A very very minute percentage of bitcoin is used in transactions. The vast bulk of it is seen by its users as an investment. And historically there have been Ponzi schemes that allowed people to cash out before the scheme fell apart — but it was always a small minority cashing out.
Go to Coinbase and try to figure out how to use Bitcoin to buy something with. All they talk about is Bitcoin as an investment.
A currency can’t be an investment as the expectation that it will rise in value undermines the main quality of a currency, which is to maintain a stable value, so it can be used as intermediary.
>Go to a gold exchange and try to figure out how to use it for microchips.
The idea that gold is useful as a store of value is ridiculous. You have painted the picture perfectly with your comment. It is not easily moved. It is not easily utilized. It is worthless to the average person and it’s price is heavily inflated.
Most Ponzis and pyramid schemes are built on something that has a legitimate use.
After all, the eponymous scheme by Charles Ponzi was built on legitimate postal reply coupons.
So a list of non-monetary uses for gold is not evidence that its monetary uses are not Ponzis.
Most financial instruments are at least Ponzi-adjacent in that their value is derived from the expectation that other market participants will pay more for them than you did.
Whether it's real estate or equities, precious metals or cryptocurrency, profit requires an infinite cycle of growth that must collapse at some point.
As of June 30, 2012, the $100 bill comprised 77% of all US currency in circulation. Federal Reserve data from 2017 showed that the number of $100 bills exceeded the number of $1 bills. However, a 2018 research paper by the Federal Reserve Bank of Chicago estimated that 80 percent of $100 bills were in other countries. Possible reasons included economic instability that affected other currencies, and use of the bills for criminal activities.
Seems to fluctuate quarterly and I was saying the article addresses the point and makes an argument that BTC is not “like gold” in this way because the majority of demand for gold comes from non-investors (which appears to be the case in I think most quarters but perhaps not most recently). Jewelry is its own category but it does have “utility” if viewed through the lens of human behavior across civilizations over time.
>the majority of demand for gold comes from non-investors (which appears to be the case in I think most quarters but perhaps not most recently)
There's actually been far more industrial usage proportionally recently than any prior year. Prior to 2020, the highest industrial usage year was 2016, at ~7%. The article is wrong; the VAST majority of the demand for gold does indeed come from investors. This is ignoring gold's historical status, of course. Before the advent of modern computing, there was extraordinarily little "practical" use for gold beyond use as tooth fillings. And yet, it is during this time that gold was most coveted. Why is this? Economists have been debating that for a century! :o)
>Jewelry is its own category but it does have “utility” if viewed through the lens of human behavior across civilizations over time.
Jewelry does have utility yes, but gold jewelry has no marginal utility over, say, brass jewelry, other than the material composition. And yet, gold jewelry commands a far higher price, and despite even this, it is still in higher demand. This is because buyers place a premium on the metal itself, hence why I referred to it as a para-investment.
Gold's coveted status is fairly easy to identify. It's one of the few physical elements that is (a) somewhat rare and difficult to mine (b) has an exceptionally long shelf life, even under harsh conditions e.g. under ocean water and (c) can be authenticated with simple tests e.g. nitric acid.
(A) applies to a number of metals, including ruthenium, iridium, rhodium, and osmium, all of which are less abundant than gold. Although industrial demand has caused the price of those to rise in recent years, the difficulty of extracting them gave them essentially no value historically. Production difficulty may cause the production cost of a given asset to rise, but in a market that must also be met with equivalent demand lest the effort be in vain. For example, I could go outside, pick up a large rock, and spend the next several days crushing it into a fine powder. This would be a fairly difficult process, and yet the end product would be worthless. Rarity does not automatically equate to value.
(B) is perhaps gold's most unique physical property, but given the historical prominence of silver (a metal that corrodes rather easily), I seriously doubt that this alone justifies a single ounce of gold historically having been worth an average person's months of wages.
(C) is true of many metals, and has only come into existence as a method for verifying gold in more recent years, which again belies its historical value.
