One of the points I appreciate is the comparison to a gold based investment strategy. Though unlike other commodities (like gold) but coin itself is not useful. At least with gold something can be made, Bitcoin consists of a completed computation so you’re paying for something that’s been used.
Something being useless is a desirable quality for a currency, and gold, in addition to several other traits, was an optimal material specifically because of how useless it historically was. Where gold was used, it was for displaying wealth, for example in decorations and jewelry.
Compare say steel - if your currency was based on steel, which historically was quite valuable because of its utility and difficulty in production, that means either perfectly good steel that could be used for tools that generate wealth is sitting useless in the form of coins, or people are smelting down the currency to make tools. And if your coinage derives its value from the utility of the material, what happens when someone develops a superior alloy, or figures out a cheaper production method? Do you stunt technological and economic growth to prevent hyperinflation?
Nowadays gold has some niche industrial uses, but these uses are in competition with using gold as a store of value, which remains gold's dominant price driver by a wide margin, and thus you have, for example, artificially high prices on certain electronics that require gold.
When you buy a gold ring you're paying for something that's been made from gold (and time and energy...) When you buy a bitcoin you're paying for something that's been made from just time and electricity. Not used.
A ring made of gold is made of gold using time and effort.
You can retrieve the gold from the ring. You cannot retrieve the time and effort.
There is, in fact, a distinction here. Bitcoin very well may have legitimate uses (and I would say it does), but it is not like a ring made of gold, in the ring's capacity of being returned to it's constituent components.
I understand the distinction. Of course you can't "get back the gold" from a bitcoin, but you also didn't have to put it in in the first place. That doesn't reduce the value of the thing you've made except by degree (as would using more or less gold, or more or less time, or whatever).
Thanks for the response. I agree that bitcoin cannot fill exactly the same niche as gold and I think it's foolish to try to shoehorn it into that role.
I mostly wanted to address the concept that bitcoins merely represent used resources. Bitcoins are in fact a novel good that are produced using no physical resources which intrinsically gives it interesting and potentially promising properties. When you buy a plastic toy and it breaks you don't usually melt it down for its valuable plastic, you just throw it away. You mostly paid for the time and the energy to make it, but the physical substrate was valueless. That type of good currently dominates the marketplace and seems subpar to bitcoin from a manufacturing perspective.
A gold ring isn't a store of monetary value, and the value of it outside of the jeweler is based on its gold content only, and in some cases collectible value. Its value to the wearer is subjective in nature, and will vary based on wearer.
So with regard to bitcoin, it's not art, and not a useful commodity. It can be a representation of "value", but then why make it expensive to make since it's only a representation?
Nic Carter, a bitcoiner, had some interesting points about Bitcoin's energy consumption on Lex Fridman's podcast (EP. #173)
He suggests that most of the energy Bitcoin consumes generally comes from places that consistently produce an excess of energy that otherwise goes to waste. Miners, seeking to maximize profit, gravitate to areas where energy is cheap because supply > demand. I'm not sure what percentage of the energy could be considered "excess."
His other point was that the discussion of Bitcoin's energy consumption should be framed in the context of how much value it brings to the global community. Expecting a valuable global decentralized asset to be entirely without energy costs is unrealistic, it's just a matter of how much energy is feasible. Depending on how valuable Bitcoin is deemed to be, consuming the same amount of electricity as a small country might be justified in the short term, but should clearly be addressed in mid term.
> Bitcoin's energy consumption should be framed in the context of how much value it brings to the global community.
Sure, but how much is Bitcoin actually being used where it creates real value, as opposed to being something people invest in hoping it will go up farther.
Bitcoin converts computational energy into a digital store of that value which can be transferred anywhere, any time, in any amount, without the need for a trusted third-party, for a miniscule portion of that value. To assert this is a waste or that it doesn't have value is disingenuous.
