Currency is a collective delusion. It's valuable if everyone believes it is, which is why precious metals trade higher than their usefulness in industry.
I don't think Bitcoin's delusion will last more than another decade. We'll probably find a way to design a delusion that distributes value "fairly" rather than to a class of nerd overlords. But until then, it's a fun story to watch.
Right, that's exactly my point. Bitcoin's only value is in the transactions it can make. If there are no transactions, there's no way for it to be a store of value, contra the GP.
Fiat currencies aren't technically any different, but you can use them to pay taxes and their value is insisted on by armies, which does count for something.
> Bitcoin's only value is in the transactions it can make.
Bitcoin's value is that it's
* Fungible
* Divisible
* Verifiable
(All qualities that gold has, but Bitcoin does them a lot better)
as well as being
* Stupidly easy to store and transport
* Extremely difficult/impossible to confiscate
* Not subject to devaluation due to an as-of-yet undiscovered deposit
> If there are no transactions,
There are, as of now, on the order of five transactions per second. How many times per second do you think people are trading gold?
> Fiat currencies aren't technically any different
Well, there's at least one difference; fiat currencies can be easily devalued by inflation. Gold can't be inflated by fiat, but it could be inflated by the discovery of a large deposit (or asteroid mining). Bitcoin can't be inflated at all, period.
> but you can use them to pay taxes
If you have an asset, you can sell the asses to pay taxes or court-ordered payments. The small friction involved in converting the asset to fiat money is factored into the price of the asset. (Incidentally, one of the benefits of Bitcoin is that it's less beholden to taxation than traditional clearing house/bank-held assets).
> and their value is insisted on by armies
I've seen this meme a few times, and I honestly don't understand how anyone can say or write this out and not think to themselves "Wait, this doesn't make any sense at all.". I'm pretty people started saying this as a joke.
What is this even supposed to mean? If I attempt to sell something for USD above a certain price, is the army going to kick down my door and threaten me until I place a higher value on the dollar?
> Gold can't be inflated by fiat, but it could be inflated by the discovery of a large deposit (or asteroid mining). Bitcoin can't be inflated at all, period.
Is this really true though? Couldn't a leap forward in quantum computing make mining BTC considerably "easier" and thus inflate and devalue the supply of BTC on the market?
Not as far as we know. Even with grover's algorithm, all hash algorithms in Bitcoin should still (probably) be secure. Even if there were a huge leap in processing power, the mining difficulty would increase automatically. Even if someone had infinite processing power, all they could do is mine the rest of the coins more quickly; there is still a hard cap on the total future number of coins.
Quantum computing has implications for the transmission of coins but has no implications for mining. There is no evidence that QC is going to make it easier to invert hash functions.
You can quantify how much the value of gold is through actual physical use value and how much is through mere speculation. So yes, 'using it in jewellery and circuits' is a perfectly fine explanation.
It's not a binary choice. Things don't have to be pure speculation or pure 'real' value.
People have been desiring gold for longer than documented history. It's beautiful to look at. It has inherent value, which is evident in the fact of it's desirable beauty and long history.
Even in worst case scenario that it's comparable in value to dull, metallic gray Rhenium for its industrial applications: $42 an ounce is better than BTC's worst case $0. You'll always be able to exchange gold for bread.
> People have been desiring gold for longer than documented history.
Yes, it's been around longer than Bitcoin. Not really sure what you're trying to indicate there.
> It's beautiful to look at.
Which is responsible for a very small fraction of its value. Most gold is not used in jewelry.
> It has inherent value
There is no such thing as "inherent value". Humans assign value to things. Most of the reasons that humans assign a high value to gold (fungibility, divisibility, unforgeability) also apply to Bitcoin, only more so.