WingNews

sytelus|8 years ago

That's quite a balony.

- Both are in fixed quantity so none is more rare than other.

- Gold has practical use in industry which puts lower bound on its value. BTC has no lower bound.

- Gold is exchangeable virtually in any country and any culture regardless of how technologically advanced that society is.

- Thousands of years of history has proven that humans have almost natural lust for this shiny metal and it gets displayed as jewelry uses. This again further sets the lower bound for gold prices.

- Gold is not only rare but is virtually rust proof and can be stowed away without any advanced tech for 100s of years. BTC will be pointless if there was a natural or human made disaster and few people had electricity.

- Gold is far more unlikely to be made illegal by governments.

- There are no new rare metals popping up every day like whole slew of new cryptocurrencies which might fragment and trump each other. No one knows which cryptocurrency will end up dominating 10 years down the line.

- BTC has huge risk of getting stolen and hacked because someone exploiting zero day vulnerabilities in your system even if you did everything you possibly could to keep your system safe.

- Governments can start their secret operations to control the crypto market behind the scene, hack in to exchanges, find vulnerabilities or do dirty trades.

- Crypto exchanges are wild west without regulations which means clever deep pocketed traders would be exploiting them by techniques like frontrunning, wash trades, willybot, spoofing etc. This enables big investors to profit at the expense of small investors.

Above arguments should make it clear that btc has very real upper bound that it can rationally reach and its most definitely less than gold market cap. Of course, big investors can juice up things in the short term but it would be impossible to sustain irrational highs on long term.

moduspol|8 years ago

> Gold is far more unlikely to be made illegal by governments.

Empirically this has not been the case, particularly in the US [1].

[1] https://en.wikipedia.org/wiki/Executive_Order_6102

ce4|8 years ago

Bitcoin has >200k [1] unconfirmed transactions in the mempool, summing up 4.3m us$ of fees alone. fee to get your transaction into the next block is around 22$ [2] right now.

Starting to look less and lesser like a currency, becoming more and more a security.

edit add links:

    [1] https://blockchain.info/unconfirmed-transactions
    [2]: https://bitcoinfees.earn.com/

dcosson|8 years ago

> Gold has practical use in industry which puts lower bound on its value.

How did that work out for oil a couple years ago?

Yes there's some lower bound on gold, but if it turns out it's lower than you thought, or if the supply can be altered to manipulate the price and drive it even lower, it's not very useful.

Given that gold prices 20 years ago were somewhere around 1/6 the maximum price in that period ($300 vs $1800), it's reasonable to assert that this lower bound on gold lower than even that. Meaning if I invest in gold and people completely lose faith in it, I could lose 85%+ of my investment. Not a very helpful safety net.

milcron|8 years ago

> Both are in fixed quantity so none is more rare than other.

There is 80% more gold aboveground today than there was in 1980.

varjag|8 years ago

Should just point out that gold was made illegal in multiple cultures on several occasions.

colordrops|8 years ago

Just because gold is better in some ways that bitcoin doesn't invalidate the GP's point that bitcoin is better than gold in some ways. One quick example among many is that you can transfer it nearly instantaneously without geographic bounds.

microtherion|8 years ago

> Both are in fixed quantity so none is more rare than other.

"BitCoin" is just a particular name for a bunch of numbers. If every single wallet in the world disappeared today, you could restart a new block chain tomorrow, and would get numbers just as good as the bitcoins were (And in fact, the # of Bitcoins doubles every time there is a fork). Any scarcity is purely by fiat and consensus.

pingec|8 years ago

One disadvantage of gold I can think of is you cannot hide it in your head.

justboxing|8 years ago

> willybot, spoofing

Interesting. First time I'm hearing about these two. Anyone know of any real life instances where someone perpetrated this w.r.t. bitcoins / crypto trading?

rsync|8 years ago

"Gold is far more unlikely to be made illegal by governments"

I have nothing to say about bitcoin, or cryptocurrencies, but this statement is currently false because (AFAIK) bitcoin has not been made illegal by any government, whereas gold has:

https://en.wikipedia.org/wiki/Executive_Order_6102

wyager|8 years ago

> Both are in fixed quantity so none is more rare than other.

Yes, gold is fixed by the limited amount of it in the world, solar system, and universe. We haven’t even mined most of the gold on earth. If you’re worried about supply shocks, gold is infinitely more vulnerable.

I was going to respond to more of your points but many of them are obviously the exact opposite of true. Are you being sarcastic?

Florin_Andrei|8 years ago

> Gold is exchangeable virtually in any country and any culture regardless of how technologically advanced that society is.

Your other arguments are not bad (well, it varies), but this one is very weak. You do know that a lot of 3rd world citizens now have access to cell phones? Technology is pervasive nowadays.

raverbashing|8 years ago

Even more than that

BTC has zero value if the network stops (you could say it could have some value but "infinite illiquidity" which is basically the same)

felipeko|8 years ago

There's a difference about Gold's rarity and Bitcoin's.

