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Comment by TheBiv | Hacker News Reader

>> They said they might look at selling when the value of all the Bitcoin in circulation approaches the value of all gold in the world — some $7 trillion or $8 trillion compared with the $310 billion value of all Bitcoin on Tuesday — given that they think Bitcoin is set to replace gold as a rare commodity. But then Tyler Winklevoss questioned even that, pointing out the ways that he believes Bitcoin is better than gold.

I found this to be the most fascinating part of the article.

View on HN

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.

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

Some may be surprised to learn this includes the U.S. from 1933-1974.

Was not illegal to own, was illegal to hoard which is a critical difference.

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

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

Gold exploration had been going on for thousands of years which means every new piece of gold is being discovered at much higher cost. So while supply increases, prices don't go down.

Similar to BTC

Not really.

If you ask your Shaman to produce a poison and send it to every gold miner in the world and as a result no new gold will be mined, you still won't dig up much by simply putting shovel in your backyard. You would have to go to the last crust level they been at and start to dig from there, which makes it incredible expensive and complicated.

Meanwhile, if for any reason, including breaking a Bitcoin blockchain by state-sponsored actor (or someone powerful enough; or simply forcing ISPs to ban traffic on mining ports now that NN is gone), when miners stop or move to something else, you can pick up from where they left off of and alone mine one bitcoin a minute on your mediocre laptop.

Whether someone will pick up these coins from you at $15k per pop, that's a different story.

> or simply forcing ISPs to ban traffic on mining ports now that NN is gone

If the government can force ISPs to implement content-neutral routing, what on earth would stop the government from forcing ISPs to mandate content-neutral routing for everything except mining ports, or going even further to demand that DPI be used to investigate the content of all ports to prohibit mining activity?

Is this not similar to the diminishing release of bitcoins?

Exactly the point. Satoshi created the issuance curve of Bitcoin to mirror the amount of gold that was dug up.

In the next 100 years the amount of gold above ground will triple or quadruple. Growth in Bitcoins will be far less.

Of the additional 80% gold I'd guess about half represents profit for gold miners or tax or mining royalties. So 40% of the gold supply has come at zero marginal cost.

Also keep in mind that a technological breakthrough could produce a sudden glut in gold supply, as we have seen recently with oil and gas fracking.

The main reason the price has gone up is that the world population is in aggregate far richer than in 1980. What's more, Indians and Chinese (who are culturally inclined to invest in gold) have seen their wealth grow particularly rapidly, so the proportion of world assets stored in gold has likely increased.

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

No one can steal it from you with 50%+1 CPU resources though.

The 51% attack allows you to double spend. It doesn't allow you to steal other people's coin.

By allowing you to double spend, it reduces confidence in coins you buy to zero, which reduces the value of all coins to zero. You still have your coins, but they aren't worth anything.

This is false, you just have to wait for more confirmations. And if miners are censoring transactions there will be a fork where you can use your coins.

Which is exactly why no one would spend the crazy amounts of money it takes to execute a 51% attack. It would be like self-immolation. Billions of dollars in equipment and energy and you'd have 51% of a worthless network. In practice, you would have to control much more than 51% of the network, because you'd have to catch up to the 49% that are still hashing away.

Just like why no one would spend $100s of billions on wars that just perpetuate violence.. surely there's no incentive or gain they'd have by causing such disruption.

Unless they are a government, shorted bitcoins, or own a massive stake in a competitor etc.

PS: Remember the value of Bitcoin is limited as a function of the cost of that 51% attack. If the price increases by 10x the transaction fees need to also increase by 10x or Bitcoin becomes less secure.

This idea comes back many times... but I don't see a reason why government would want to short bitcoins or disturb the market to get their hands in it.

1. They have BEP printing press; instead of stealing or brute forcing into bitcoin and then selling the loot for $, the might as well ask Bernanke to print few thousands more sheets of 100 dollar bills (of course not legally but i'm sure there is some overprint like in any business).

2. screwing people out of bitcoins would mean screwing US citizens as well. Why would any part of government do that just to upset Congress and get themselves in front of bunch of congresspeople for grilling? Doesn't make sense.

Government is unrelated to shorting, Governments may chose to destroy Bitcoin for the same reason the may ban it. Basically, currency controls etc.

