Hacker News Reader

Comment by seibelj | Hacker News Reader

Bitcoin is a very good store of wealth when compared to, say, gold. If I was in a country like Turkey or China I would be moving my wealth into it any way I could. The government inflates their currencies and locks or seizes bank accounts. When you want to escape the dictator, you can memorize 24 words and take your wealth with you over the border. Very hard to keep your gold safe from guards.

Ignoring all of the other uses of Bitcoin, the “digital gold” argument is the strongest IMO.

View on HN

The argument you're making is a strong argument for cryptocurrency, but not for Bitcoin specifically. Ethereum, Litecoin, Peercoin, Dogecoin, and a wide variety of other cryptocurrencies have the same properties you're describing.

Bitcoin isn't the most advanced cryptocurrency out there. It doesn't have even close to the best technology. Bitcoin's continued dominance is very strong evidence that it's completely popularity, not technology, that drives prices. There are numerous other examples: Peercoin, for example, pioneered a new proof algorithm, but peaked at $10 and is now at $0.38; superior technology doesn't guarantee success. This means that it's entirely possible for another cryptocurrency to surpass Bitcoin, but the technology isn't the driving factor.

With gold, there are industrial uses which drive the price up or down, and you can't just substitute platinum or silver for those industrial uses. You can substitute platinum or silver for gold as an investment, but the laws of physics limit the number of precious metals that can stably exist, so gold is competing with a limited number of precious metals as an investment. Not so for Bitcoin: I can spin up a competing blockchain this afternoon if I want, and there's no limit to the number of competing cryptocurrencies.

What I'm saying is that I think that speaking of Bitcoin as "digital gold" breaks down pretty fast once you analyze it at all.

The key property of using gold as a store of value besides it being easily divisible, hard to counterfeit, etc is that there's plenty of other people in the world willing to accept it. Popularity isn't an arbitrary property, it's a feature

That's a circular argument. People accept it because it's valuable, it's valuable because people accept it?

It’s weirdly circular, but it’s also correct. This is how many things with network effects work. Something is useful because others use it, which makes it more useful, which makes more people use it...

In this case, you could also look up “coordinated Nash Equilibrium”, which can partially explain some of the behavior in bitcoin.

> It’s weirdly circular, but it’s also correct. This is how many things with network effects work. Something is useful because others use it, which makes it more useful, which makes more people use it...

This can work for a little while, but without other factors to maintain the cycle it's just a fad.

> In this case, you could also look up “coordinated Nash Equilibrium”, which can partially explain some of the behavior in bitcoin.

You could also explain how coordinated Nash equilibrium relates to your point, instead of name-dropping complex topics (which you may not even understand). If you actually have a valid point here, you can explain it rather than expecting others to do your research for you.

Bitcoin's value is incredibly volatile. That's not a good attribute for a store of wealth.

Even loosing 90% is better than loosing everything to war, dictatorship, police.

But having gold or offshore dollar bank accounts is better than losing 90%...

Ahhh yes, because rose are so easy to come by and to setup

I can assure you a lot more people in countries with broken payment systems have managed to acquire gold and/or US bank accounts than to transfer their local currency into Bitcoins...

You can't compare the penetration of Bitcoin (10 years) to Gold (1,000+ years) yet but adoption trends point in bitcoins favor.

Do adoption trends really point in bitcoin's favor? Central banks have been buying 10s of billions of dollars worth of gold every year.

The worst case for BTC is not -90%. It has very little fundamental utility underpinning its value, and nowhere near the faith in its value that gold has built up over millennia.

How is it better than gold? The primary goal with a store of wealth is price stability, and gold is way more stable than BTC. BTC is certainly better than many fiats but it’s still highly unstable. Most people who are buying it are buying it as an investment, not a store of wealth.

I think that those that believe in Bitcoin as a store of wealth, believe that its volatility is temporary. The assumption (or hope) is that its taking a volatile path upwards and will eventually, like gold, reach relative stability at a much higher price than what it is currently.

Couldn't it be argued that Bitcoin's volatility is a temporary

I think the commenter is suggesting that sometimes the mobility of your store of wealth is more important than volatility. Hard to argue that gold is easy to move or store. People from the US and Western Europe are prone to forget how volatile the political and economic situation is for most of Earth's population.

People who use gold as a money store don’t buy physical gold, though. They buy insured, gold backed securities which are held in a stable location, usually the United Kingdom. The account that holds those securities is protected by a password, just like Bitcoin

Ignoring the volatility of Bitcoins, if you can convert your wealth into Bitcoins why not just move it outside of the country using the same mechanism?

Reply on news.ycombinator.com