Gold is rare on its kind and rare on its abundance. It may be hard to mine more gold, but it's way harder to find another gold-like commodity.

Bitcoin is only rare in the abundance sense. It is hard to mine more bitcoin, but it's pretty easy to find a (arguably better) substitute for what it does.

I can agree with it being better (having more utility) than gold, though. So I'd agree that the sum of all e-coins will surpass gold, but I see no reason for Bitcoin to do it alone.

WorldMaker|8 years ago

Bitcoin definitely isn't rare in kind as we've already seen how relatively "easy" it is to fork. Could just fork Bitcoin infinitely as one way to deal with its supposed scarcity.

Bitcoin isn't even rare in the abundance sense if you consider that how hard it is to mine new coins is merely a function of a mathematical curve that can be adjusted as a software change. Certainly any change to the mining difficulty and/or coin pool ceiling would be hugely controversial, but it's not like it's mathematically impossible merely politically improbable, for now.

KaoruAoiShiho|8 years ago

What do you mean gold is rare on its own kind? Aren't there tons of other pretty metals? There doesn't seem to be any unique property of gold (other than sociological) that would help it defend against competitors like bitcoin or any other new asset.

saalweachter|8 years ago

Another critical difference is that there are commodity uses of gold. The price of gold will never go to zero; it might go to $100 or $10 per oz if all speculation and hoarding were removed from the market but it wouldn't go to $0.

lsadam0|8 years ago

We live in a world where the near-ish future could bring us asteroid mining. Something that could devastate the rarity of abundance of gold.

dahdum|8 years ago

"So I'd agree that the sum of all e-coins will surpass gold, but I see no reason for Bitcoin to do it alone."

We could pick any number of gold-like commmodities, but like Bitcoin, gold has had a history of large expenditures to acquire it. Both are buoyed by that past.

So many tokens and blockchains are coming out with incremental improvements or niche capabilities, but in the end I think consolidation of market cap is inevitable. I think it ends up Bitcoin as store of value, Ethereum as contracts/api and a large amount of application specific token/chains. Most applications would be backed by ethereum (like most tokens are now), but ones like Ripple could definitely be top 5.

mtgx|8 years ago

That doesn't make much sense. I think you set up a rather arbitrary definition for this.

Here's my attempt: Gold is just a "metal" just like Bitcoin is a "cryptocurrency." There are many types of metals and other materials. Some can directly replace gold while others have way different uses - just like cryptocurrencies.

unknown|8 years ago

[deleted]

pishpash|8 years ago

It's not even rare in abundance. Every fork (Bitcoin Cash!?) defeats its supposed non-abundance.

epx|8 years ago

Good luck trying to make a fountain pen nib with a cryptocoin :)

QAPereo|8 years ago

To me it just sounded like talk designed to pump the price now.

0wing|8 years ago

If you understand the computer science behind Bitcoin, you'll realize how ridiculous the false equivalency to gold is.

1. The claim of "rare" doesn't exactly hold true.

Consider the 10,000 BTC pizza - how did this happen? This was the direct result of Satoshi's economic policy, granting vast sums of BTC to mint out very quickly very early for a short duration to the very small pool of people who ran the software. Satoshi's algorithm produced BTC in plentiful quantities enabling the 10,000BTC pizza - thus it wasn't rare if you were Satoshi and the dozen other early whales hording as much as possible, until the algorithm begins cutting off the production and limiting later users from producing coins, starving the economy. Now there's a psychological game being played, where public relations and marketing must convince new users to buy in. Because the exchanges are unregulated, they can manipulate the spot price though wash trading and painting the tape [2] (where trades are falsified and you just sell the same item back and forth to your friend for a higher and higher price).

The supply was created by running a piece of software. It's not magic. Most of the supply was produced very early on and as much as 30% of all Bitcoins are owned by less than 100 people.

  Best estimates are that there are about one million 
  holders of Bitcoin;  47 individuals hold about 30 percent, 
  another 900 hold a further 20 percent, the next 10,000 
  about 25% and another million about 20%, with 5% being 
  lost.  So 1/10th of one percent represent about half the 
  holdings of Bitcoin and 1 percent close to 80 percent 
  (http://www.businessinsider.com/927-people-own-half-
  of-the-bitcoins-2013-12). The concentration of Litecoin 
  ownership is similar 
  (http://litecoin-rich-list.blogspot.com).  
  Most of the big wallets have been in place from early on, 
  so sitting back and watching your capital grow has been a 
  very successful strategy.


