Try take your personal safe across borders. #Bitcoin in ones memory is unconfiscable.
Discussion
Bitcoin in your memory is also imaginary
If you can get others to imagine with you, that particular form of imagination can prove very effective - for a time
We are going to wake up from the fiat dream at some point, and Bitcoin will be left behind
The bitcoin in my mind is no less imaginary than the 10 commandments, which are written in so many copies around the world that they can’t just be forgotten (they’re really even more secure, because you can’t change a single UTXO without rewriting the entire chain thereafter… virtually impossible)
Also your gold is just a shiny rock unless you can find someone to trade you something for it. Desert island gold is no more useful than desert island Bitcoin.
It's a little more useful. It's a physical metal I can shape into a bowl to carry water.
Carry it over the Ukrainian border when escaping war with your family.
Will you have the necessary metallurgic tools to shape gold on that island by yourself?
Pure gold is a very soft metal and can be hammered into shape with a rock.
But I'm planning for fiat collapse, not the literal evaporation of all tools.
I think in a fiat collapse I might lose electricity or Internet temporarily.
I don't think my metal coins will evaporate.
I actually don’t understand why goldbugs are so obsessed with the physical atoms of gold.
“Money” is a psychological phenomenon that arises in groups of humans. There’s no mandatory reason it needs to have a physical representation in the physical world. If that were necessary, we wouldn’t even be able to use fiat like we do today. It just would be impossible.
But no, indeed, we do use immaterial abstractions as money. We do it across the world every day. The problem is that there has not been, prior to Bitcoin, any way to rate limit the manufacture of these immaterial abstractions.
Incredibly, the same mathematical equation that solved this problem of limiting money creation also improved upon other desirable aspects of money - secure defense of the asset, ease and speed of transfer, ease and cost of verification.
Gold bugs insist that money needs a physical manifestation to be “real” but I don’t understand that logic at all. In fact, the physical manifestation of money introduces a host of downsides and security challenges that purely abstract money doesn’t have.
If we evaluate money as a technology, it seems unlikely we would return to an older technology that was replaced by a more recent one - we wouldn’t have adopted the more recent tech if it weren’t better at solving more of our problems. However, we may in fact adopt an even newer tech that solves even more of our problems.
I guess, in summary, that’s my question for you - what problem does gold solve that Bitcoin doesn’t? (Most times I see this comparison, it’s argued that gold has a 5,000 track record and Bitcoin has only 10 years. To which I would simply say… I’m not going to be living in the last 5,000 years, but rather the next 50. Which tool is going to be more useful to me in that timeframe?)
As always I appreciate the debate and I’m sorry that this particular forum is going to lead to uneven sides 😅
Gold can fill a tooth cavity, or coat a surface for a scanning electron microscope, or conduct electricity.
The money value of gold derives logically & chronologically from its material use.
The value of fiat derives from gold. The value of Bitcoin derives from fiat. You've just added another derivative, another epicycle on the fiat hallucination.
You’re contradicting yourself. You said all value is subjective, meaning it’s derived from nothing but my subjective analysis. You also pointed out that gold has been money for thousands of years… but during those years it didn’t fill cavities, there were no electron microscopes, and no one used electricity. For most of those years it was a shiny rock. Material use cannot explain why they valued it.
The value of fiat no longer derived from gold. It is entirely subjective, like the value of every other commodity (which you correctly pointed out). The subjective valuation for most people is something like “I can buy food with this and also the government is strong and powerful and they say this is the money to use and I owe them a cut denominated in it so it’s the most practical money for me to deal in”. However, it loses value annually, so everyone who accumulates even modest amounts of it begins acquiring other assets as savings vehicles, of which gold is merely one. Others include bonds, stocks, and real estate. There is widespread agreement over what the best unit of account and medium of exchange are, but totaschizophrenia/tribalism over the best store of value. An entire industry has sprung up to help you “diversify”.
Again, “money” only has value because of the expectation that someone will give you something for it in the future. Your choice of money is subjective, and everyone is free to use one form for spending, another for saving, and even a third for accounting. And today they do.
