Comment by kyledrake | Hacker News Reader

Comment by kyledrake | Hacker News Reader

So, in a sentence: Bitcoin is being used by people as a highly liquid, defensive store of value from within Cyprus, where capital controls are preventing people from moving their money out through traditional means.

This is what gold used to be used for. But gold is not liquid, and Bitcoin is. It appears that hackers have made something better than gold, the longest standing store of value in human history. What an incredible achievement! For the first time in history, I can somewhat safely make the argument that we now live in a post-gold economy. Gold is still there, but we now have something even better for storing value.

This is getting deep into the economics of mediums of exchange, which are important for understanding what is going on here.

I did a talk on Bitcoin a while ago where I went into describing Bitcoin from a medium of exchange perspective rather than a technology one. It may help you to understand what is going on here, and why I think that this will continue into the future: http://www.slideshare.net/KyleDrake/bitcoin-the-cyberpunk-cr...

We have been in a post gold economy since the end of the Breton-Wood agreement. Hording gold is far from a wise investment. It certainly isn't a safe way to store value. First, history aside where it's value comes from is difficult to understand. There is literally tones of it lying around without any real use (far more than what is produced). Basically it's a safe haven because people decide to use it this way but the market could crash any day and has multiple times before and thus despite central banks holding so much of it they dwarf anything someone could decide to inject.

From my point of view, bitcoin is an even more stupid investment. As little as 5000BT makes the rate plummets. Nothing could stop a young Soros from pulling out a mini-black Wednesday. Add the fact that the market is completely unregulated and you have a pretty risky situation. I see Bit coin has a step backward. It's like current currency without any of the warranty provided by governments (security of trade is one of the main reason we instituted government after all). To the people who will argue that Cyprus is currently stealing its citizen, please think about what would have happen to them if there was no way to get a bailout and the banks actually collapsed.

I like your slides and I'll probably check out the talk later on.

I think that depending on what the future looks like (no zombie apocalypse, massive wars, etc.), there will be some kind of cryptocurrency that basically replaces gold. It's very exciting.

At the current time, though, given that bitcoin hasn't withstood the test of time, it's a bit hard to claim that gold is outdated. It's not hard to convince someone that gold or silver have value because of all the historical precedents. That counts for something when considering in which money to invest.

Reply on news.ycombinator.com