Gold Is Useless
...and every other metal with no utility for that matter. Precious metal, for the sake of being shiny, might have had some utility back in the day. The human population was smaller and the economic activities were limited. Today, in our technological advanced world, the act of digging up gold and then storing it somewhere (while we exchange its value on NASDAQ), is similar to buying a lamborghini and hauling it proudly with a donkey.
We have moved on. The reason cryptocurrencies are gaining so much momentum is because tokens represent value for given ideas. It might be services, hardware, software or anything else in between. A token represents a futures value for something that has utility. Issuing a token for gold is pointless since gold has no other utility other than in miniscule amounts in some electronics — which is also being substituted. Even as it is today, it is way overvalued due to mainly lack of alternative for storing value.
Gold historically attracted investors as a safe bet in case fiat currencies collapse. Even so, assuming there will be a massive crash, people will not be able to transact with gold. Even if it is exchanged much like other asset, few know the actual stock quantities and whether they will be getting the actual pieces of gold in return. Same problem exists with FIAT currencies. If everyone wished to cash out their FIAT currency no bank in the world has the notes in hand to satisfy the demand.
Cryptocurrencies are the future of value for this very reason. People are moving from gold to crypto because the world is governed digitally not physically. Precious metals will begin to become more and more obsolete as we move to smart materials that can replace traditional raw materials.
Precious metals are finite but so is every single thing on the planet than can be produced by alternative means. Trees might have had great usage but with the introduction of plastics and other synthetic materials products became cheaper and more abundant. Even if we have scarcity of trees, nobody will value them other than close fetish circles that like to romanticize on the idea of wood. We do much the same with fine art.
I adhere to ancap and libertarian ideas but I find the belief in Gold as store of value nonsensical. With every single person I talked that defend the value of gold their excuse is the same: Safety. Personally, I see nothing safe about holding a piece of metal in your home with no way to use it functionally. For anyone that owns slabs of gold in a safe, in the event of a catastrophe, I assume they will hold onto it until society reboots. No one will dare to transact with it due to the risks involved and the fact that no one will be able to place an actual value to it.
Scarcity is surely something that creates value. Nonetheless, long gone are the days where raw materials were limited. Nothing is as rare as it was in the past. We keep creating substitutes for just about everything and will continue to do so. Scarcity might have defined value due to our technological limitations but as the future unfolds the trend will become a relic of the past.
Everything, including crypto currency has value only if people trust it and give it that value, in that aspect crypto currency is no better or worse than anything we have had up to now, in reality it has nothing backing it except trust.
Most certainly but gold is relying more on tradition rather than trust. Given one has the technical expertise they can check how much coins they are in circulation and transact based on that. With gold we don't know how much there is around and what the real value is. When there is little information about something value is hard to build because there is no trust.
I like your reasoning. Unless the digital age is going to be destroyed which I don't see that happening. I see the digital age growing to be come more intrusive. Digital tokens are the storers of wealth.
Stage 1: Hunter & gatherer societies
Stage 2: Agriculture societies
Stage 3: Industrial societies
Stage 4: Information societies (now)
Reason that I still didn't buy into "precious" metals for so long. Although certain physical materials are still required to develop stuff, information itself is driving the industry towards source substitutes.
Edit: although if you think about it, most cryptos are becoming like plastics of the industrial revolution.
Indeed, but in every industry we always get showered by many versions before we settle to the ones that matter.
Yeap.. speculating, the ability to becoming disconnected might become very very valuable in the future, and this would require highly curated and on-point information.
Indeed, this is why privacy coins will start to gain more and more value
Beautifully fucking illustrated.
Stage 5: Hunter and gatherer societies (future) - fixed it for you
Good article, but let's not forget gold and silver have and will always have value history never lies, the so called 1% and plenty of governments still hold the metals in large quantities. If the shit did hit the fan one thing that crypto currency's do need is power the metals don't , cheers mike
It really breaks my heart to say it, but I think you are right. These days I choose to protect my capital by putting money in crypto. I do still have a small fetish for silver though, but if I buy it, I only buy coins that are unusual, as I think the coins rarity and history will make it grow in value over time !
Yeap, rarity in respect to art might have some value. But for the sake of the material being made is rather pointless.
I thought value of art pieces was bestowed upon by rich people attempting to evade govt tax? Yes rarity or limited edition is partly marketing to justify the value. Saw a video recently about this though is collegehumor but somehow it does hold some truth.
Not completely true. Gold has many uses. We use it in every cellphone, computer and most of electronics. It is useful even in medicine primarily to reduce inflammation and to slow disease progression in patients with rheumatoid arthritis.
Its usefulness does not end here. It would be used even more if its price would not be that high.
The time for cryptos and blockchain technology is now quickly unfolding...
Buffet is a legend however he sure is old school due to ageing- blockchaintechnology is sure the future.
However watch out on circulating and total supply because scarcity is the key -I explained it well in my post.
Thanks for sharing, upped and keep up the good work.
Ask to girl - "gold is useless" :)
"diamonds" you mean
But gold will not loose any value in India because we use it in ornaments and jewellery which we wear and gift on the big occassions like wedding. It is considered auspicious in India. Indian women hold 10% of the world's total gold.