Someone shorting Bitcoin on the other hand has an economic incentive to destroy it. The cost benefit of doing so scales with the size of their short vs the current hashing power. But, a malware writer may have access to a 51% attack briefly without owning any equipment.

> Which is exactly why no one would spend the crazy amounts of money it takes to execute a 51% attack.

There was a recent paper shared here on an article about new type of currency or exchange system. Although I don't understand details, it explained that since 51% of coins are already mined by just a few pools, if these pools orchestrate together, then can break the chain. But unsure how true this is (cannot find the post anymore, sorry)

Technically, a 51% attack would allow one to confirm non-standard transactions and pretty much do anything. Granted, this would immediately be apparent to any of the other 49% of nodes and cause a fork, but still...

Whats the point of that ? A miner can confirm non-standard transactions right now when he mines a block but no one would accept it. Point of 51% attack is to surreptitiously double spend and nothing else.

Have you seen how much processing power is in the Bitcoin network? Do you know how expensive an attack like this would be?

By the way, you can only double spend with the 51% attack.

How expensive, $100M?

You're off by a factor of 20. The current hash rate is 17.5 million terahashes per second. Ant Antminer S9 goes for $2800 and produces 13.5 terahashes per second. In order to get to 51%, you'd need a $2 billion dollar investment.

How much is spent on war directly (that we know about) every year globally?

The US military budget is $600B. Not sure what your point is though. A 51% attack doesn't give a government control, it just allows it to double spend. And that's until a hot patch to increase the required number of confirmations resolves the issue.

Besides there's a huge supply problem here. ASICs need to be manufactured. You can't just buy several hundred thousand of them. The whole point of Bitcoin is that it's prohibitively expensive to just perform a 51% attack and impossible to entirely regulate.

A simple fork invalidating coins originating from the double spend would be enough. You've just spent $2B to achieve something that the network can invalidate with a dozen lines of code. It would set a bad precedent, but it did cost you a lot of money.

One hell of a straw man. Bitcoin isn't going to do that. It isn't Ethereum.

So, you can undo any 51% attack with just a quick hardfork with a few lines of code?

If I'm not mistaken, too, the $2Bn investment is just the beginning. The attacker would also have to cover the costs of at least 51% of the energy used in the network - much less find somewhere they can use that much energy without someone noticing.

The idea that a 51% attack on Bitcoin is plausible just isn't sound, imho.

Interesting, how much would it be say on Bitcoin Cash?

Teeth?

Rather inconvenient for bigger stacks.

Might be popular with the ladies, though.

You can hide the keys to it in your head. You can store it in a passworded safe.

The key difference is that those physical assets do not die with you.

They exist in that safe until someone with a plasma cutter or a Hilti coring rig takes it from you.

Rubber hose...

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.

> 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?

Mt. Gox CEO admitted to operating a Willy Bot this summer.

https://cointelegraph.com/news/mt-gox-trial-update-karpeles-...

> 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.

The fact that even millions of people who earn a BTC transaction fee per week have access to dumbphones is rather irrelevant to the observation that cultures who are resistant to banking are likely to continue to value gold jewellery over exotic computer-based financial instruments that don't look good around their neck. And that's even assuming a hypothetical world where many developing world citizens actually have practical access to BTC and local markets for exchanging BTC for goods.

> 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.

I don't think the comment you're replying to is trying to argue that gold is a particularly good investment -- just that Bitcoin is worse.

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

Do you think there's a new technology on the way that will increase the supply of gold the way fracking increased the supply of natural gas and oil?

Fun to think about asteroid mining...

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/

Looking less like a security and more like a scam.

How is it a scam?

Other than a currency, what gives it value? Artworks for example are unique, but that does not inherently make them valuable.

There are many outlier things that are only of a certain value because some group of people decide that they are: art, baseball cards, collectible postage stamps, brand label clothing goods ($3,000 purses or shoes), venture capital valuations, and so on.

Why is a new Ferrari so expensive? Ferrari could manufacture a lot more cars if they wanted to. They could also charge less, their margins are tremendous. It's an obvious function of supply and demand. The price is so high because people say it's worth paying that. It's that simple. If all of their customers suddenly decided it wasn't worth paying that, Ferrari would either lower their prices or go out of business.