Any of these uses of money is a bet on the subjective evaluations of other people. Thus, money’s value is both your own subjective evaluation as well as your subjective evaluation of others’ subjective evaluations.
One thing I haven’t mentioned too is that doing accounting with gold is an onerous process. Accounting with fiat is much easier. But accounting with Bitcoin is by far the easiest. Accounting innovations have arguably launched our species the furthest of any technology innovations - from single entry accounting and coinage in the cradle of civilization to double entry accounting and banking in the Renaissance.
Even Blockbuster outcompeted the mom and pop video shops because its computer accounting system permitted it to track and remit shared profits to the studios, something that was not possible with pen and paper.
In other words, a return to gold coins from an accounting perspective is so onerous and costly that I cannot imagine anyone doing it
Subjective value = the highest use to which I (the subject) can put this good
This is the Austrian/Misesian notion of subjectivity
In contrast the Objectivist/Radian notion of subjectivity is something like "I just make up whatever I feel like"
Economic value is subjective in the Austrian sense, which frankly the Objectivists would call objective
I see, you’re saying “subjective” but still rational
Well, the amount of gold I would hold for filling cavities is rationally quite small. The amount I would hold because I can sell it later for something I need is much higher.
But the physical limit of how much I can actually hold and defend does force me to consider alternatives like Bitcoin, where the cost of defending a small amount and a fortune is basically the same.
I won’t hold any Bitcoin for filling gold teeth, but as an accounting and monetary instrument I expect it will see tremendous future demand (my subjective analysis of others subjective analyses), and since it’s trivial to acquire and secure, I do so.
That depends on Bitcoin having value which it does in the current fiat regime, but so does fiat.
If Bitcoin didn't have value, it's security and transportability (etc) would not add to its value.
Do you see the circularity?
No central group or ruler mandates Bitcoin’s value be pegged in any way to anything. It trades against electricity at prices set by a hard-coded computer program and the free market. Bitcoin is not fiat. You will not suffer at the hands of any tyrant if you choose not to adopt it.
There is an electricity cost for the computation of the next Bitcoin block. As long as there is demand for for space in the next Bitcoin block, there will be a demand for that computation. So as long as there is demand for blockspace, there will be some electricity value of bitcoin. And as long as electricity is a real commodity in the real world, this Bitcoin/electricity price can be converted to a Bitcoin price for other commodities in the real world.
As long as fiat currency is a real commodity in the real world, there will be a Bitcoin/fiat price. But if fiat becomes worthless, the Bitcoin/fiat price will go to infinity.
Bitcoin will still have its BTC/electricity price. And since gold will still have value relative to electricity, there will still be a BTC/Gold price. And a BTC/chicken price. A BTC/oil price and so on.
You’re hung up on Bitcoin’s price in fiat as if that is the only exchange rate it has. In fact, it’s exchangeable for literally anything by virtue of its floating peg to energy, which is the real liquid universal commodity.
Why should there be demand for Bitcoin in a post-fiat world?
Only because it has value in trade. And it has value in trade only because there is demand.
In contrast there will be nonzero demand for oil, meat, and yes even gold in a post-fiat world and even excluding the possibility of trading it on to someone else.
Bitcoin is the world’s first and only immutable record. As long as there is anyone who wants to use this immutable record (and in a civilizational collapse, I suspect most record keeping will go to shit and so it could become even more valuable to people) they will have to pay others to provide the computation and energy to make that record immutable. The only currency that can be used to facilitate this exchange of energy and record-keeping is Bitcoin.
You may say - why will anyone sell their precious energy to to the Bitcoin network when the going gets tough? And the answer is simple - there is stranded energy in the world that has no other value. It would not cost much to tap it, but there is simply no buyer.
Well, now, the Bitcoin network will literally buy any energy from any where in the Universe. This presents a quasi-gold rush for otherwise stranded energy.
In this way, we managed yet another civilizational breakthrough. We didn’t just improve our use of money in every dimension, we also developed immutable record keeping and incentivized the development of any and all energy sources in the universe.
As long as there is demand for an immutable record, and as long as there is stranded energy that can’t be sold for other uses, there will be a market for the exchange of these two things.
And as long as the token of that exchange is a Bitcoin, a Bitcoin will have relative value to the rest of the physical universe.
