Quote from: toknormal on March 27, 2014, 10:26:28 PM

Quote from: 2tights on March 27, 2014, 06:08:41 PM

Gold has industrial value, so its value will remain until viable alternatives compete with those industrial applications. Fiat and part of BTC value is created by the perception of people like you and me. A piece of paper has no intrinsic value or utility, however BTC goes beyond this and actually does have a very valuable function which is the blockchain.

2tights. I don't think thats necessarily true. Gold's industrial value is peanuts compared to its monetary value.

No monetary media needs to have an industrial value. In fact, it's an important property of any monetary medium that it works as well as possible as a token of exchange and as badly as possible for anything else (other wise it has a tendency to go out of circulation as gold jewellery, circuitry and teeth have done). The monetary medium derives its value from it's "role" in the economy, not from any sense of "intrinsic value" (which is a misnomer anyway - it's easily demonstrate-able that nothing has intrinsic value).

Gold was the "bitcoin" of the old physical world markets. It had certain characteristics of fungibility, resistance to counterfeiting, ilmited supply etc which made it function as a token of value. It was the fact that it was widely adopted in a monetary role that have it it's value - not the other way around.

Here's an example to illustrate. If you go to a kids funpark and buy a few of those plastic tokens for the rides, they'll cost you about 5 Eu / Dollars whatever each. On the other hand, if you buy them in a hardware shop, they'll cost about 1 cent each. So you're paying a markup of many thousands of percent for exactly the same plastic token that is in the monetary role. Nothing to do with "intrinsic value" of plastic tokens.

Gold is exactly the same - it doesn't not have any intrinsic value. It's just that people make a deeply rooted association with gold and value historically, so the word 'intrinsic' gets used to reflect that.

We now live in an electronic trading environment, however and you can't "hold" gold electronically so a new monetary medium is required, hence the emergence of cryptocurrencies.

When you look at it analytically in this way, they actually have more justification for a high valuation than gold does.

unfortunately this what you said is all wrong .. people do hold electronic and paper gold all the time.. if you go to say monex and you tell them you want to buy gold at their exchange and have them store that gold for you in their vault then they will supposedly buy gold for u and store it in their vault for you .. whether they actually ever buy the gold is dabatable but they will issue you a certificate saying that they bought the gold and that you own it .. problem is if you do not hold the physical metal in your hand then you don't really own any gold even if your certificate says you do .. paper or electronic digits is not gold. if monex were to go belly up well you will never see that gold your certificate says you own . now lets go look at the GLD markets. that is all paper gold being traded. the price of gold is manipulated by people who trade in paper gold. the central banks mostly manipulate the price of gold using this paper system where one ounce of physical gold can control like 100000 ounces of paper gold. that is all fakelands and is not real gold.