 satoshis) in existence,  there are 457 troy ounces of gold in existence.

I don't think I can construct a sentence less arbitrarily than that.

In that case, I'm 100% against switching to bits or Satoshi -- Bitcoin would suddenly become much more common.  If units like BTC and Satoshi exist side-by-side like they do today, Bitcoin remains a paradox -- Incredibly rare and incredibly common at the same time.


You determine the amount of radiation in the number "5," multiply that by obesity, and factor out love.  Seems obvious.


The problem with this analogy is you're comparing numbers to numbers -- countable apples to countable oranges.  This is handy if you hand them out to kids, but becomes irrelevant if you do other stuff, like sell them by weight or make jam.  Then you no longer care about count and start worrying about weight.  If the apples in the room are huge, and oranges puny, then apples suddenly become more common.


Then what you established is the ratio of arbitrary units, the number of BTC vs. oz. of gold.  Since both units are arbitrary, this relationship has rather limited usefulness.


Not all well-formed formulas have solutions, but that's not relevant here.  You start with a formula that is not well-formed, and you demand an answer.
How many 6 yellow is with forty-five then inside?

I know that many believes that bitcoin should be "the internet cash" ... I'm really sorry but can't see it as cash ... in my mind cash is something to pay bills, salary, tax, and should be easy as possible to use like fiat ... for me bitcoin is be like gold and a financial instrument of investment ... crazy but when I buy a miner hardware is more like a buy a bond ... when I go to exchange for day trade .. it's like stock ... but the last thing I think of is bitcoin as money ... maybe I am blind .. I dont know ..

Rarity also depends on demand.

If 110 people want an orange and 9 people want an apple you are 10 oranges shy while there is still 1 apple left.
The issue here is that these are consumables so but you understand my point.  

Plus, those insisting bitcoin has no intrinsic value - that's incorrect and overlooking the obvious.

At the end of the day, regardless of store of value and currency, bitcoin is computer code and data. Computer code that performs any useful task is inherently valuable. Would we argue the code running the entire internet has no value when we can't get online? When something malfunctions and we have no idea how to fix the code? When entire governments can be held hostage to 1s and 0s at the whim of a "techno 4chan nerd" (no offense to the 4channers, hugs).

Computer code IS gold of the digital age. It's not a metal, it's another element entirely...but to say it has no intrinsic value compared to gold's intrinsic value is nonsense. Water is an element. Air is an element. We take those for granted and might insist water and air can't be used as currency but that is also wrong. People literally trade goods and services for air and water as a commodity...a value exchange. Ever paid a quarter to air up your tires? Ever bought bottled water? Ever been stuck in a room with limited air supply? You start rationing intake and oxygen in a hurry.

Code is digital and code pretty much runs everything we do, our entire lives at this point...so a code that has been programmed to work, solve problems, store value, provide inherent security and transparency, and includes units of currency does more in utility than gold ever hoped to do, but both are equally valuable.

We take 1s and 0s for granted way too much until our computers crash and our phones don't make calls and our downloads are interrupted and our games lag.

A piece of code that provides financial security and can't be regulated or controlled by anyone but those who use it themselves is genius.

The programmers and coders should step up and try to figure out a non geeky way of explaining just how valuable code is to their entire lives these days

You guys miss the point..... Bitcoin is commonly sold and the price is quoted in units of 1BTC, gold is commonly sold and the price is quoted in units of troy ounces.

How rare is one bitcoin compared to one troy ounce of gold?  Please do tell me the proper method for coming up with an answer to that question. I would love to see if you come up with something different than what I did.


Also, I am attempting to establish rarity based on the total existence of something.

Lets say for example you are locked in a room... outside the room nothing exists, the only thing that exists is what is inside the room... follow me? good...

Now lets say in this room you have 100 oranges and 10 apples. How much more rare are apples than oranges? Apples are ten times rarer than oranges right? Does it matter that you can cut an apple into pieces? Does it matter that you can stack 100 oranges into a crate? no... there are 10 times more oranges in existence than apples.


I'm comparing quantities in existence, doesn't matter if gold and bitcoin can be combined or melted down, I'm talking one troy ounce of gold, how many exist on the planet, and one bitcoin on the bitcoin network how many exist on this planet.

All you logic geniuses please show me the proper way to establish a baseline of how rare one bitcoin is to one troy ounce of gold if you think I'm so wrong.

Infinity or world's entire money supply.  But only to a true apple fancier

At least with bitcoins you can't do this:

http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting-goes-viral-10-tungsten-filled-gold-bars-are-discovered-manhattan

God knows just how many of these 'fake' gold bars are out there, living in bank vault reserves and possibly backing many of the Gold ETFs... people are starting to lose their trust in being able to validate gold.

If all Apple trees go extinct and you held the last apple on earth and there was no possible way to reproduce it.  How much would that Apple sell for? 

Your logic is impeccable!   

what if bitcoin was

90% of gold
95% of silver
80% of paypal
99.9% of Western Union
100% world reserve currency

what's the implied price in this scenario ?