Government money has absolutely no bearing on the equation.
Ok, let me check myself… the 10 minute block time is a limitation that most likely prevents us from using Bitcoin as-is beyond our planet. So we run into our next challenge when we colonize Mars (and considering I don’t think we’ve been to the moon, I’m not concerned that Mars colonization is a near-term concern). But “universe” is a fun word
Still not limiting, IMHO. You just wait longer for a confirmation. Nobody said we won't change the time in between block to one hour if we needed to deal with other planets.
I agree, that’s why I said “as-is”
Also far-enough down the road so as not to effect my thinking at all
Also, unless we find some way around the speed limit of the universe I can’t see a lot of back and forth trade with Mars, so it seems like they could have their own fork of the protocol or a side chain 😂
How do you bring the 'post fiat world' up? Will you politely ask FED?
#Bitcoin is the only thing that can separate money & state. If it dies after this point (it won't), we have to get there first. We won't get there with your 'trust' or gold.
This is well put. Fiat (violence + debt notes for more violence) conquered gold (durable shiny rock) and it’s unclear to me what has fundamentally changed about either technology that suggests a different outcome in the next century.
Gold is entirely sufficient to blow up the fiat ponzi, but I suspect silver (or even some base metal) will be the trigger
When Comex runs out of something I think we'll have a run on the commodity "bank"
This is an interesting point where we actually agree.
You see the ponzi collapsing with a bank run. I do too.
I actually see the many bank runs in Bitcoin’s short history (eg Mt Gox, FTX, Prime Trust) as proof that is exactly the asset to do the job.
We can add to the list of good qualities of money: “the ability to quickly and effectively withdraw your money if you suspect shenanigans with a third party”
Yet, gold cannot do the job. Silver won't separate money and state either. Both need centralized authorities, #Bitcoin doesn't.
On gold/silver, just another fiat (backed by metal) will take over the USD position, nothing will change, just the central issuers.
If it's backed by metal it's not fiat - you can express your lack of confidence in the issuer by redeeming the currency for the metal and peacefully withdrawing from the system
Fiat makes this peaceable withdrawal impossible (at least, not for everyone)
If it's backed by metal it means a central authority. You can peacefully withdrawn unless you get cheated by one of many trusted parties
https://decrypt.co/34033/chinese-firm-dumps-83-tonnes-of-fake-gold-on-the-market
Fiat withdrawal is indeed impossible; metal withdrawal I think is simply impractical. Bitcoin withdrawal is trivial so I think it will keep blowing up the people who try to play ponzi games with it (exactly as it should).
Do you really think the same people who use violence to mandate dollar usage are the same people using the same methods to give a fair market value to Bitcoin?
The knowledge of certain properties & how they may be useful is what allows people to see value in a thing. Bitcoin's provable scarcity, its ability to be teleported anywhere, the security that keeps what is mine safe from ciminals even if they kill me, the ease with which it can be hidden or transported, and the ability to programatically mitigate risk in a trade relationship (among other things) makes it valuable.
Physical gold has far fewer useful properties, which is why people are constantly trying to replace it with some other system of accounting. As far back as the story of Babylon, the wealth there was most likely an early discovery of the power of double entry accounting. But because the ledger was centralized the authorities could ultimately corrupt the accounting to direct all people & all resources toward one idiotic goal & destroy everything. But the discovery of double entry accounting was obviously important, quite literally in a Biblical sense
Bitcoin represents either the discovery or the first useful application of triple entry accounting, which eliminates central authorities, allows distributed coordination, & prevents corruption of the ledger. That, in my estimation, will prove far more significant than the discovery of double entry accounting & more sustainable than any one system of double entry accounting to ever exist. I think we are literally living through a Biblical shift in human history.
Gold is not special beyond the basic properties (unique to gold) which make it a good accounting tool—mostly scarcity & a good stock to flow ratio. Both of which Bitcoin improves upon. Material uses were only needed to bootstrap gold's use as money. Once a thing has value as money, the monetary premium outweighs everything else. Bitcoin's value is all monetary premium, it was designed to be valuable as an accounting tool from the start.