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Stop Comparing Bitcoin to Gold

This just shows how important it is to understand concepts from first principles as opposed to trying to reason by analogy.

Bitcoin isn’t gold, and although it’s heralded as digital gold, the truth is that it’s much more than that. It’s a network of computers, called nodes, which all contain a synchronized copy of the full history of all transactions ever made on the network. These nodes are aided by miners who compete to solve complex cryptographic algorithms to validate transactions made by users on the network. The miners make sure that the bitcoins being transacted are in fact bitcoins, and not counterfeit.

Essentially, the Bitcoin network is an entire monetary system that operates on its own.

If you’re wondering what to compare the Bitcoin network to in order to estimate its valuation, then take the sum of the value of the monetary systems of the countries which it was created to replace and discount it by some percentage to account for countries that choose not to adopt the standard (like Nigeria).

And if you are in the camp that believes humans will inevitably colonize space, then you should be invested in Bitcoin, because rest assured that the current monetary systems in place don’t scale beyond singular nation-states. Colonies on Mars aren’t going to be okay with relying on central banks back on Earth to control their money.

https://youtu.be/O3XvCbh8pQU



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5 Comments

  1. Its not that difficult to see its Gold, the netork to secure and also to trade it… so i think comparing it to Gold is fair, bur only if you also consider the market of Gold and also the whole Gold mining and securing Industy as well

  2. I agree that bitcoin shouldn’t pin itself down to gold. Don’t tie bitcoin down, and it can go to 1 million per coin. Tying it down to something like gold grounds bitcoin, and we definitely do not want to ground it.

  3. ## Both gold and Bitcoin have all the properties of “strong” money.

    ## Bitcoin Compared to Gold

    Gold is expensive to store securely.

    Gold is extremely expensive and slow to transport securely, especially large amounts.

    Gold is heavy, it takes up space.

    You can’t walk very far carrying a lot of gold. You can’t swim at all with more than a few coins of gold.

    Gold can be confiscated. Gold has already been confiscated by the US government.

    Highway robbers, corrupt border guards, pirates, and others can merely kill you, then take any gold you were transporting.

    Tungsten’s density is very close to that of gold. There are now gold-coated tungsten bars in circulation. It requires special equipment and know-how to detect gold-coated tungsten.

    ## + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +

    Bitcoin is easy and inexpensive to store securely.

    Bitcoin is inexpensive to transport, and compared to gold, transporting Bitcoin is ‘instantaneous’.

    Bitcoin weighs nothing and takes up little, if any space.

    Bitcoin cannot be detected and can pass right through any border or airport.

    Bitcoin won’t stop refugees from walking long distances, nor from swimming across rivers.

    Bitcoin cannot be confiscated. Robbers, pirates, corrupt cops, soldiers, etc. won’t know you own any (unless you tell them), and they cannot merely kill you and take your Bitcoin.

    Bitcoin can be sent across the Internet.

    Nobody spends gold as money these days.

    People have been using Bitcoin as money, and as a store of value.

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