Gold as money.
Well we do not know how much gold there really is.
So as we dig more out of the ground on a regular basis it like currency value has deflationary buying power.
bitcoin is 21m not more so a more stable base for money value.
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Need to look into it deeper but does “Stock to Flow” ratio take into account of the goods output? When metals are added to the above ground totals or “stockpile” this hoard ratio will not be the same. When gold is mined it virtually never leaves the economic ecosystem( it will never be in an unusable state). Silver on the other hand may be mined at triple the rate but it is also used in processes that make it unusable to the future. Stock to flow comparison between those metals would not really be valid.
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Based on the reading, Gold is the metal which contains the best properties for being used as money.
It melts at lower temperatures than others, such as Platinum. It is stable in it’s physical state. It doesn’t ignite into flames, such as Alkaline. It does not corrode or tarnish over time, like Silver. It is malleable so it can be minted into coins, bars, even used in sculptures on buildings. Other metals leak dangerous radiation or are too rare or difficult to synthesize. Gases and liquids are obviously too unstable as mercury and bromine are…for these reasons, Civilizations have used it for thousands of years.
Here are other reasons why Gold became money.
Salability - Scales, Time and Space
Scales: Difficult to measure
Time: It does not deteriate
Space: Difficult and risky to travel through space.
Scarcity - Gold is more scarce than other metals like Silver and Copper.
Neutrality - Gold does not have biases. It is neutral.
Salability was good enough as Gold was just best out of other metals and other alternatives.
Can someone explain to me, in the video when the speaker is calculating the Stock to flow ratio of 62, where he got 3000 tons from?
It as 185,000 total stock, flow 3000 tons but this 3000 wasn’t mentioned previously.
thanks
This topic is pretty straightforward. After the barter system and trial & error with different types of money (i.e. sea shells, salt) gold won as the most suitable substance to use as hard analog money. It is stable, scarce, neutral, salable across time/space, and divisible. Gold works great as money, prior to the Age of the Internet.
Now with the age of the Internet, we have Bitcoin, which is obviously a superior technology in today’s society, for money compared to gold. Humankind continues to advance with better and better tech for things like money. It is interesting to note that bitcoin’s tech is almost modelled off of gold, with improvements in certain aspects (known limited supply, ease of transfer).
Golden reasons for Gold as money = MATERIAL OF VALUE
- no dissipation into the atmosphere
- no burst into flame
- no poison
- no radiation
- rare enough AND difficult to overproduce
- malleable to mint into coins, bars, bricks
Gold Salability
= EASY TO GET SOLD
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the most liquid asset at any time
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the superior best choice through history
- scale: easy to subdivide but requires special equipment
- time: resistant, indestructible
- space: easily transportable
Gold Scarcity
- measurable rarity and demanded
- stock to flow = S2F = rate of change of total supply = 185K t stock/ 3K t flow = 62
- flow: added quantity to stock on annual basis
- inflation rate: flow/ stock * 100 = about 1.6% per year
Gold Neutrality
mmmh, it could be Swiss…
- no opinion
- no politics
- beauty
- hardness
I love it, yeah, I love gold. I love good matter.
Now, is Bitcoin real Bitgold?
Or what would be ( or is) real Bit-gold?
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Gold is a sound form of money. Could not be easy to use as physical today, but crypto gold is a serious candidate as long redeem is allowed for small quantities.
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Not inflammable
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Does not intoxicate the beholder
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Highly valuable and scarce due to mining difficulty
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Does not degrade overtime and can be minted to make jewelry or coinage
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Very low inflation at less than 2% making it’s value stable overtime and unaffected by hyperinflation
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Previous point makes the asset a great store of value over long periods of time and leads to great purchasing power
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Neutral to all things e.g. no support to governments, companies etc…, it’s a natural asset and cannot be artificially produced. The value and its use is down to its beholder
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Many gold intrinsic properties make it an ideal contender as a medium of exchange and a store of value. Some are:
- Natural state: it is solid under natural conditions - its solid-state makes it portable
- Durability: it is the least reactive of all metals and can sustain the test of time
- Scarcity of supply: rare enough but not too rare - in demand
- Fairly easily minted
Other characteristics:
- widely accepted
- neutral: stateless - idealogy and people agnostic
- salable
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According to history Gold was used by humanity for over 10,000 years. We read about it even in the religious books. Even in crypto with its advantages, it takes its cues from gold. With all the merits of Crypto, gold will always win on verifiable and confirmable resilience validated with time past. Crypto has a place in the modern and future world, Gold is the master of the world of money, Crypto is the Hero of the world of money. When they work together everyone benefits.
