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    Author Topic: Why Bitcoin is a better choice as a currency for Americans than gold  (Read 3596 times)

    • Elwar (OP)
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    August 06, 2012, 11:36:07 AM
     #1
    If the whole world were to change their currency tomorrow and had the choice between gold or Bitcoin, Americans would be well served if Bitcoin was chosen. The reason being, we are richer in Bitcoin compared to the rest of the world than we are in gold compared to the rest of the world.

    In tons of gold, the United States holds 8,133 out of a total 30,623 with the closest holder being Germany with 3,396. That is 26.5% of the world's gold controlled by the United States. (according to: http://en.wikipedia.org/wiki/Gold_reserve)

    In number of Bitcoin hosts, the United States has 6005 out of a total 14,727 with the closest holder being Germany with 1096. That is 40.7% of the world's Bitcoin nodes controlled by the United States. (according to: http://bitcoinstatus.rowit.co.uk/)

    If tomorrow the whole world switched over to Bitcoin, we would hold over 40% of the world's wealth. This would solidify our presence on top of the world stage for a long time to come.

    Even without switching over tomorrow, the eventuality of Bitcoin becoming a dominant world currency presents the challenge to all nations to get a larger piece of the pie before other countries catch on and get priced out of existence.

    And yes, I do realize that the number of nodes does not necessarily mean that the amount of Bitcoins is evenly distributed between all nodes, but it gives a good statistical indicator in a currency where anonymity does not allow for knowledge of who owns what amount of bitcoin.

    So, at the moment, it would benefit all Americans to start pushing Bitcoin as a viable currency and start pushing that 40% higher before other countries catch on and tip the scale in their favor. And at current prices, that would not be very difficult to do.
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    August 06, 2012, 11:45:56 AM
     #2
    40.6% of nodes in the usa ?

  • proudhon
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    August 06, 2012, 12:13:07 PM
     #3
    Why Bitcoin is a better choice as a currency for Americans than gold, or why Bitcoin's future can be shaped by how US lawmakers react to it.
    Bitcoin Fact: the price of bitcoin will not be greater than $70k for more than 25 consecutive days at any point in the rest of recorded human history.

  • Elwar (OP)
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    August 06, 2012, 12:19:58 PM
     #4
    Quote from: proudhon on August 06, 2012, 12:13:07 PM
    Why Bitcoin is a better choice as a currency for Americans than gold, or why Bitcoin's future can be shaped by how US lawmakers react to it.

    True, having 40% of the Bitcoin economy hit by an overarching government would have a significant affect.
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  • aq
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    August 06, 2012, 12:23:06 PM
     #5
    The number of node does say nothing about how much bitcoins are owned.
    As an example, I am sure the US has more filling stations than Saudi Arabia, but the latter still has much more oil.

  • DeathAndTaxes
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    August 06, 2012, 12:30:40 PM
     #6
    Quote from: aq on August 06, 2012, 12:23:06 PM
    The number of node does say nothing about how much bitcoins are owned.
    As an example, I am sure the US has more filling stations than Saudi Arabia, but the latter still has much more oil.

    This. 

    I would also point out that <50% of all coins have been issued so the US long term "share" of Bitcoins is still unknown and unlikely to be 40%.   

    Money (to include Bitcoin or even money like commodities such as gold) has no direct value.  It is merely an accounting system.  You can't eat a Bitcoin, you can't be entertained by it, you can't protect your other property with it (no different than gold or dollars).   Even if US residents owned 40% of Bitcoins as they exchanged those for goods and services the "Bitcoin flows" would be very similar to other monetary flows and international trade.  If the whole world adopted (not necessarily replacing fiat currencies but not putting any prohibitions in place) bitcoin in time the US "share" of Bitcoin will be the same as the US "share" of global wealth.

  • kangasbros
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    August 06, 2012, 01:47:58 PM
     #7
    LOL. I believe that the country Satoshi lives in, should adopt bitcoin first, because he probably has most bitcoins.
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  • DeathAndTaxes
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    August 06, 2012, 01:54:19 PM
     #8
    Quote from: kangasbros on August 06, 2012, 01:47:58 PM
    LOL. I believe that the country Satoshi lives in, should adopt bitcoin first, because he probably has most bitcoins.

    Which country is that?

  • Pieter Wuille
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    August 06, 2012, 02:17:50 PM
     #9
    Quote from: DeathAndTaxes on August 06, 2012, 01:54:19 PM
    Quote from: kangasbros on August 06, 2012, 01:47:58 PM
    LOL. I believe that the country Satoshi lives in, should adopt bitcoin first, because he probably has most bitcoins.

    Which country is that?

    Atlantis.
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  • evoorhees
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    August 06, 2012, 03:41:19 PM
     #10
    I don't like this nationalistic "us vs. them" mentality. There are a number of problems with that line of thinking. First, people shouldn't associate themselves primarily with their governments (nationality should be one of the least important attributes of an individual). Second, the fact that many other individuals in the same national territory as you have lots of wealth doesn't indicate that you will benefit any more than if that wealth belonged to individuals on the other side of the world.

