Anonymous wrote:
Anonymous wrote:I tried for five minutes in good faith to understand the case for bitcoin. I couldn’t, so I’m not going to buy any.
Fair enough. I'll suggest that perhaps five minutes is not enough time to think it through, but you were on the right track with trying to understand it.
I'll pose this question -- what's the modern case for gold? Why it is above $4K per ounce today? Yes, it's shiny and has an attractive yellow color and many people like to wear a bit of ornamental gold for the visual effects. While at one point in history it may have been a challenge to create shiny, attractive yellow colored ornaments to wear (and gold was perfect for that when our technology was limited), with modern technology it's not difficult to create ornaments out of other materials that look/feel just like gold. (That's why fake gold is a thing, and anyone buying/selling gold has to rely on labor-intensive methods to determine if something is truly gold or not.) Gold has some industrial value, but not much - that probably accounting for about 7% of its value. So what really makes gold valuable? Do some research and you'll see that the price of gold isn't based on its industrial value uses or even its ornamental value (and much of the "ornamental value" of gold is contingent on its having monetary value, not on its appearance, i.e., people understand gold has monetary value so they like to wear it to signal they're wearing something that's valuable, not just because it's something shiny and yellow); the majority of the value of gold is it's "monetary value" simply due to it being relatively scarce and humans therefor ascribing value to it. Gold is a scarce metal that is relatively portable, divisible, and durable. The world's supply of gold has historically only grown by about 2% per year and it's energy intensive to extract.
Bitcoin is an engineered technology designed to replicate the "monetary value" of gold by creating a scarce digital resource (one that is also energy-intensive to create and sustain, this is what you hear referred to as "bitcoin miners") that is likewise portable (even more so, it's digitally portable and can be transferred cheaply and quickly anywhere around the world), divisible (infinitely divisible, in fact) and durable (the bitcoin network runs on the internet protocol and is distributed around the world and even on satellites in space). It lacks any minor "industrial value" and "ornamental value" and is engineered solely as something that is scarce, portable, divisible, and durable.
Many people think gold is just a relic; a shiny yellow metal that is wildly overpriced for what it is. But humans are fundamentally drawn to place value on things that are scarce because they are scarce. That's why gold has the value it does.
Nobody can "control" gold beyond what they have possession of (or what they can seize by force from others and take possession of). Nobody can click a button and create more gold; it takes energy intensive work to create. Bitcoin is the same idea in digital form. And given where technology is going, the bitcoin bet is that a scarce digital asset, a store of value that can be transferred quickly and inexpensively, is where the future is headed -- not in shipping pieces of heavy yellow metal around the world as a store of value.
I've heard it said that bitcoin is for anyone, but not for everyone. Same is probably true with gold. But that's the little thought nugget I'd suggest to anyone interested in learning more about it.
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