Even bond ratings are often open to significant subjectivism that can swing their value considerably.

If enough people decide that a Bitcoin is worth $100,000, then that is what they will be worth. That is in fact how most things in the world are valued. Bitcoin's scarcity and the fact that in the near future it will become almost impossible to mine new coins, adds to the premise.

The question is: does Bitcoin's low utility value and ease of trading in proportion to its market cap, particularly open it up to dramatic whims of the mob? Yes, which you see in its volatility. That won't change until or unless it finds greater baselining usefulness.

Ferrari cars charge a premium, much like Apple does but they are a hell of a lot faster than a Honda Civic. Baseball cards started as a thing outside of rarity, they had information and a picture which was more valuable pre Internet.

Now you can argue that Antiques should not gain value from age, but old junk is not valueable, old pristine stuff is. So your argument is people overvalue something they have a rational reason to value, which is different than placing clause on something without inherent value.

I am not saying Bitcoins shpuld be worth zero today, I am saying they will be worth zero in 100 years after the fad ends unless they fix the inherent problems with the protocol so it can be used as a medium of exchange.

> Other than a currency

You answered the question there is nothing more than that.

Which bring us back to the question, just because it's a currency, its a scam?

No, the 22+$ transaction fees are the problem. People are saying that it's no longer a currency because of them, but that just makes it a security. IMO it's currency or scam not currency or security, because there is no inherent value beyond currency.

So its a scam because there are transaction fees?

It's become a scam because of the incentive structure. The miners control the currency and are trying to maximize the money they extract not grow the usage of Bitcoin.

Why would the miners mine Bitcoin in the first place if there was no incentive?

Once the mining stops, they make money by transaction fees.

Do you expect people to work for free?

I don't expect people in multi level marketing aka pyramid scheme to work for free either. But, their are plenty of incentive structures with good and bad rewards. One option for a hypothetical digital currency is to stagger payments so a miner gets say 1/2 of their reward in 10 years.

I am only saying the current structure ends up as a scam, not that the eventual successful currency can't solve these problems.

> One option for a hypothetical digital currency is to stagger payments so a miner gets say 1/2 of their reward in 10 years.

Who pays for the electricity costs till then?

I dont think you understand the meaning of the word scam, the miners are not cheating anyone with some false promise nor are they getting commissions if they bring other people under their fold like a pyramid scheme

The incentives are needed for miners to start mining in the first place, if you dont like it you are free to start your own currency.

That still boggles my mind. I thought the whole idea was to remove middle man that not only authorize (or not transaction) but also charge hefty fees? I was told for long time it is free to buy or sell with bitcoin. What am I missing?

The Bitcoin network doesn't do away with the concept of a middle man completely, it merely replaces one mutually trusted middle man (like the Visa card network) with several untrusted middle men (anyone that can afford a mining rig).

If one untrusted middle man produces a proof of work for a transaction request, the other untrusted middle men verify the PoW to be valid, if there is consensus §, they collectively agree to append the transaction to the next block on the blockchain. The untrusted middle man is then rewarded for their efforts by being paid the mining fee that was accruable for the transaction.

[§] If 2 or more untrusted middle men solve the PoW for a transaction request independently, i.e. they are competing to be rewarded with the same mining fee, then the untrusted middle man with the longest confirmations from other nodes on the network is the one whose block will be appended to the blockchain, the others will be discarded.

Would appreciate any corrections to my gross simplification.

> 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?

> 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

Was just about to link to this. I'd also mention that gold confiscation was heavily used by the Nazis.

Gold is great as a store of value when things are good, and incredibly shitty when your government turns on you.

Unlike bitcoin the government has no way to track gold. Burry it 10 feet under your garden and it can stay there for your great grandchildren.

That's a poor example, as it has in fact been the case that gold has been legal throughout the extreme majority of US history, including critically for the entire post gold standard era. Gold was partially illegal for only ~16% of US history, which fits very well with the term "unlikely."

> far more unlikely

> Empirically

Bitcoin has been legal for 100% of US history.

> 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.

"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

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)

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.

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.