Gold is a good store of value, in the sense that it meets the criteria to be considered as much.
I agree fiat is garbage, but gold is difficult to transport in large amounts, is not transactionable, is not as limited in supply as some may think, we always seem to be able to dig up more. I don’t fall into the belief that just because something has always been a certain way it should just be accepted and remain that way without question. I do believe gold has its place, but I think eventually it will lose a significant portion of its market share with Bitcoin.
Gold is the worldwide accepted precious metal that has intrinsic value. Since the early days of the relationship between humans and gold, it has been a desired and appreciated material. In present days that has not changed and it is a true element that checks almost all the boxes to be considered hard money and therefore a true store of value item.
If we speak of gold as a “value”, it has always been one of the first values and will probably remain so for a long time to come. There is something symbolic about him.
But to imagine it as a “Money” does not make sense for me, because there is not enough of it and it would be too expensive to transform it and always check its purity.
Bitcoin is therefore a great invention by the qualities that we recognize in it.
The only question I ask myself (apart from the fact that it must be recognized by a majority of human beings to be able to last), is this:
If the price of Bitcoin is soaring in the stratosphere, because it is bought by an increasing number of people, and its code is “open-source”, why wouldn’t we do more exactly on the same principle ?
Imagine a €-Bitcoin, in every way similar, just the name that is changing and moreover accepted by European governments. Why shouldn’t it increase in value?
What makes Bitcoin irreplaceable, taken in its entirety?
as someone who works with gold in the dental industry, it is easy to see the value of gold when it comes to it’s makeup and properties, especially in a sector where gold has more practical uses than just being money. Gold is truly valuable as an asset as something we use everyday, in electronics, fillings and even still is a good storage of value.
There is a good comparison between gold and bitcoin made by winklevoss brothers in their bitcoin report.
In the report they compare key metrics: durability, store of value, portability, fungibility, mean of exchange, scarcity.
Bitcoin beats gold in almost every aspect (easier to carry, transact, verify and finite known supply). Gold only can compete as a store of value and on durability.
I used to be a gold bug, but I came to realise that bitcoin is superior in amost every aspect, even durability is backed by the energy of the miners.
The only way gold be superior is if bitcoin is banned as a mean of exchange, but that also happened to gold and the value did not go to zero…
gold is great but bitcoin is better,only 21 millon btc, and gold??
If bitcoin can fulfill the criteria for the definition of money, can the blockchain which underpins bitcoin be applied to gold which also fulfill the same criteria for money?
Gold is inherent to humanity itself, the gold standard has been around since ancient times, it has defined and shaped civilizations. In fact, the creation of Bitcoin was inspired by gold. Gold has been and will always be among us, in one way or another.
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Well I can say this much, as soon as I was aware of Covid, I went out and exchange all of my savings for gold and silver. It was clear to me that currencies can be created and inflated easily. Today, I have my portfolio diversified but I will always have a percentage in gold because of the security I get from it.
When we look at the Periodic Table, we’ll see that there is no other element like the gold - it does not dissipate into the atmosphere, it does not burst into flames, and it does not poison or irradiate the holder. It’s rare enough to make it difficult to overproduce and malleable to mint into coins, bars, and bricks. All this features bring his value but there are also problems like how to store, secure and to transport your holdings. You may need a third party, which brings extra cost, so I’m thinking that gold was very useful and real good store of value in the past, because there was no other option but in these days we have the blockchain. For me this is the future.