    There are many reasons Bitcoin should be more widely adopted around the world as a primary currency. The fact that the USA or "we" control the plurality of the Bitcoins is not one of these reasons.

  • Elwar (OP)
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    August 06, 2012, 03:53:50 PM
     #11
    Quote from: evoorhees on August 06, 2012, 03:41:19 PM
    I don't like this nationalistic "us vs. them" mentality. There are a number of problems with that line of thinking. First, people shouldn't associate themselves primarily with their governments (nationality should be one of the least important attributes of an individual). Second, the fact that many other individuals in the same national territory as you have lots of wealth doesn't indicate that you will benefit any more than if that wealth belonged to individuals on the other side of the world.

    There are many reasons Bitcoin should be more widely adopted around the world as a primary currency. The fact that the USA or "we" control the plurality of the Bitcoins is not one of these reasons.

    I looked into this initially merely because it was an argument used against pushing for a return to the gold standard as a currency many years ago because "The US doesn't produce gold as quickly as other countries so going back to the gold standard would be worse than staying with the dollar."

    So I figured I would see how Bitcoin compares in that regard to gold.

    Certainly Bitcoin is a currency of the individual but if a government can be tempted to embrace it based upon the fact that it would give it more power within the world, it should be highlighted. Such a collective approach could also be used against those government officials whom would see fit to try to inhibit Bitcoin's use.
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  • hazek
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    August 07, 2012, 12:40:39 AM
     #12
    This is so bad it would be funny if it weren't so sad..

    Quote from: Elwar on August 06, 2012, 11:36:07 AM
    In tons of gold, the United States holds 8,133 out of a total 30,623 with the closest holder being Germany with 3,396. That is 26.5% of the world's gold controlled by the United States. (according to: http://en.wikipedia.org/wiki/Gold_reserve)

    In number of Bitcoin hosts, the United States has 6005 out of a total 14,727 with the closest holder being Germany with 1096. That is 40.7% of the world's Bitcoin nodes controlled by the United States. (according to: http://bitcoinstatus.rowit.co.uk/)

    1. gold reserves are a horrible representation of who actually holds most of the gold because it accounts only for the gold held by central banks. It's estimated that all the gold ever mined is somewhere around 175k tones out of which CBs hold 30.6k, a mere 1/6 of the total. Who knows by which private hands the other 5/6 is held.

    2. as others pointed out, controlling nodes doesn't give you anything, virtually nothing except mining revenues


    There is no room for the neanderthalic "us vs them" mentality in Bitcoin. Bitcoin is open and accessible to anyone and everyone absolutely must follow the same rules, no matter who you are. It's all about individualism and honesty.
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  • miscreanity
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    August 07, 2012, 12:41:08 AM
     #13
    Quote from: Elwar on August 06, 2012, 03:53:50 PM
    I looked into this initially merely because it was an argument used against pushing for a return to the gold standard as a currency many years ago because "The US doesn't produce gold as quickly as other countries so going back to the gold standard would be worse than staying with the dollar."

    As DAT pointed out, the balance of payments will push capital flows toward essentially the same distribution as exists now. There is an excellent, albeit lengthy explanation by FOFOA entitled It's the Flow, Stupid, and it's follow-up Flow Addendum.

    What it boils down to is that gold can act as a store of value and a medium of exchange or a metric of value - but not all three in perpetuity. Fiat can function as a medium of exchange and a metric of value, but not a lasting store of value. No form of money has ever been able to act as all three at once. The limiting factor for gold is its physical manifestation. This is explained best by the Triffin dilemma.

    Bitcoin, by being entirely abstract yet functioning almost exactly as gold does, is capable of satisfying that issue entirely because it is infinitely divisible (in theory) - in other words, Bitcoin can act in all three capacities simultaneously. The Triffin dilemma would be solved, and a unified currency finally possible.

    Going further than this, even if gold were to continue as a reliable store of value, there is the possibility of massive price shocks looms within our foreseeable future. Bitcoin's hard limit of 21mm units virtually eliminates that kind of structural supply shock.

  • btctraderr
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    August 07, 2012, 09:42:09 AM
     #14
    Quote from: miscreanity on August 07, 2012, 12:41:08 AM
    Quote from: Elwar on August 06, 2012, 03:53:50 PM
    I looked into this initially merely because it was an argument used against pushing for a return to the gold standard as a currency many years ago because "The US doesn't produce gold as quickly as other countries so going back to the gold standard would be worse than staying with the dollar."

    As DAT pointed out, the balance of payments will push capital flows toward essentially the same distribution as exists now. There is an excellent, albeit lengthy explanation by FOFOA entitled It's the Flow, Stupid, and it's follow-up Flow Addendum.

    What it boils down to is that gold can act as a store of value and a medium of exchange or a metric of value - but not all three in perpetuity. Fiat can function as a medium of exchange and a metric of value, but not a lasting store of value. No form of money has ever been able to act as all three at once. The limiting factor for gold is its physical manifestation. This is explained best by the Triffin dilemma.

