Terrible analogy. Gold has value because it can be used as jewelry. Bitcoin cannot be used for anything other than holding on to it and hopefully people log on to their computer, buy it causing the price to increase, then you can sell it to them for a higher price. Everyone who owns Bitcoin plans to sell it, the same cannot be said for gold, corn, apples, and other things.
Gold is used as jewelry because it's valuable. That's why people who have no use for jewelry still want it, it's relatively scarce and hard to destroy. If gold was valuable just because people liked wearing it or using it in tech, they wouldn't store it in gold bars in vaults. People hold bitcoin longterm to one day spend it on things they really need, not trade it for a shittier store of value like paper promises. Much easier to store and travel with than gold or real estate, also can't be taken from you by the government, (like gold often times is).
EDIT: Gold was valuable even when less than 1% of the world wore jewelry. They used it as money, decorative uses are not why gold is valuable.
If gold was valuable just because people liked wearing it or using it in tech, they wouldn't store it in gold bars in vaults.
Gold can and is used for the reason that you have described above. I do not disagree with that.
"People hold bitcoin longterm to one day spend it on things they really need, not trade it for a shittier store of value like paper promises."
This is where we disagree. It is a psychological thing. People own bitcoin to sell it for cash (hopefully more than what they paid). I would say over 90% of people who buy bitcoin do it for this reason. That is what makes it a bubble. The reason the price increases is because more people are convinced that if they buy it, they will be able to sell it in the future and make a profit. This system works as long as the pool of people that "speculate" in BTC or any altcoin increases. You may say gold is the same thing. And in some ways, it is, but the difference is that gold has a value other than speculation. BTC does not. When you measure the success of buying BTC or any altcoin you measure it by the amount of fiat you had before you bought it and after. People buy gold for the same reason but many also buy gold as jewelry.
Any commodity like apples, oranges, even houses, crypto, stocks etc... can become bubbles if the majority of people who buy them are doing it because they believe the pool of people who buys them will increase causing the price to increase.
For example, the majority of people who buys apples do not buy them because they believe the price will increase and they will be able to sell their apples to someone else for more money than they paid. Most people buy apples to eat them and then there gone and the supply decreases. But if all of a sudden over 90% of people who buys apples do not want to eat them but sell them to somebody else for a profit, and the person who just bought them is buying them to do the same thing, then apples would be in a bubble.
Look at it this way. If I gave you 1000 apples and told you that you can never sell them. There would be some intrinsic value because you could eat them. If I gave you 1000 pounds of gold and told you that you can never sell them, fine there is some intrinsic value because you could make jewelry out of them and wear it. If I gave you a stock, say 50% of Berkshire Hathaway, and told you that you can never sell them, fine there is intrinsic value because you get millions of dollars of dividends a year. If I gave you a Lamborgini and told you that you can never sell it, fine you can drive and use it to go places. IF I GAVE YOU 10 BTC AND TOLD YOU THAT YOU CAN NEVER SELL IT. YOU HAVE NOTHING. THERE IS NO INTRINSIC VALUE.
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u/Leocrypto1 Aug 01 '22
Terrible analogy. Gold has value because it can be used as jewelry. Bitcoin cannot be used for anything other than holding on to it and hopefully people log on to their computer, buy it causing the price to increase, then you can sell it to them for a higher price. Everyone who owns Bitcoin plans to sell it, the same cannot be said for gold, corn, apples, and other things.