Topic: Silver at 29 ,Bitcoin at 30. this is no-brainer.. - page 2. (Read 10715 times)

Bitcoin IS far superior to both fiat and gold (much less so gold).  The benefits outweigh the drawbacks.  In addition to portability and store of value, bitcoin can be used for escrow services, notary services, and other legal services.  Basically, any contractual agreement can be stored permanently in the blockchain as proof.  I believe we are only scratching the surface of what this technology can do.

Also, the backlash over fiat is a bit overdone IMO.  The primary risk in fiat is debasement of the currency, which occurs over time.  Precious metals retain their value over time.  In the US, gold was outlawed for only a breif period during the 1930s.  Nothing is stopping anyone from keeping their long term savings in PMs and using fiat for day to day purchases if they are worried about debasement.  Fiat should be treated as what it is, currency of the government.  Nothing more, nothing less.  The solution is simple for the average person.  Hold your assets in something other than fiat if you are worried about debasement.

As for the argument that you cant buy much using bitcoin.  Well, what can you buy using gold?  Yet gold has retained its value over time, much more so than fiat, which is primarily used for purchases and paying taxes.  Therefore, utility for buying things is not what gives a money its value.  Fiat will continue to be used for certain purchases and paying taxes just as paper mail is still used extensively, given the fact that email is a far superior technology.  Fiat is likely not going anywhere anytime soon, but that wont stop crypto from gaining the acceptance it deserves, and crypto may take market share away from PMs.  Just my two satoshis.

...and what it buys is ... fiat.  Now that SR is history, it buys just about nothing else.
So let's put that foolishness to rest -- the paper money everyone loves to hate is the only stuff that IRL stores want.  Not gold, not silver, and certainly not bitcoin.
Walk in to my local bodega with dollars in hand to see how well they work.

Recently in the news:

Man Buys House With Dollar$.  

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Multimillion Dollar Business Not Shut Down By FBI

Feature article:  Life on Teh Dollar -- Young couple makes a go of using the dollar -- cash and credit.  Will they succeed?

Bitcoin can be forked, some are talking about canceling bitcoins that haven't been used for a certain time. These properties are not suitable for money, so people who find them more important than easy transactability, continue to keep PM in high regard.

Fiat is the sucker that will be destroyed.

All money acts as a commodity (including bitcoin).
Precious metal and cryptocurrency are not in conflict as money, they complement each other.
Crypto is best for long distance transaction, precious metal for local.
Bitcoin obsoletes fiat currencies, but not precious metal, in the same way that paper money took its value from gold and silver coins in your grandparents time, bitcoin has value from what it buys.

When a commodity money finds a "higher use" it is because it is worth more with that use than it is as money.  For example Mastercoin and colored coin claim to be a higher use of bitcoin (use of the protocol as a trading platform).

Bitcoin transactions are traceable and trackable and are recorded in the block chain for all time, each are uniquely serialized. Coins (unlike paper money) have no serial numbers.  Each are like all the others (fungible).

They are different types of money, different purposes and barely overlap, this makes them very compatible in the currency marketplace.

I have no additional info to add, but I agree this is important.

Perhaps bitstamps price after gox?

I would like there be a all-encompassing historical price index for USDBTC.

I currently think that:
- Since Mt.Gox opened, at least until they started having difficulties last summer, it would be MtGox price.
- After the said difficulties, I don't know (help me!)
- Before the opening, the only datapoint I know is the pizza that was about 0.0025 $/BTC. Does anyone know of others that could be used?

The perception of stability is increased because people look at EUR to USD exchange rate and see little (relatively speaking) volatility.  Of course this is to be expected.  All central banks debase their currency however they are somewhat careful to keep their debasement in line with what other governments are doing.  If the US was debasing the dollar by 30% and Euro central bank debasing the Euro by "only" 20% we would see a massive 20% year over year move on the USD to EUR exchange rate but if both banks are debasing at roughly 10% (or even 30% or 99%) then the exchange rate will appear stable.

Essentially all fiat currencies (all fiat currencies every created, currently operating, and all that will ever be created) are a race to the bottom.   Purchasing power always declines.

Silver or gold may in the short term decline in real purchasing power if production exceeds economy growth however unlike fiat currencies that is hedged by economic factors.   Demand dries up gold/silver correct downward, the margins on the most marginal mines (highest cost of production) collapse and production is reduced.   

Nobody would notice since gold/silver is quoted in fiat.

Totally unrelated note - I get incensed when people talk about the supposed stability of fiat. The only thing that is stable in fiat, are the things that are fixed in terms of fiat, such as labor contracts. Relative to anything else, such as gold or silver or energy or general price index or other fiats, it is not uncommon to see 50% yearly fluctuations, and 10-20% is the norm.

Thinking more about it, my remark that silver 'inflation' is higher than economic growth and therefore will lose value is incorrect because if silver would become more wanted by the people we will actually see a faster 'inflation'(growth) of the stock pile, but the value will still go up, and if people want less silver we will see an actual 'deflation' (shrinkage) of the stock pile, as happened the past century, but the purchasing power still went down.

$300k per bitcoin would put market cap around $6,000 billion, about the same market cap of gold. Agreed, a challenge to gold that would definitely be.