    Bitcoin, by being entirely abstract yet functioning almost exactly as gold does, is capable of satisfying that issue entirely because it is infinitely divisible (in theory) - in other words, Bitcoin can act in all three capacities simultaneously. The Triffin dilemma would be solved, and a unified currency finally possible.

    Going further than this, even if gold were to continue as a reliable store of value, there is the possibility of massive price shocks looms within our foreseeable future. Bitcoin's hard limit of 21mm units virtually eliminates that kind of structural supply shock.

    +1. Not to mention Fort Knox hasnt been fully Audited since the 50's, who knows how much gold the US actually has, or that everyone else reports it correctly. Rumours abound that 250tons passed through Hong Kong to mainland China in 2011 and has not been declared by their central bank....Gold reserves are nothing to go by.

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    August 07, 2012, 11:18:14 AM
     #15
    Quote from: Elwar on August 06, 2012, 11:36:07 AM
    we would hold over 40% of the world's wealth.

    And over 15,813,740,000,000 of the world debt too  Roll Eyes .

    If we are going to start to weigh positives without the negatives though..  Us New Zealanders have over 40% of the world penguins!  Even better we have 99% of the Kiwi's!!!!!! 

    All bow to the supremacy of our flightless avians.

  • ShireSilver
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    August 07, 2012, 12:01:32 PM
     #16
    Quote from: miscreanity on August 07, 2012, 12:41:08 AM
    Quote from: Elwar on August 06, 2012, 03:53:50 PM
    I looked into this initially merely because it was an argument used against pushing for a return to the gold standard as a currency many years ago because "The US doesn't produce gold as quickly as other countries so going back to the gold standard would be worse than staying with the dollar."

    As DAT pointed out, the balance of payments will push capital flows toward essentially the same distribution as exists now. There is an excellent, albeit lengthy explanation by FOFOA entitled It's the Flow, Stupid, and it's follow-up Flow Addendum.

    What it boils down to is that gold can act as a store of value and a medium of exchange or a metric of value - but not all three in perpetuity. Fiat can function as a medium of exchange and a metric of value, but not a lasting store of value. No form of money has ever been able to act as all three at once. The limiting factor for gold is its physical manifestation. This is explained best by the Triffin dilemma.

    Bitcoin, by being entirely abstract yet functioning almost exactly as gold does, is capable of satisfying that issue entirely because it is infinitely divisible (in theory) - in other words, Bitcoin can act in all three capacities simultaneously. The Triffin dilemma would be solved, and a unified currency finally possible.


    Having only read the Triffin wiki page, it seems to only apply to government currencies. A gold standard would be unworkable, but a gold currency that was unrestrained by politicians should work.
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  • JoelKatz
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    August 07, 2012, 12:32:28 PM
     #17
    Quote from: Elwar on August 06, 2012, 11:36:07 AM
    So, at the moment, it would benefit all Americans to start pushing Bitcoin as a viable currency and start pushing that 40% higher before other countries catch on and tip the scale in their favor. And at current prices, that would not be very difficult to do.

    Say you hold $40 worth of Bitcoins today and they go up to $1,000. You've made $960 over that time period. You got $1,000 at the end since you have $1,000 worth of Bitcoins. But you gave up $40 today, since you could have sold them for $40.

    Say you have no Bitcoins today. You buy $40 worth of them. They go up to $1,000. You've also made $960. You got $1,000 at the end. But you gave up $40 today, since you used them to buy the Bitcoins.

    So it basically makes no difference who holds them today.
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    August 07, 2012, 09:09:05 PM
     #18
    So are you saying to buy bitcoin over gold?
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  • Stephen Gornick
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    August 07, 2012, 09:28:15 PM
    Last edit: August 10, 2012, 10:50:47 PM by Stephen Gornick
     #19
    Quote from: Elwar on August 06, 2012, 11:36:07 AM
    Even without switching over tomorrow, the eventuality of Bitcoin becoming a dominant world currency presents the challenge to all nations to get a larger piece of the pie before other countries catch on and get priced out of existence.

    That really is less a factor than it would seem.

    Here''s an example:

    Why we need Bitcoins for international transactions
     - http://bt.irlbtc.com/view/98988.0

    In that example, no matter which currency (either USD or JPY) you were holding a certain percent got siphoned off to the banks.

    The casino doesn't care if it is Susie or Bob who wins at the table, the house gets their money either way.   Having to go through banks is the same thing.

    So with bitcoin simply being a financial system that can be used at a cost that is at least an order of magnitude less than the existing ones is what will allow value to be retained rather than it being transferred to the money changers.
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  • augustocroppo
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    August 08, 2012, 09:28:29 PM
     #20
    Sorry OP, but the American Dream is over...

    No digital currency in this planet is going to save the largest consumer of natural resources from a catastrophe. The whole USA infrastructure is based on fossil fuel. When shortages start to happen, no gold or Bitcoin is going to replace the energy necessary to obtain the essential goods of living.

    Prepare yourself for hard labour. That is going to be your local currency.

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