So is gold. Most gold ends up in vaults (see [0]), where absolutely nothing is done with it. If we would price it for practical stuff (for it's thermal and electric properties), it would be worth much, much less.
Also, gold is not scarce by any means, just expensive to mine.
The difference is that cryptocurrency is ephemeral, and gold is not. One can create a new crypto-currency at any time. One cannot conjure up gold at any time. Crypto-currency can be wiped out with a hard drive crash or a lost password because it is a social contract. Gold cannot because it is physical. That still makes a difference.
1. You can't create new bitcoin at any time - not after all blocks are mined
2. Same as bitcoin, Gold needs to be mined. This is basically "conjuring" gold.
3. Wiped cryptocurrency can be returned.
4. Gold can be destroyed as well.
> You can't create new bitcoin at any time - not after all blocks are mined
Bitcoin Cash did exactly that. New value was conjured up out of nowhere - Bitcoin didn't drop, and every owner of a Bitcoin suddenly had $2-3k worth of Bitcoin Cash.
> Wiped cryptocurrency can be returned.
... What? Are you sitting on a SHA-256 exploit we don't know about?
Bitcoin Cash is not Bitcoin. It did not create new Bitcoin. It created another currency called Bitcoin Cash. Not sure what is so hard to understand from this.
Let me break it up to you again:
1. Bitcoin (In it's current form) has a limited supply. If nothing changes, there will be a time when new Bitcoin cannot be mined anymore.
2. Forking Bitcoin does not mean new Bitcoin is created. You are confusing value and supply. Forking creates an alternative currency (which can be called anything you want) that uses the former ledger of Bitcoin to distribute its initial wealth.
3. It is not a guarantee that addresses with lost secrets will be lost forever. Like you said, SHA256 exploits, or maybe quantum computing would be able to recover them.
When the fork occurred, Bitcoin's value didn't drop, and Bitcoin Cash's market cap was instantly in the billions. Everyone suddenly had more funny money, but we're somehow supposed to believe "Bitcoin isn't inflationary!" still holds.
It's going to get really exciting at tax time, when people declare bankruptcy, go into a nursing home and need to prove they don't have assets for Medicaid, etc.
> Like you said, SHA256 exploits, or maybe quantum computing would be able to recover them.
That's an insane defense of the point. Sure, if that stuff happens, you'll be able to retrieve lost coins. And non-lost coins. So will everyone else. Bitcoin's value would be instantly zero.
New value was not conjured up. A new crypto was created, but the value of it was proportional to its expected use and some other features. There are plenty of bitcoin forks, but you dont hear about the other ones as much because they flopped entirely.
Also, gold is not scarce by any means, just expensive to mine.
[0] https://www.youtube.com/watch?v=CTtf5s2HFkA