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Comment by solotronics | Hacker News Reader

Gold having value over a long period of time is a counter argument. Nobody is transacting in gold yet it is valuable.

That's not right.

One: gold is the og currency, it doesn't have to prove its value because it already did. Two: it is also being actively used for transactions, look no further than jewelry. If you have gold, you will find someone who is willing to exchange it for something else with material value in any city on the planet. This is not the case for crypto.

> This is not the case for crypto

No? You don't think the following statement is as true as the one you made?

"If you have Bitcoin, you will find someone who is willing to exchange it for something else with material value in any city on the planet"

My experience would tell me otherwise, but maybe I'm a outlier.

Scenario: a country-wide blackout occurs. You're haggling with local farmers for food. Which has value to them, bits on a hard drive or solid gold?

Counter scenario: you're fleeing a country ahead of war, and you know that metal detectors will be involved and your gold will be taken. But they will not be checking every piece of paper you have, everyone is in a hurry. The bank run already happened and reinsurance depends on the capital staying functional.

Bitcoin wins.

See, we can do this all day. There are points of comparison and points of departure.

I agree with your point, but consider the following:

1: Cryptocurrencies can still operate over distributed mesh networks or sneaker-nets in a semi-doomsday scenario.

2: With gold, it is difficult to verify its authenticity vs some impostor alloy without the necessary tech/knowledge.

Edit: the bottom line is that in a doomsday scenario, people have little use for bitcoins or shiny yellow rocks.

You can verify gold with a vessel of water, an already verified piece of gold and a set of scales. It's taught in story form to primary age children with the famous quote "Eureka I found it!"

For daily transactions at the current gold price, it would be extremely hard to do this sort of measurement that way with any precision without very specialized equipment. A gram of gold (around $60) is a reasonable daily transaction size and has a volume of 0.05ml. In order to distinguish metals of similar densities, you'd have to be able to measure just a fraction of that volume accurately. Maybe there is some clever system to scale this down, but wasn't obvious to me.

Well one historic way of doing this, was instead of trading directly in minute quantities of gold, people would store larger amounts of gold in a bank and trade contracts that represent certain fractions of what is stored. This was called "currency".

Interesting point. I don't have any comment, but it looks like this guy disagrees with you: https://news.ycombinator.com/item?id=31933490

We have never seen a distributed mesh network that worked correctly in the real world at scale. The OLPC project tried doing that but ran into severe technical problems. So it's not necessarily impossible, but I simply don't believe we will have an operating mesh network in that scenario.

https://wiki.laptop.org/go/Mesh_Network_Details

If the farmer is unwilling, you'll find someone else. That was one of the conditions right? That you'll be able to find someone "who is willing to exchange it for something else with material value in any city on the planet". Not the likelihood of a farmer during a country-wide blackout. This is just moving the goalposts.

I think bitcoin is about as difficult to transact as gold, although in ideal circumstances cryptocurrency should be easier to transact than gold.

However, gold has a fundamentally stronger argument for its value. Gold is useful: it has unique physical and chemical properties.

This strikes me as obviously untrue.

Gold is drastically more difficult to transact in than bitcoin or any cryptocurrency. Not only is it extremely difficult to create exact change to pay in gold (shaving of milligrams per dollar?) but there is zero infrastructure or education on how to verify that the gold is real. Even modern nation state banks have been fooled by tungsten cored bars of gold.

There are plenty of well established crypto apps that make receipt, verification, and conversion into your preferred cryptocurrencies or fiat currencies instant and effortless.

Interesting point. I don't have anything interesting to say, but maybe you should argue with this other guy: https://news.ycombinator.com/item?id=31933417

For a long time (thousand of years), people in Asia transacted in gold for high value items.

My parents bought my childhood home with physical gold bars (around ~3.5kg gold, in bar of 37.5g each)

Gold has thousands of years of history as a currency (or backing a currency).

It's also intrinsically valuable for jewelry and industrial purposes. It's irreplaceable in electronics, for example.

Cryptocurrency that can't be sold to someone else has absolutely no value. In fact, it has negative value because of transaction fees, something that plain cash doesn't have. I can send someone $100k with a $0 transaction fee.

Gold also has enough value as a material to both lift the value of it and complicate the making of things with it.

First silver, then gold, then platinum, now palladium and rhodium have ridiculous values associated with them.

That is incorrect. The Bank of International Settlement definitely uses gold for payment. In rare events, a country will do physical settlement via shipping, but it is usually done via paper claims.

https://www.bis.org/banking/balsheet/statofacc200831.pdf

Both the argument and your counter argument are discussed by Lyn Alden here: https://www.lynalden.com/cryptocurrencies/.

She proposes three ways, including valuing cryptocurrency as we do precious metals.

Long hold for Aluminum didn’t exactly work out.

https://www.americaslibrary.gov/jb/gilded/jb_gilded_monument...

I actually agree with you. :)

If anything this is an argument for Bitcoin also having “value” without being used by the average Joe for day to day transactions like buying a coffee.

Gold has utility. You can't make circuits out of Bitcoins.

But most Gold is not used for circuits. Not only that, gold can be mined on demand and has an ever increasing supply (gold does not really disappear).

Sure, but a not-insignificant amount of gold is still used for industrial applications. Even if gold wasn't used as money or in jewlery, I imagine it would still be quite expensive: at least half of it's current price. The same could be said of other precious metals.

But I don't think you can say the same about bitcoin. Bitcoin's fundamental utility is low, even compared to other cryptocurrencies.

Gold has useful unique properties over other metals. Bitcoin does not even have useful unique properties over other cryptocurrencies.

It would definitely be worth half its price as a reserve currency for purely industrial reasons, if not a bit more. Like if it became impossible to balance payments with it, well like if it became irradiated long-term like in Goldfinger, but there was still some clean gold left and it was just for industry. People would totally invent new uses for it at half the price. They just don't even consider it because it's expensive.

This reminds me, I was looking at the periodic table the other day and I noticed that gold actually has a pretty high electronegativity: almost as high as carbon!

https://mappingignorance.org/2017/02/09/electronegative-gold...

Makes me wonder if there are a ton of unexplored properties and usecases for rare metals that we just haven't discovered yet.

You think gold has the value it has because a miniscule amount of it is used in circuits?

I think it has a more stable value if the demand for gold is more diversified across industries.

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