Bitcoin vs. Gold – just for fun. Math battles
A lot is written comparing three supposedly inflation-resistant investments: gold, silver and Bitcoin. Though the ratio of gold to silver was higher half a century back, in the days of silver-backed currency, it has been quite stable at between 70 and 80 for the last decade. The argument in favor of silver is primarily that it is used extensively as an industrial metal, and usage has outstripped production for several years now. It is due for an adjustment.
Not finding a chart on the Internet (probably not trying hard enough), I made this one of my own, superimposing Bitcoin and Gold over the past ten years. A couple of things strike one’s eye.
First, Bitcoin has been more volatile than gold since Covid. Second, though it has risen more, it is not vastly more. After increasing in value more than 200-fold to hit 60,000 between 2014 and Covid, it has only increased by a bit more than half. Though this chart does not show volume, Bitcoin trading volume has fallen substantially as its value has risen.
The bottom line is that Bitcoin has not substantially outperformed gold and silver over the past four years. Given the advantages of the metals (viz, 5000 years’ history vs. 15, substance vs. bits floating in the ether), I’m betting more heavily on the metals.
I’ll repeat what I have noted in earlier posts. Though metals are presently an awkward vehicle for everyday transactions, there are ways in which that could change if and when fiat currencies fall further out of favor. I made my own proposal for Bartercoins, and the Goldback people have what looks like a very viable approach. Conversely, crypto fans have been working on the problem of crypto usage for small transactions every since Bitcoin’s inception and no widely accepted system has emerged.
In my opinion there is a lot to be said for a means of exchange that is totally anonymous, with the value intrinsic to the medium itself. Crypto by its nature is visible in the blockchain, and the schemes being advanced to make it more suitable for small transactions involve financial intermediaries, which make it more visible to banks, taxing authorities and everybody else.
Putin just lost Syria. The economic news from Russia keeps getting worse. Battlefield successes are coming at a vast cost. How long can it continue? Not forever. In very local news, our power is only out about four hours per day and the Russians haven’t rocketed us much for a week.
In other news from Lake WeBeGone, Eddie just got back from “Math Battles,” where his team, which placed second in Ukraine last month, just placed first in Kyiv. He is wildly excited. My excitement could not be described as tame.
Yeah; congrats to Eddie!
Congrats to Eddie - good work!
As for your idea about an anonymous bartercoin, it has to have stable value as against, say, the cost of a week's groceries, or the value of an hour of honest work producing something of tangible value (which excludes most bureaucracy...). Gold and silver kept a stable value in the US for nearly 150 years - 1783 to 1933 (when the fascist government of FDR robbed the American people of their gold, details, see https://cdn.mises.org/Peoples%20Pottage_2.pdf). And it's not going to stay secure for long, even if held in a "wallet" on an air-gapped Raspberry Pi with an SD card. To transfer funds, you still have to go on the internet, and you'll traverse at least one node on which NSA is doing bulk collection - and all it takes is some simple pattern matching to pick up transactions and do network analysis.. If governments with this kind of power were to cease to exist - and given the feedback loop with regard to debt that the US government is now in, it's not impossible, it could fold as quickly as Assad's government - then the " bartercoin" would be a viable alternative - given the existence of some sort of decentralized internet structure, perhaps modelled after the old FIDOnet of the 1980s.
As to Syria, I posted the following on a US "conservative" pro-Russia substack, we'll see what kind of outrage it provokes: "My bet is that the Russians *couldn't* intervene [in Syria], what's left of their army is tied up in Ukraine, and Assad's military brass had figured that out, which meant that knew that they were toast. They folded like a cheap tent in a rainstorm, and that was that. The ruble is in the process of going into the toilet despite everything Nabiullina has tried, which is why they paid off DPRK in oil, not rubles. At some point, Putin is going to be in trouble. As I've written before, the question in Ukraine is which side loses fastest and most effectively - because nobody is winning that war. Putin scared the piss out of his intel community, they told him what they thought he wanted to hear instead of the truth, and he made a very bad decision. And instead of sacking Gerasimov after the initial clusterf*ck of the invasion in Kiev oblast, Putin doubled down, resulting in the current debacle. It's going to be interesting to see what, if anything, happens if the Chinese try to grab the Far East." Fun and games and amusement...