 

10 apples have 1 Bob
2 apples have 1 Cindy

Is Cindy worth more than Bob?


There is 1 goldsupply, there is 12.7 mil bitcoin supply. Bitcoin is 12.7 mil less rare than 1 goldsupply

1.  Bob has 10 apples.
2.  Cindy has 2 apples.
3.  ? ? ?
4.  Cindy is 5 times MORE RARE than Bob.

The community (aka market) for any scarce commodity can be expanded or contracted, especially gold.

Bitcoin = digital gold

Cryptogenic Bullion (CGB) = digital platinum !

 

By definition, everything with value and scarce is precious. Therefore, bitcoin is precious.
The problem is comparing ounces of gold with 1 bitcoin. Why not 1kg or 1 gram of gold with 1 or 100 bitcoins. It's arbitrary.

You are comparing different units here (like apples to oranges). Both Bitcoin and gold are sub-dividable.

Bitcoin happens to be lighter and harder to counterfeit (and probably easier to steal).

Yeah but is it in everyone else's? 

Its all in your head

Gold's preciousness is also just illusionary.

Not precious? Not unique? Seriously?

If it isn't unique, please.... Conjure up some of it then... Bitcoin isn't seashells scattered on the beach being used for currency.

Not precious? I've never spent such care protecting my private keys... And people are willing to pay ~450 for it... That's precious.

Besides a top of bitcoin price at Gox (1242 usds) on the same value of the ounce of gold, the match between 1 ounce of gold and 1 bitcoin has no factual support. It's very hard to compare so different things.
And, as told, gold has been precious for at least 7000 years: http://en.wikipedia.org/wiki/Gold_mining#History

That's not really true. I know what you mean but the fact that Bitcoin is both a store of value (and is rare and therefore comparable to Gold, making it share a certain investment trait) AND something that can be used to pay for things (with more convenience coming down the line) in a way similar to cash, makes it unique and lends it a special property of its own. I think that this unique combination lends Bitcoin a certain plus value, to be discovered.

Gold may be used to make jewellery, but it cannot and will never be a convenient way of paying for something.

I think bitcoin might see some serious competition in the next 3 to 5 years that could eat into it's market share. It could be possible to overcome that with sidechains, but it comes down to who releases the next innovative crypto first.

 
I tend to agree with you.  Bitcoin has done all the dirty work and has taken the unbeaten path.  Something no other coin can claim to have done.  That fact with a few other things makes it special but the number one thing is the timing.  That is what I believe will be the reason Btc makes it.

The comparison to gold makes me all the more bullish haha good work OP.

You know why I think bitcoin will be valuable and coveted in the future beyond any other cryptocurrency, even if arguably better ones come along?  Simply because it is the first, the original, the pure source.  Rare, uncorruptable, untaintable.  A special place in history as the one that started it all.  First mover advantage.  It will be like the Holy Grail, the Model T Ford, the Mona Lisa of all cryptocurrencies, and everyone will want to own some just because of this one special attribute.  Especially the rich.  Just look at BRK-A stock, the rich want some of it just because the "commoners" can't afford it (yes I know BTC can pretty much be owned by anyone due to near infinite divisibility, even if it attained a $1M/BTC valuation, but still).  

I know, it sounds completely crazy, but I've seen crazier things in the fine art, antiques and collectibles market.

Interresting point of view, hope you're right but....

Since Bitcoin and gold are not alike I do not think we can compare it purely on it's rareness.

Age
Gold has been a rare and valuable material dating all the way back to the pyramids, aztechs, etc.
Bitcoin has only been around for a few years. We need more years and more mathematical proof to trust it.

Properties
Gold is used in the industry as a material for it's properties. Companies who use gold for products will be forced to buy gold at sub-optimal prices.
Bitcoin has no other properties, it's purely data and has no distinct physical form (yes you can store it on a physical media but it has nothing to do with bitcoin itself).

I will say it again, I hope you're right but we cannot compare gold and bitcoin in a simplistic model like this.
That said it does show that bitcoin can have a great potential to grow.

According to a recent report, there are 171,300 Tonnes of mined gold in existence on earth.

Now consider that there are 32,150 troy ounces in each ton of gold.

Mathematically, that means that there are 5,507,295,000 troy ounces of gold on the earth.

Each troy ounce has a current market value of around $1,300. A Market capitalization of 7,159,483,500,000


Now lets contrast bitcoin.

There are currently has around 12,730,000 bitcoin in existence right now.

each bitcoin has a current value of  around $450



So 5,507,295,000 troy ounces vs 12,730,000 bitcoins means that bitcoin is 432 times MORE RARE than gold.


Now, lets pretend an ideal scenario where  bitcoin took the place of gold and it's entire value structure. 5,507,295,000 x $1300  = 7,159,483,500,000    (7 TRILLION DOLLARS)

now, If there are only 12,730,000 bitcoin right now, that would mean that each bitcoin would be worth $562,410 at the same market cap as gold.



Extrapolating from the current price, (450 / 562,410) this also tells us that bitcoin has only reached  .08% (.0008) of the market cap that gold has.

room to go up?