To be fair, people could also stop thinking gold is worth much. Maybe a modern-day alchemist finally figures out the formula. I don't know. Probably far less likely than the Bitcoin scenarios though.
Consider aluminium. At one point it was more expensive than gold (due to mining+refining challenges). When those were overcome the cost plummeted to it's current "cheap" level.
Personally, I think a better comparison is to the diamond trade. Through a series of machinations (price fixing, artificial supply constraint, marketing) diamonds are deeply overvalued if you consider just the fundamentals of them - aka they're in a bubble. However, due to those same expertly administered steps they've maintained a high retail value for decades.
Yes, I had the same thought about aluminum. Another example is, in older parts of the Iliad, iron is considered a precious metal, while in other parts it is not.
Films also have criminal masterminds ask undercover police officers "Are you a cop?", followed by a tense musical score, and a close-up shot of the cop's face...
And a "Ha, ha, just kidding, of course you're not a cop."
Crime dramas and action films tend to have an incredibly poor understanding of money, crime, policing, and Newton's laws of physics.
Significant diamonds still hold their value when resold.
It's kind of like art. Spend $5k on some locals work and you might get $50 at a garage sale later on if you're lucky. Spend $5mil on a big name and you'll likely make it back, maybe profit, when you move it. The high and low end are basically different products that function differently in the market.
It's only shmucks overpaying for mediocre diamonds that lose out.
> To be fair, people could also stop thinking gold is worth much.
They've already noted that:
> people's perception of its value will change
But as they say, a gold bar will remain a gold bar, until and unless it is actively destroyed. Not so for bitcoins, which only remain so as long as they're actively maintained (not just individual coins but the mining networks which allows the creation of new transactions)
I’m not entirely convinced, although I’m partway there. When you “have” a Bitcoin, that means you have the private key to a wallet which the blockchain says has such-and-such amount in it. You can have that even if the miners all disappear. You can still use it to sign transactions, although they won’t get confirmed. You can even confirm them by mining a new block yourself with your transactions in it. (If all the miners are gone, the difficulty has hopefully dropped precipitously. And if not, you could always fork it to have a lower difficulty, since the only thing that stops forks currently is network consensus.)
This doesn’t sound super useful, but it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable.
> it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable
Nah, if civilization collapses then you'll still be able to use your bar of gold to bash in someone's skull and steal their canned beans (which, in the grim solar-flare induced darkness of 2020, will be worth their weight in bitcoins).
You just sent me down a 3 minute rabbit hole / day dream about Wall-E, the last robot in the universe connected to the blockchain quietly and very easily mining coins from every type of crytocurrency created over the centuries since the early 2000's. Thanks!
If the miners are all gone, there's nothing to stop malicious parties from doing 51% attacks and making the entire thing not only valueless, but also completely unreliable.
At least when you give a person a gold bar, you know that they now have the gold bar.
> If all the miners are gone, the difficulty has hopefully dropped precipitously
AFAIK there is no mechanism for the difficulty of new blocks to fall. And if the only use is creating transactions between yourself and yourself, well you can also collect gravel.
> This doesn’t sound super useful, but it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable.
Even in a sub-industrial context and ignoring pretty much all of human history and assuming your gold has lost all of its extrinsic worth, your bar of gold could be molded or cast into plenty of useful things (light reflectors, heat shields, baubles, weights). Bitcoins, not so much.
The catch is that the difficulty adjustment only happens every ~2k blocks. If a mass exodus of mining capacity happens really quickly, it could leave the network stranded. But if they leave at a reasonable pace, it will ramp down. That’s why I said “hopefully” before.
I imagined that was talking about a certain level of fluctuation in the exchange rate of gold to dollars, not a radical change like happened to, say, aluminum (considered rare and precious at the time it was put on top of the Washington Monument; not so much today).
How do you think the story would end for gold, if it became unpopular and the exchanges closed? You can sell your gold bar, and you can sell your private key. I see them as the same and no, I don't own Bitcoins.
