if silver retained its monetary premium during the gold standard despite gold having a lower S2F ratio, wouldn’t gold and silver retain their monetary premium under a bitcoin standard?
discuss.
Discussion
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No. Gold and silver acted a bit like on-chain bitcoin and Lightning in some ways: gold was simply too valuable for micro transactions such as buying a drink since it's hard to physically move, store, or measure a tiny fleck of gold.
As soon as you can operate purely on s2f factors via credit and checking banking by which the volumetric value becomes irrelevant, you have a fractional reserve so you are not *really* on a "gold" standard.
If you want to understand more about coinage, William Jevons' *Money and the Mechanism of Exchange* from 1875 goes through mind-numbingly excruciating detail of the compositions of all sorts of coins.
Anyway, the key takeaway is that silver still had monetary advantages over gold in some dimensions (divisibility), but neither has any advantage in any way over bitcoin. Nor does any other monetized asset class such as equities or real estate have any advantage over bitcoin within any narrow domain, so 100% all monetary premiums will be absorbed by bitcoin. RE & Equities have a monetary premium of >2x to put a conservative floor on it.
thanks agree with gold having divisibility shortcomings. i also wonder if the uncertainty of the s2f / scarcity into the future played a factor. we know now what gold and silver’s historical s2f approximately were… we don’t really know how that changes in the future except tail risk of finding some significant amount on earth or elsewhere in the universe. i have to think the certainty introduced by bitcoin’s supply schedule is part of the story and the rest of the monetization is just the natural emergence of an economic good (menger) where we have to have a human need, a thing that can satisfy that need, knowledge of the thing being able to satisfy the need, and sufficient command of the thing to make it satisfy the need.
as more and more people become aware of and develop command of bitcoin with tools to satisfy their needs for sov, moe, and uoa… i would also expect bitcoin eats into the monetary premium enjoyed by all other goods in each category.
there may be edge cases where we need to account for environments and markets that can’t have stable and sufficiently high bandwidth internet, either because of censorship or poor infra.