  The distribution of Bitcoin holdings  looks much like the 
  distribution of wealth in North Korea and makes the 
  China’s and even the US’ wealth distribution look like 
  that of a workers’ paradise

2. Easy migration to more advanced e-cash services, LTC, XMR, ETH, so on See: https://coinmarketcap.com/currencies/views/all/

3. Bitcoin network requires ASIC miners, largely centralized in China [3]. Assuming the inveitable surpassing of a more advanced cryptosytem making Bitcoin obsolete, as the market is informed there will be a decline in BTC's spot price and once this falls below the cost of OPEX for miners, the hardware goes offline and the network will cease to function. Maximalists will attempt to offer an emergency fork, in any attempt to save their "investment", just as they have developed the lightening network to create centeralized payment hubs, so "investors" can act as liquidity providors and take fees, instead of miners.

4. Electricty usage is unsustainable, GOTO 3

[1] https://bitcoin.stackexchange.com/questions/86/is-it-possibl...

http://www.businessinsider.com/bitcoin-inequality-2014-1

[2] https://www.youtube.com/watch?v=6r04gfWfRkE

[3] https://qz.com/1055126/photos-china-has-one-of-worlds-larges...

glitch003|8 years ago

>as the market is informed there will be a decline in BTC's spot price and once this falls below the cost of OPEX for miners, the hardware goes offline and the network will cease to function.

I don't think the network would cease to function. If that happened, the difficulty for the network would drop drastically, and GPU miners would come back online, similar to the early days of BTC

chrisco255|8 years ago

On 1) the exchanges may be unregulated, but there's dozens, if not hundreds of exchanges. Implying that exchanges are manipulating the spot price across the board is ludicrous. There's also exchanges like EtherDelta, which are entirely run by a smart contract on the Ethereum block chain, so it's independently verifiable that the trades are fairly executed.

2. BTC is being used as the reserve currency for almost all exchanges. BTC has a vast network and even as popular as ETH has gotten, it has some ways to go before it's accepted at the same level as BTC. The others, like LTC & XMR also rarely have trades delimited in their currency.

nathancahill|8 years ago

Say the guys with a significant stake in BTC.

shostack|8 years ago

So rather than just assume ulterior motives here (which I agree should be considered as a possibility whenever a big stakeholder is discussing a major investment of theirs), I wonder if there's a different question to ask.

Specifically, how does the game theory play out for his comments? Does it point towards him being genuine? Or does it point to him trying to do something else?

tim333|8 years ago

Just now Bitcoin is down 11% (to $17k) and Bitcoin Cash up 55% (to $3.4k) as people look to it as an alternative. I'm not convinced Bitcoin will last thousands of years as a major asset the way gold has.

dpflan|8 years ago

Interesting. What are the economics arguments for Bitcoin replacing gold? Does the “ease of transaction” of Bitcoin provide an implicit value over gold and is that factored into the price of Bitcoin as maybe a fixed value?

apeace|8 years ago

> Does the “ease of transaction” of Bitcoin provide an implicit value over gold...

I know this doesn't answer your question but it's still relevant. Currently Bitcoin is the most expensive, least convenient currency available. According to estimatefee.com it would take about a $25 fee in order to get your transaction through in an hour.

My point is that nothing about Bitcoin will ever really be "implicit" like it is with gold. Gold exists as it exists, cryptocurrencies only have the properties that are created by the developers, and/or are run on machines by participants in the network. In Bitcoin's case, the developers and the network have not been able to handle the load of all the transactions.

I used to be in the "Bitcoin is the new gold" camp. But after seeing what's happened with Bitcoin, I'm certain it's not that simple.

KaoruAoiShiho|8 years ago

Gold is just non-scalable and is bound to die eventually. If you think about it, if you're going to start a new country and a new federal reserve, how much sense does it make to ship tons of gold to Mars for example?

Any store of value that makes sense for humanity in the long term has to be both digital and reflect the work/real value creation process that matters in the future. I'm not sure it's going to be bitcoin but it's definitely not gold.

kamaal|8 years ago

>>But then Tyler Winklevoss questioned even that, pointing out the ways that he believes Bitcoin is better than gold.

:)

Well. This could be another Facebook level embarrassment if it turns out false.

jpm_sd|8 years ago

BTC is far more likely to hit zero than to outstrip gold.

jhall1468|8 years ago

Literally nobody knows what Bitcoin is going to do, so comments like this are not only blatantly false (you have no idea what's more likely), they serve zero purpose.

Kiro|8 years ago

I claim the opposite. The truth is that neither of us knows so your comment is nonsense.

cohnnton|8 years ago

can someone explain why bitcoin is rare? there are COUNTLESS cryptocurrencies out there. The only reason bitcoin is believed to be rare is blind belief, much like believing in santa claus.

glitch003|8 years ago

There will only ever be 21 million BTC. I mean, it's right there in the code for Bitcoin. Yes you can fork or create new cryptocurrencies, but they don't have the mining power of BTC, and they are inherently NOT BTC. So Bitcoin is rare, cryptocurrencies are not.