I think the value of bitcoin is at the expense of the other monies. So $6 trillion will be coming from fiat but also gold/silver I think. Knowing all fiat is valued around $30 trillion, gold $6 trillion and silver $0.5 trillion, taking an equal cut from each would take about $5 trillion from fiat and $1 trillion from gold/silver that is now in bitcoin, meaning gold/silver lost 20% of their value to bitcoin at that point. Step after that is total defeat...

  

 

Sorry, with 1/2% I meant between 1% and 2%. I agree with you.

interesting...

Bitcoin, in my opinion will replace Silver in the long run.

Aside from being a decorative material, Silver was used as a currency that could be more easily managed than gold. It was priced in a manner that made transactions more convenient and since it was in general less hoarded and more liquid, it was safer to put it into banks in return for depository slips, or just for writing checks against. This made it ideal for short-term storage and transactions that couldn't easily be done with physical gold. Gold was a more stable store of value, but due to the amount of it that is hoarded, whenever banks tried to use it without a system like the Federal Reserve in place, there was a series of bank runs. These hardly ever happened with silver, unless a political event served to trigger the bank run.

Bitcoin replaces silver as a more convenient alternative to gold. Like silver, it has less intrinsic value than gold, but its supply more tightly controlled than silver's, adding certainty which is always nice to have in a currency. Bitcoin probably won't become as stable as gold due to fluctuations, but over the long term it won't lose lots of its value as silver has. Also, clearly Bitcoin improves on the transactions front as no bank is required to create depository slips or the like.

Thus IMO gold will continue being the money with the greatest intrinsic value, while Bitcoin will hopefully eventually be used as an easy medium of exchange.

Not sure why the economy is growing at 0.5% on average.   Global GDP growth is closer to 3% over any extended period of time (say a decade).   Hell population growth is >1.1% annually so if economic output is growing at 0.5% and population is growing at 1% then productivity per worker is shrinking?  I mean that doesn't even pass the common sense test.

The reason that gold and silver have held purchasing power over large periods of time is because the inflation of the metal (~2% to 3% annually) has been roughly the same as economic growth.

I agree with everything else, but still want to correct the logic above.

IF we take the stock of 45B, we can take the flow of 0.7B, so flows:stocks = 1,6%

IF we take the stock of 20B, we have to take the flow of 0.4B, because in this case some of the mining supply is instantly irrevocably dissipated. Therefore flows:stocks = 2,0%.

To conquer silver, and later gold, Bitcoin needs to grow. The rise in market cap is a proof that we are talking seriously about Bitcoin being superior to them. Only after 1 bitcoin equals $300k in today's dollars, can we say that it has challenged gold (unless gold deepens its decline).

Ok, makes sense. So my silver 'inflation' rate estimate of 6/8% is wrong since there is about 20 Billion ounces of silver above ground, so it's likely around 4%. Still higher than economic growth so still will go down in purchasing power based on supply.

But ofcourse it depends even more on demand. Basically if people want to hold more silver, it will go up, if they want to hold less it will go down in value.


What I don't understand is that you still value silver eventhough you understand bitcoin.

As we agree silver already lost most of it's function as money pre bitcoin and became already mainly a commodity the past 100 years used mostly in industrial applications.

A smaller part of the mining supply still served as a store of value however this function will likely also be lost now that bitcoin is here.


I think silver will continue to become more and more a commodity/industrial metal. And commodities only go down in purchasing power long term.

I think now that bitcoin is here, wanting to own part of the above silver will become equally irrational as wanting to own part of the above bronze.


Ie: after this temporary rising commodity cycle, the silver deficit will continue for good reason: we don't need a stash of silver anymore as we don't use it anymore as money, and soon also not anymore as store of value, or inflation play.


Having said all that I think short term, the coming 5/10 years the commodity cycle may continue, or the credit/counterparty crises may become much worse and push gold/silver upwards. But risk/reward is not as good at all compared to bitcoin so a little gold/silver compared to bitcoin makes sense. A lot not.

Not wanting to sound arrogant, but I have literally written a book about this. About half of the 45-50Boz that is ever mined is still aboveground in recoverable form. A large part of the yearly mining is dissipated, but at least the stock is growing (silver was in structural deficit from 1940s to 2007).

Silver is very volatile, because most of the "holdings" are distributed to households as silver items, which do not react quickly to rise and fall in price. The incredibly small stock in COMEX is many times leveraged. Speculators tend to have inverse demand curve that they always demand more when price goes up. Silver market is a mess because of many factors.

Sorry, I take that estimate of mine back. I have no idea how high recycling costs are vs mining costs.
 

Good point, so either there is an enormous amount of silver available above ground, or the inflation rate is 6/8% per year.

Pick one, it's bad news either way.

Ah, in that case all the 45-50 Billion ounces is still aboveground, and the yearly mine production of 0.7B is less than 2%. Where do you get the other figures from?

A) If you are already rich, you can effortlessly buy BTC5k-BTC10k, no need to sacrifice anything. If you buy much more, then not only do you sacrifice, you become a target as you are among the largest bitcoin holders. If bitcoin takes off, everyone with BTC5k is ultra-rich, there is no practical difference to one with BTC50k.

B) If you believe even 10% of what is written here, you realize that Bitcoin is the best that has happened or could happen to you. A person with only $10k can recuperate it easily by working, so it is not too great a risk to invest it all in bitcoin.