Quote from: Bigeyeone on February 02, 2014, 03:30:00 AM

Gold as a alternative currency, well good luck on that one, ever bought something with gold ? ever bought something with gold online ?

Gold is an excellent store of value but really sucks bad as a currency and that is why it has been replaced a long time ago with paper, you just don't carry gold around to pay for stuff, much too risky and as a merchant you just dont except gold as payment either, you need a lot of expertise to determine whether the gold is real or not and how much gold exactly of what purity your customer is offering you, and even if you have the expertise it consumes a lot of time to check all this, chances of getting conned are just too big. No gold really sucks bad as a currency.

Don't mean to bash anyone, but some of you are misinformed.

The world used to operate based on a Gold Standard, it actually was an excellent alternative currency - but only when things were "good". The reason for its failure, was because the standard performed/performs poorly during a crisis. Firstly, physical gold wasn't transferred between persons. Gold certificates were used as paper currency in the United States from 1882 to 1933. These certificates were freely convertible into gold coins. So you could "carry gold around and pay for stuff". Now it failed after World War II and is often blamed for prolonging the depression because during a crisis, persons HOARD their certificates/physical gold (of limited supply) which would halt the interchange of money. Production prices would rise, wages would fall, and no one could afford a thing. Adherence to the gold standard prevented the Federal Reserve from expanding the money supply to stimulate the economy, in comes fiat. So stimulation here was a good thing (whenever is it not? :-p).

Bitcoin in essence is the cyber version of the gold standard. It operates based on the same principles, easily transferable, limited supply. Its only benefit right now is that it can be transferred easily between hands and is anonymous. Now if bitcoin were the main currency of the world, it would operate the same way as gold, but would fail horribly during a crisis as persons would hoard their bitcoin, and it would be the Great Depression II.

As a side note, don't view bitcon as taking over the USD and operating as the worlds currency, that would be naive. If you view bitcoin as an alternative to Gold/a store of $$, then you see its value. If bitcoin were to capture 5% of golds marketcap that would be $200billion. We aren't even close to that yet.

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