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Comment by kurthr | Hacker News Reader

Nobody wants to transact in an inherently deflationary currency with high fees, unless they are speculators or money laundering. It's a store of value at best, which is more like gold than a currency.

The gold standard was dropped for good reasons. It couldn't expand at the GDP growth rates and storage/transport fees were significant. Gold backed fiat solved the latter, but not the former.

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If the alternative is fiat currencies printing themselves out of existence, then yes, people will happily transact in hard money with high fees. See Turkey, where you basically take on debt to buy anything (including commodity items like iPhones) that you can sell later, simply because the currency is spiraling out of control and you need your networth divested out of it.

I'm always very surprised to see HN ignore the obvious counterweight that cryptocurrencies serve to fiat currencies.

FWIW, the costs for transporting gold bullion are marginal. A fully-laden Boeing 747-400F cargo plane can carry 396,900 kg, or 12,760,000 troy ounces. At the current price of $1,936/ozt, that's over $24 billion in value transported for perhaps 0.1% overhead. These are perfectly reasonable sums to be expected in the realm of nation-state debt settlement.

I agree those costs may not seem that high, and I think the transport costs in that case would be dominated by security. Daily BIS is ~$6T, and I'm not sure how much net would need to be transported, but even $1B/day in costs starts to seem significant.

The problem is that even smaller quantities of $100M or $100k would have larger relative overheads. Once you're down to $1000 or toz size quantities where security is less of an issue, the testing and weighing costs become significant.

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