Nostr Web Client

You’ll have to defend why you think the money market is a winner take all. Gold is a tens of trillions dollar market cap and I’ve never seen anybody trade in gold in person. It seems clear to me there’s room for multiple financial instruments and money.

Pascal 9mo ago

The reasons for the fiat standard are that gold serves primarily as a store of value, but it is not effective money across space due to issues of transportability and associated costs. Additionally, gold is not an ideal unit of account. Silver, on the other hand, was easier to divide, which is why both assets were used historically.

The gold standard was a solution for a certain period, but we all know what unfortunately happened during World War I, when more paper gold was issued than actually real gold in the banks existed. The same might happen with Bitcoin by using L2s.

The main reason for the fiat standard, however, is the political coercion behind its use, along with the lack of a better alternative in all three dimensions of the characteristics of money.

Reply to this note

Please Login to reply.

Discussion

WildBill 9mo ago

“The reasons for the fiat standard are that gold serves primarily as a store of value, but it is not effective money across space due to issues of transportability and associated cost.”

This is my point. The dollar and gold have value. So will Bitcoin and Kaspa. You’re making my point.

Pascal 9mo ago

The difference is that there is no reason to hold Bitcoin while paying in Kaspa. A store of value and a means of payment do not exclude each other if it solves the money trilemma.

So, why should someone hold Bitcoin long-term if they need to swap it with high fees, when they can hold everything in Kaspa and save on fees as well?

WildBill 9mo ago

In principle, you’re saying because there is a new asset that is a better form of money, there’s no reason to hold the old asset. While I understand what you’re saying, it doesn’t bear true in the real world. Look at gold and BTC. Just because BTC showed up, gold didn’t go to zero. It takes generations for value to transfer from one asset to another, and even then, the prior asset’s value doesn’t go to zero. It’s very hard to say winner takes all when that hasn’t been the case in all of history.

Pascal 9mo ago

From what proportion would you discuss it so that other assets are no longer worth considering? I mean it should be clear that I don’t mean exactly 100 percent. 😅

Another point to consider is that while gold might not go to zero against the dollar, it definitely loses value compared to Bitcoin and Kaspa. One reason for this is the rapid rise of these newer forms of money, of course. Even though, this trend is likely to continue in the future.