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Comment by lawn | Hacker News Reader

How can something be a store of value only?

For something to be a store of value you want it to appreciate in value and have enough liquidity for you to cash out.

If you want it to appreciate in value there must be something driving the price. It cannot be others who only want to store their value as then the price is dependent on greater fools entering with new capital. Pure speculation cannot uphold the price long term.

Wanting Bitcoin to be only a store of value or only digital cash misses the point. It should be both.

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Gold is only a store of value, even less so than Bitcoin. With Bitcoin I can actually buy things, both via e-commerce and locally if I am motivated enough to.

If I walked around with a bunch of gold coins I would have a harder time.

Cashing out is even more difficult (as someone who grew up in California's gold country and knew many a gold bug, it involves humans and haggling).

The difference, of course, is that gold used to be currency, then was the backing for currency, but then that was abstracted away. Bitcoin essentially replaces rare-earth mining with it's own, in theory "repairing" this abstraction with cryptography.

The total value of gold ever mined is about $8 Trillion, something like 50 times more than Bitcoin. There's probably a lot more value just stored in gold that isn't being exchanged every day for goods and services than the total market cap of Bitcoin.

Gold is not only a store of value. It has industrial use and also as decoration.

As you point out gold isn't a perfect store of value either as it has liquidity problems.

I don't want to sound condescending, and if I do I apologise, but anyone who has any familiarity with financial markets knows that the industrial applications of gold account for a negligible percentage of its price.

Have you ever heard of gold?

Are people buying gold "greater fools"?

If so, why?

Gold was previously used as and in currencies. It also served as scarcity control for paper money (until abolished). To a lesser extent gold can act as money even today.

Nowadays it is also used in industrial purposes and as decoration.

Gold certainly isn't only a store of value.

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