The thing that is rare is the total amount of mining nodes behind bitcoin. That is what you are buying into, is mindshare. Of course the mining nodes are mostly profit driven. If another coin had a higher profit margin, the miners would switch over to that coin.

That rarity too is also software controlled based on the difficulty curve. Bitcoin doesn't have to boil the oceans, it could make mining easy enough again that transactions could be mined in a coffee break on an average person's smart phone's GPU.

As I said, the scarcity of Bitcoin is much more a political structure than an inherent nature of Bitcoin. The miners control Bitcoin so much as anyone does and it is their political intent as much as anything else that creates any scarcity in Bitcoin at all.

Forking bitcoin doesn't create more bitcoins. It creates something else that is not bitcoins any longer that will not be accepted anywhere.

The philosophical and political reality of what makes a "real" Bitcoin that people can accept is outside of the question of scarcity. The fact that a Bitcoin can be endlessly "duplicated", at the whims of software developers and/or miners, regardless of how likely or improbable they may be able to be "spent" should definitely give people some pause in their Tulip mania that Bitcoins are not by their nature inherently a scarce commodity. They are scarce only so far as the political reality in which they are transacted continues to keep them scarce.

But they are in fact different. Maybe not as different as gold vs silver but similar in that gold and silver also have completely artificial values driven by hype.

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.

Gold is insanely useful as a conductive metal.

You can't find another precious metal that will have the rarity of gold and it's "non deterioration" property, both that made gold what it is (it's also a really useful commodity).

But i agree that's not enough to defend against competitors like Bitcoin, but the same cannot be said of Bitcoin. Other than sociological factors (that are arguably much stronger on gold), there's nothing that would help it defend against others e-coins.

>You can't find another precious metal that will have the rarity of gold and it's "non deterioration" property, both that made gold what it is (it's also a really useful commodity).

platinum. i will agree that gold is easier to tell apart (it's yellow) than platinum. although realistically that's a moot point because you're going to want to do chemical tests when dealing in non-trivial amounts of precious metals.

You got me! :)

Now find a few hundreds more and we will be closer (not really) to Bitcoin's rarity of kind.

Which is even more rare for when you need to deal with issues like environmental temperatures going over 800C.

The same argument applies to platinum: it has essential physical applications that are hard to replicate, so it will retain a high baseline value just on the merits of "we need it for essential hardware."

If a cryptocurrency manages to pull off the software equivalent of "essential engineering applications," then the conversation about cryptocurrencies will change dramatically. As it stands, blockchains will probably prove to be situationally useful, but blockchain =/= cryptocurrency.

There aren't that many metals that behave similarly to Gold.

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

"There aren't that many metals that behave similarly to Gold" is not equivalent to "there are no metals that behave similarly to Gold".

You cannot invent a new noble metal. You can't fork an existing noble metal.

Gold is rare in several senses: In addition to being a rare element, it is the most ductile metal, the most malleable metal, and one of the best conductors of heat and electricity. It is very stable and doesn't oxidize. It is easy to alloy and easy to refine back to pure state. It is one of three metals that naturally occurs in its elemental state. It is the easiest metal to work for jewelry and other purposes. It is also very dense.

All of these properties are what made gold valuable sociologically. Silver is nearly as easy to work and refine, but it is far more abundant and it also tarnishes easily, so it is two orders of magnitude less valuable.

Platinum is also far more abundant, but much harder to refine, which is the sole reason for its high price. It is also much harder to work, requiring much higher temperatures to melt. It is a far harder and tougher metal than gold, which is why it is often used for the crowns in which precious stones are set, and as a plating material for gold.

Bitcoin is just vapor, good for nothing in a practical sense. It doesn't even have attractive designs like paper money. Fiat money is susceptible to going to zero value; gold will never go to zero, even in some total societal collapse scenario.

If a government pulls the plug on the internet won't the value of Bitcoin go to zero?

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.

And what's that got to do with bitcoin? If you're going to assert that gold can't go to $0 and imply that bitcoin can, you need to also give a good reason why bitcoin can go to $0.

At one point in time, Bitcoin was worthless. Therefore it is provable that it can be worthless.

At no point in history has gold been worthless.

As far as you and I know, gold has had worth as long as society has had the capability to get it.

False.