> You can sell your gold bar, and you can sell your private key. I see them as the same and no, I don't own Bitcoins.
If there's no support network for your bitcoins, their value is 0, exactly. Even if you assume people stop caring for shiny imputrescible metals, its intrinsic property (of being shiny and imputrescible) pretty much ensures there will always be some demand for gold, and thus it will keep a non-zero price. Possibly low, but not actually zero.
I would say, the intrinsic property of gold is insignificant. Other metals which are naturally more abundant and in a usable shape would have more value, in other words, probably you would get more money by selling your monitor stand than a gold bar, if gold were to lose its scarcity.
It matters because one is a physical object with static properties and the other is a digital abstraction with characteristics that can change arbitrarily based on network consensus. One is fundamentally a thing that can be looked at and held, the other isn't even a thing you can know you have without consulting a quorum of nodes about the status of the ledger (for all you know, you don't actually own any tokens because an attacker has stolen them)
But what does that matter in a world where people spend numbers on a bank account, never questioning if the money is actually there or not? I fear you are putting too much emphasis on physical things, as if the quality of being "able to be touched" somehow matters in the modern world.
But are you really hedging against the collpase of _everything_ so that we are at a completely primative level. Or do we mean collapse as in another collapse of the world economy?
If you mean the former, then yes, gold is a good hedge. But if you mean the latter, then I would argue Bitcoin beats gold 100x.
> But are you really hedging against the collpase of _everything_ so that we are at a completely primative level. Or do we mean collapse as in another collapse of the world economy?
The world economy has never collapsed, and if it did, it would be equivalent to the first option.
If you mean a short-term market downturn like the one that occurred with the ~2009 financial crisis, why would I even bother to hedge against that—and, if I did, why would I use an asset with high volatility to hedge against short-term market movement?
Just look at the gold price over the past 100 years, even the last 10-15 years have seen an modest increase. It will only go up & it is highly unlikely that it won't ever be perceived as the asset compared to other precious metals.
> Just look at the gold price over the past 100 years
Or 2,000 years:
"the researchers look at pay for a Roman legionary, in the era of Emperor Augustus (27 B.C.-14 A.D.), who was paid a salary equivalent to 2.31 ounces of gold. A centurion was paid a salary equivalent to 38.58 ounces of gold.
Compared to modern US Army salaries, a private is making 20% more than the legionary, and a captain is making 30% less than the centurion" [1].
A counterpoint can be found in silver, where unexpected Spanish silver production in the New World prompted inflation around the world [2][3].
TL; DR For historical reasons, gold is grandfathered into our collective consciousness.
One of the properties of gold is that it cant be destroyed by chemical reactions. Physical destruction would amount to powderizing and dispersing over an area too wide to re-mine.
If someone discovers a huge lode or if something crazy happened like the US Government divesting, it could cause a pretty wild swing, in the manner of Mansa Musa's pilgrimage.
Guess it's one of those things that seems impossible, until it isn't.
Asteroid mining would disrupt the market for many rare elements, but I think it could be less chaotic than people think. It's not going to be like the Gold Rush where a deposit was found and prospectors flocked to it. It'll be a massive undertaking, almost certainly with multiple nations working together to achieve. The time between the project becoming public and the resulting mined resources being delivered would give markets time to settle on a price.
That said, yes, asteroids mining could certainly affect the price of gold, but not necessarily destroy all its value. There's a price floor set by the industrial applications for it.
With BitCoin, there is no floor. If no one wants to buy your BitCoins, you can't do anything else with them. They are just data representing proof of work, but no outside value.
Plus, in a world where you can mine asteroids for gold, suddenly there's potential for growth not only on Earth, but in the solar system at large, and there have to be industrial uses of gold on Mars...
Asteroid mining won't be able to significantly affect prices of gold downwell, definitely not until we bootstrap a real industrial presence in space - with the way we do space today, mission costs would eat up any profit you could make on shipping raw material down.
