Quote from: fellowtraveler on February 23, 2012, 10:12:02 AM

Quote from: NOTtheMessiah on February 20, 2012, 05:01:48 AM

This weekend I was at the International Students for Liberty conference where Peter Thiel gave the opening keynote. I asked him about PayPal's crypto-anarchist roots and the future of Bitcoin and currencies that might follow (in retrospect, I should have specified Bitcoin, because he was a bit vague with his response), and he seemed somewhat fond of the idea, hinted that some sort of cyber-currency future is inevitable, but said that Bitcoin isn't likely to have the network effects necessary to take off, and said that gold-backed currencies already have a great deal of support, and would serve as a better fit for a competing currency. He said that he would have more to say on the topic. Someone I talked to who attended a private social with Thiel mentioned there was an impression that Thiel hadn't done his homework when further questioned on the topic.

I don't have his exact response, but I know the event was taped, and suspect that videos will be uploaded by Students for Liberty after editing.

Edit1: CoinSpeculator shares details of a more in-depth discussion with Thiel
https://bitcointalk.org/index.php?topic=64610.msg760848#msg760848

I have started to hear of this Peter Thiel character over the past year or so, and I have been impressed with his intellect and his focus on issues that our dear to our hearts, here on this forum.

Clearly he has not yet grasped the full impact, if he is still thinking of Bitcoin and Gold as competing things, instead of thinking of Bitcoin as a new technology that will someday be used for transferring gold. The Bitcoin community and the digital gold community are going to merge. The whole will be greater than the sum of its parts. Both commodities have important roles to play in a larger picture of things. Those who still think that it will be "one community or the other" have not yet grasped the full implications of what is happening.

However that is no matter, because soon everyone will come around, and probably Mr. Thiel sooner than most.

As for Bitcoins and gold, it's important to keep in mind that neither has "intrinsic" value.
Rather, both are valued by men for their unique properties.

Gold is:
-- Divisible.
-- Fungible.
-- Value dense.
-- Recognizable.
-- Durable.
-- Zero counter-party risk.
-- Stable in supply, yet minable.
-- Liquid.
-- International.
-- Non-manipulatable. (Non-centralized.)

By comparison:
-- Diamonds, while valuable, are NOT divisible, nor are they fungible.
-- Water, while valuable and divisible, is not value-dense enough to compete with gold as a form of money, on the free market.
-- Food, while valuable, is not durable.
-- Dollars, while liquid, do not represent zero-counter-party-risk (rather, they are debt-based.)
-- Dollars, while recognizable, are not stable in supply (inflation is a worry).
-- Dollars are also not minable. (Production is available only to a monopoly cartel, versus gold, which anyone can produce.)
-- Food, which anyone can produce, is not liquid, especially in comparison to dollars or gold.
-- Dollars, while you can hold them in your pocket, a board of bankers still has the power to reach into your pocket and manipulate its value. (This is not the case with gold.)

Soon it becomes very clear that gold was never "declared" to be a form of money by any "authorities" but rather, became money due to natural market forces.
If gold became money strictly due to natural market forces (as a result of its unique properties) then clearly the only reason it has been supplanted by dollars is due to artificial restraints imposed on the market by government force. (Such as legal tender "laws", tax "laws", money laundering "laws", etc.)
Such forces must be constantly active, otherwise, natural market forces would immediately resolve back to gold again as they have for thousands of years.

Now let's consider Bitcoin's unique properties:
-- Divisible.
-- Fungible.
-- Value dense.
-- Recognizable.
-- Durable.
-- Zero counter-party risk.
-- Stable in supply, yet minable.
-- Liquid.
-- International.
-- Non-manipulatable. (Non-centralized.)
AS WELL AS:
-- Non-confiscatable.
-- Accounts cannot be frozen.
-- Anonymity is possible.
-- Electronically transferrable.

As you can see, Bitcoin's unique properties are similar to those of gold, although it adds new properties due to its ethereal nature.

Those new properties (non-confiscatable, non-freezable, pseudonymous, transferrable electronically) all serve to route-around the artificial forces that are currently being used to supplant gold with the dollar. After all, the various immoral, legal-tender legislation in place today uses the force of a gun to impose fiat money onto an economy that would otherwise resolve to gold by natural forces. That artificial force depends on the government's collusion with banks and their collective monopoly on the ability to issue, store, freeze, confiscate, track, and transfer dollars.

What happens once Bitcoin destroys their ability to do so?

===> What will happen is that Bitcoin will take a pre-eminent role for all digital currency transfers (for ALL currency types including gold.)
===> It will also serve as the censorship-proof "universal medium" for all other online settlements.
===> Gold will eventually revert to its status as money, due to natural market forces that will be unleashed by the technology of Bitcoin, etc. (Just as Bitcoin has enabled people to buy drugs online, meaning Bitcoin has brought natural law to the drug market, so in the same way, Bitcoin will enable people to use gold as money, meaning Bitcoin will also bring natural law to the monetary system.)
===> Of course, gold has already reverted to its status as money at the elite, national, and central-banking levels. But Bitcoin has the potential to enable this for the livestock/slaves at the plebe level as well. (The proletariat.)
===> Ripple will fill the need for credit lines and expansion, in an F2F manner. It will also enable all participants to exchange in-and-out of all other currencies, including fiat currencies, while entirely routing around all existing government-imposed bottlenecks and "money-transmitting authorities". People will easily be able to exchange in-and-out of the system by way of their own trusted friends and attorneys.
===> I believe also that small vault operators, as envisioned by Andrew McMeikan of PKTP, will have an important role to play.
===> As will various transaction servers along the lines of Ricardo, PKTP, Loom, Truledger, and Open-Transactions.
===> As well as various DGC issuers and Bitcoin voting pools.

The next time one of you gets an opportunity to explain Bitcoin to Peter Thiel, please give him more of a "big picture" view of things, and don't let him go astray down the primrose path where people still think of Bitcoin and Gold as "either-or" sort-of-things, when in fact each has unique properties, and its own part to play in a larger, overall vision.

+1