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Gold has severe flaws. Physical locality makes it less secure and far more transactionally local, and thus more vulnerable to politics and less sound, than we can now achieve with Bitcoin, with good key management and taking advantage of its trust-minimized global settlement.https://twitter.com/MrHodl/status/991676293052813312 …
Aztecs took gold tribute from their subject tribes. Spanish conquistadors looted the Aztecs. Sir Francis Drake looted Spanish galleons. Seizing gold vaults was a universal war objective. Many politicians have controlled monetary systems by controlling gold. Now we can do better.pic.twitter.com/pg33pZLJCK
Probably the biggest flaw with the monetary metals (gold, sil er, and copper) is that they are costly to assay/validate. This led making people vulnerable to (i.e. requiring them to trust) centralized entities such as coin minters and bank note issuers, said trust often abused.
Some of the same craft skills & tech that gave us the industrial revolution also made it much easier to counterfeit coins. As fake coins spread, use of bank notes grew. Here's a fake silver dollar made in Birmingham via a technique invented in Sheffield. https://www.coincommunity.com/articles/swamperbob_8_reales_birmingham_counterfeit.asp …pic.twitter.com/Qbx7heTq2p
Bank notes further increased trust, i.e. vulnerability. to the actions of third parties. Gold came to be held in centralized vaults, and IOUs for much more than the gold actually held were issued -- fractional reserve banking (FRB).https://twitter.com/bitstein/status/1145438009636085760 …
Governments helped set up the largest banks, which printed even more bank notes and used them to buy government debt. These banks became (Bank of England) or were set up as (Federal Reserve) note-issuing monopolies, which we now call central banks.
Eventually default turned these gold IOU paper notes into fiat. BofE started refusing to honor its notes in 1931. The Fed reduced the amount of gold it would redeem a dollar for in 1933, restricted gold trade by targeting the centralized bank vaults, and went full fiat in 1971.
Here's an example showing how, despite authority resemblance
https://unenumerated.blogspot.com/2016/07/artifacts-of-wealth-patterns-in_15.html …
the fundamental nature of U.S. dollars radically changed over the course of the 20th century. They look very similar, but the kind of money they represent is radically different.
ht @jp_koningpic.twitter.com/JF7KifIcXJ
Yes, but gold tied to tokens with physical decentralization (eg. storage distributed across different jurisdictions) reduce this flaw. Also 5k years of price history. I think blockchain might just make gold sexy again.
Look at digix. To me, this is pretty much akin to the old bearer bonds.
How do I know the gold is there? Still gotta trust a 3rd party.
Very true, but it makes gold infinitely divisible, and simple to use as a means of payment. In the current system, we are always forced to trust 1 or more 3rd parties. (btc etc the exception, but usability still limited)
You just outlined the case for bitcoin perfectly. Trusted 3rd parties are security holes. Did you guys even read the thread? You just tried to make the case for paper money, we tried that already...
My case was simply that blockchain makes gold better (than it has been). Do not understand how you can say I make a case for paper money. But POW is IMHO a weak spot, because it makes it easy for a Gov. to strike down larger data centers.
"In the current system, we are always forced to trust" Bitcoin is the exception. Don't trust, verify.
Your digital gold certificates are exactly how we got to paper money in the first place, they were originally redeemable for gold. Read Nick's thread again.
Bitcoin is an amazing technological discovery. The only drawback is there is no ‘there’... there.
Nick articulated a severe shortcoming of having a ‘there’ there (aka physical locality). You assert that the lack of physical locality is a drawback, but without providing substantive arguments to support your assertion. Nick’s thread is full of excellent substantive arguments.
Why is physical locality a drawback? I consider it an advantage vs a digital asset. Bitcoin is a great tech step forward. But in a time of crisis, I'd prefer a physical asset nearby than a digital asset in the ether somewhere.
Read Nick’s thread! You can run your own Bitcoin full node and hold your own private keys. Better monetary assurances than holding physical gold.
Again, Pierre, I respectfully disagree with you and Nick's view. I wod prefer to hold a physical asset, particularly during a time of crisis, than a private key, or other non-physical digital asset.
I have re-read Nick's thread. Again I think it is utter nonsense, sorry.
You can disagree but providing an argument beyond "I prefer to hold my shiny rocks in my hand because I don't understand technology" would really help you make your point. Gold is centralized in vaults, easy to seize, led to inflation, default, fiat, then more inflation.
Well I disagree that gold is a shiny rock, and I presume the central banks that own gold would agree with me. I also disagree that gold is centralised...
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