At one point Mussolini was alive. Therefore it is provable that Mussolini could live again.

Sorry, try again.

At one point, these grains of sand were in this glass. Then I poured them into the ocean. But they were in the glass so they could be in there again.

Except no, no they couldn’t. The 2nd law of thermodynamics makes many things non-repeatable.

You are making the opposite claim to mine, they are not comparable. Try these on for size:

  Before his birth, Mussolini was not alive. Therefore, it is possible that he could not be alive again.

  At one point, there were no grains of sand in this glass. Therefore it is possible that there will be no grains of sand in this glass again.

Thermodynamics is really not the tool you should bring to bear in this conversation. Entropy dictates that eventually everything will be worthless, and that includes Bitcoin. The price of Bitcoin is not an irreversible product of entropy, despite what some investors might wish.

Are you really standing by your logic, or are you just arguing with me for sport? If it’s the latter we can continue but I’m not going to repeat myself if you’re not going to listen.

Yes. My argument is only flawed for things that are tied to entropy, which the price of Bitcoin is not in any meaningful way.

Good reason would be broken or lost blockchain, then all these letters and digits are only worth a thumbdrive you stored them on.

I know it is hard to imagine because generally bitcoin is new technology, but also because of that - its not that it is impossible.

Meanwhile gold is gold; a physical object with very high temperature of vaporization.

Sure but what's the importance of that fact? If I buy an ecoin at $1500 and it goes to zero and if I buy gold at $1510 and it goes to $10 it's the same loss. I guess what's the real importance that gold has a floor which is marginally above zero and bitcoin doesn't if both of those floors are far below the current price level.

It's valuable because you can, if you do some research, make some pretty educated guesses about what the floor is in the gold market. That tells you whether you are risking 10%, 25%, 75%, or 90% of your money while speculating.

And, uhh, if you don't know why having a good idea of your potential downside is useful when investing, maybe consider finding a trustworthy financial adviser?

"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.

I respectfully disagree with your conclusion.

There isn't one company for internet searches and there isn't one provider for online video content. Why should there be just a handful of currencies?

The natural state of a healthy ecosystem includes competition and variety.

There is only a handful of companies for internet search, no?

75% of all searches are Google, 10% Baidu, and 8% Bing. Youtube represents the vast majority of online video content. Netflix the vast majority of on demand television.

I only mean to say a handful will capture the vast majority of market share/cap.

For now, those companies were different 10 years ago, Netflix has it's own issues if my viewing options are the same as everyone else's these days.

Google is losing market share of searches last I looked. Baidu searches have doubled in percentage marketshare.

Youtube and netflix are both on demand television as are amazon instant, modern cable tv subscriptions, and a variety of specific channels (hbo, showtime, etc).

There will definitely be use case dominance, but they may not be the same whales as we currently see.

Both are buoyed by that past.

That bitcoin is a (sort-of) working cryptocurrency and that bitcoin has a history are basically the primary arguments for bitcoin's continued value.

But it seems implausible to claim that this will allow bitcoin to become a store of value investment. I think it's clear those buying bitcoins today either are doing so with an eye to increase their investments through bitcoin's rise or are trying to get money out of some nation which prevents capital exports.

As a thought experiment, if a person knew for certain that bitcoin would have the same price in six months, would that person ever prefer bitcoins to a us savings account with the same amount of money? It seems to me no one would.

Moreover, if bitcoins are essentially always going to be speculative, this leaves that possibility of them always being possibly displaced by an equivalent.

If you were in Venezuela you would certainly prefer to own Bitcoin if it had the same buying power in 6 months than keep local currency. Could be said of rubles and other currencies as well.

Even in the US, holding Bitcoin at the same buying power would be a hedge against inflation.

Of course the Bitcoin price in USD would still fluctuate, if it were pegged to USD there wouldn't be much use other than easier to move around.

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.

I would have put that the other way around ("like gold, bitcoin ...") but even so the scale of the relevant histories are not even in the same ballpark. Bitcoin has had held value for seven years. Gold for more than seven thousand years.

Gold has had some ridiculous swings along the way too, though I doubt anything like BTC.

The scale is incomparable, but every year the history grows and the likelihood of permanent acceptance increases.

