It's that simple physicality which gold bugs will always value, so I don't see your argument persuading them that bitcoin is *now* better than gold, and even in some future where bitcoin dominates - people would probably want some of their portfolio in gold.
I think we essentially agree.
I'm not arguing that people now trading want bitcoin as much as they want gold (that is manifestly untrue). More, I'm trying to counter the opinion that goldbugs seem to hold that there is something inherently valuable about gold, and something inherently bad about bitcoin.
That just isn't true; their argument is essentially anthropic: gold is valuable because it is valuable. There is no reason we can't say $COMMODITY is valuable because it's valuable. Therefore bitcoin is valuable because its valuable.
I don't seek to disprove the worth of gold; I seek to show that if gold is valuable, then bitcoins are valuable.
Now... a quick word about "lower bound of zero". If you want to argue that gold has a non-zero lower bound, fine, but then bitcoin must have a non-zero lower bound. It has properties that make it worth
something. Even if that something is $0.000000001. In that case we're simply talking a matter of scale not of truth.
If gold is valuable, then $COMMODITY is valuable.
set $COMMODITY = my poo.
Hmm, your formula doesn't seem to be working.
But I agree with your argument that bitcoin has value. Gold is valuable because it has valuable properties (unlike my poo). Bitcoin is valuable (or not) according whatever properties it holds (or does not). Gold and bitcoin share certain properties, but they are not entirely identical. We should start talking to goldbugs by first telling them about the properties bitcoin shares with gold. Then, when they agree on those, educate them about bitcoins unique properties.
bitgold is so convenient and successful that nobody ever actually goes and claims their gold. Why would they? What if, at this moment, 99% of the gold vanished? Literally. It gets zapped by aliens. But... nobody knows that it's happened. Nobody need care. Trade is happening as it always has. Nobody actually wanted the gold (and for those that did, the 1% that's left will be fine).
Ignoring some minor differences about how the coins/gold was introduced to the chain, we've gotten to a point where bitgold is equivalent to bitcoins. Goldbugs of the world, and mises.org fuddy-duddies: where is your god now?
This example also explains how to take over bitcoin with another digital currency. Start by making the currency backed in bitcoins, and give it some unique properties (e.g. instant transaction confirmations, better payment support, w/e). One-day you realise people don't bother converting their new currency back into bitcoins...