> Gold has had some ridiculous swings along the way too...

The Spanish pulled a large amount of gold out of their New World colonies. It reduced the price of gold in Europe... by 20%. That seems to me to be not much of a swing, given the magnitude of the event.

The biggest swing that I know of was when the US allowed the price of gold to move. The US held the price of gold at $35/oz from (about) 1932 to (about) 1975. When they allowed gold to float, it went to $200/oz, dropped to $100/oz, then went to $800/oz. But I'd ascribe that set of "ridiculous swings" to government messing with the market, not to gold itself.

Off topic, but too fun not to mention: An ounce of gold weighs more than an ounce of feathers. This is because an ounce of gold is a troy ounce (1/12 of a pound), and an ounce of feathers is an avoirdupois ounce (1/16 of a pound).

As a native from a country that uses the metric system, this sentence is both amusing and saddening.

Another interesting swing was Mansa Musa:

> Musa's generous actions inadvertently devastated the economies of the regions through which he passed. In the cities of Cairo, Medina, and Mecca, the sudden influx of gold devalued the metal for the next decade. Prices on goods and wares greatly inflated. To rectify the gold market, on his way back from Mecca, Musa borrowed all the gold he could carry from money-lenders in Cairo, at high interest. This is the only time recorded in history that one man directly controlled the price of gold in the Mediterranean.

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

Or, as a much more probable alternative, the whole blockchain fad dies out as it should. The blockchain is a solution in search of a problem. It is cumbersome, slow, and an absolutely ginormous energy pig. The only thing it is good for is speculation and giving a particular type of libertarian an-cap a hardon. It is useless for mainstream anything.

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.

That is true, and this should really factor in the decline of gold in the future, but this does not help Bitcoin against it's e-coins rivals.

And isn't Bitcoin hackable in a near-ish future with quantum computing?

> quantum computing?

I have been hearing that for last 15 years.

Yes, in it’s current state it most certainly is. Though as I recall there are already proposed updates to address this threat.

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

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.

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

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

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...

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.

1) Unregulated exchanges are likely operating as fractional reserve pools. Also notice how historic charts show steep, often 90° falls in spot price? Low liquidity and high latency allows exchanges to take in new deposits and delay withdraws while they shuffle funds from new deposits to pay withdraws.

EtherDelta is only compatible with Tokens generated within the Ethereum network, i.e. digital "assets" produced not by mining but by writing a separate contract that immediately creates or "pre-mines" millions of Tokens.

Pre-mined Tokens are a gimmick that amounts to a gift card for a Business, but the marketing tries to claim this is a magic software network where a limited amount of giftcards are released into the wild and you need to horde the giftcards to use the services offered by the business. Please feel free to show proof where this is not the case.

2. BTC is not a "reserve currency", it's merely referenced in the form of a ratio for other crypto-assets. BTC could fall to $0.001 USD and you would simply see the ratio as BTC 6 : 1 OTHER-CRYPTO

"reserve currency" may be the wrong word, but the fact remains that for the vast majority of exchanges, you add value by depositing in BTC and you trade in terms of BTC (not USD). So any crypto you want to sell usually has to be converted to BTC first before your native currency.

1) Many existing networks, including the Qtum network were sold on ERC20 contracts (https://qtum.org) originally as an ICO method before moving to their own network where they trade the tokens for coins on the network. In that case, Qtum continues to issue new coins on a proof-of-stake basis. There's other examples out there, this is just one I'm familiar with.

If you can point to 90° drops on GDAX, I'd be interested to see them.

>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

Say the guys with a significant stake in BTC.

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?

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.

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?

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.

Gold is definitely useful for building the spacecraft going to Mars though. They cover the entire spacecraft in the stuff.

It might be too useful for Mars to use as reserve!

https://www.itmtrading.com/blog/aerospace-gold-the-next-fron... https://www.geek.com/news/geek-answers-why-does-nasa-use-so-...

:) thanks!

> 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.

It definitely takes longer than an hour to send gold to someone on the other side of the world.

Should the slowed clearing rate actually reduce the value? Increased perceived value driving the price up / speculation actually causing a drop in value due to the system underlying Bitcoin?)

>>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.

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

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.

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

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.

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.

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