Many gold bug values overlap with Bitcoin, but it rejects BTC without understanding the superiority of its digital ledger.
This is an opinion editorial by Luke Groom, a civil engineer, JD-MBA student, and part-time strategic partner at Marathon Digital Holdings.
The past two years, Jordan Peterson He dives down the sound money rabbit holeAnd it was a pleasure to watch her from afar. Many of the values he espouses align with the values that Bitcoin encourages, such as personal responsibility and the search for truth, so it was only a matter of time before he became interested in bitcoin.
I’ve talked with They will benefit Amos And Robert Breedlove In recent years, even if you are not using Bitcoiner per se, The audience was captivated At the Bitcoin Conference in Miami in 2022. prof A more recent conversation with Roy Sebagh It was also fun to listen to, though it made clear to me the need to discuss the differences between gold and bitcoin, not just their properties as monetary units, but also the properties of their ledgers.
Sure enough, gold bugs like Sebag and Peter Schiff Share many beliefs with Bitcoiners. I respect them and their work. There is a lot of overlap in the problems and solutions that both gold bugs and Bitcoiners tackle. But the arguments for bitcoin as a superior unit of account have been discussed at length.
The fact that gold has other tangible uses is not relevant to world money
Sebagh and Schiff argue that gold is valuable, in part, because it has other uses such as cell phone parts and dentistry, while bitcoin has no other uses. This is correct; However, I’m not sure how relevant that is.
Why do we need our money to have other features besides money? Where is it written? If the monetary premium to gold were to disappear, and used only for its other tangible purposes, the price of gold would absolutely collapse. Moreover, if gold becomes a universal unit of account as the gold bugs want it to be, gold will be used to a lesser extent for non-monetary purposes due to cost constraints. His monetary premium would increase, weakening their argument that there were other uses of value.
A monetary unit just needs to have good monetary characteristics and interact well with its ledger. like It is dictated by generally accepted characteristics of moneythe ideal monetary unit would be portable, durable, acceptable, rare, fungible, divisible, and counterfeit-proof.
As a unit, bitcoin is equal to or superior to gold in all of these features, with the exception of acceptability. (The market value of gold is still nearly 20 times that of Bitcoin, which means it’s still widely accepted.) However, talking about units is only a fraction of the conversation. We should also look at the ledger.
Bitcoin Ledger is excellent
Our modern society requires the use of ledgers to handle money. Moving dollars or physical gold around the world is very expensive, dangerous and logistically difficult. Instead, we rely on the ledgers of credit card companies, banks, and central banks to facilitate the “movement” of money. Our entire system, with the exception of the relatively few physical dollars that exist, is a system based entirely on cash in the ledger.
Since ledgers have become essential in modern commerce, and because no one is advocating a return to a society in which all trade is conducted exclusively by exchanging money in person, when analyzing monetary systems we must look not only at the units in our ledgers but also the ledgers themselves . Bitcoin’s properties as a ledger are what make it a monetary system far superior to anything out there.
If we think about the characteristics that make up the ideal ledger, they would be: reliable, non-attackable, verifiable, universal, accessible, trustworthy, and capable of fast final settlement. While the sound money characteristics of gold versus those of bitcoin were relatively close when considering the units behind the ledger, when comparing the ledgers themselves, bitcoin is much better.
From a monetary unit perspective, both bitcoins and gold bugs agree that a gold-based system can encourage monetary responsibility and curb inflation. However, the gold bugs did not provide any mainstream suggestions for improving the USD ledger system. This current system is flawed because it is not verifiable to individuals, cannot be accessed by individuals to interact directly with it, and is slow to process final settlement. How could a gold-based ledger be better?
Moreover, the gold bugs made no meaningful suggestions on how to avoid the problems of degeneration, which had been constant for centuries.
We’ve actually been experimenting with gold-based ledgers for the past 800 years. the Medici family He popularized ledger-based, gold-backed banking in Italy and throughout Europe as early as the 12th and 13th centuries. In fact, Europeans used ledgers to “transfer” their gold over long distances. People and governments continued to use the system of nested ledgers backed by gold for centuries and each of those countries They witnessed ledger corruption, the failure of their currency, or Degradation of gold. So, what mechanisms do gold bugs propose to avoid corruption and degradation of gold-based ledgers in the future? I didn’t hear anything.
Bitcoin is beautiful in that it provides an elegant solution to both the unit and the ledger. The module provides all the characteristics of sound money, a ledger that is reliable, non-attackable, verifiable, global, accessible, and provides fast and trustworthy final settlement. One can personally interact with the ledger and provide a verified final settlement worldwide within minutes on the ledger which does not require a trusted broker.
I have a lot of respect for gold bugs, and even hold a modest amount of gold myself. With this respect in mind, I ask Peterson, Sebagh, Schiff, and other gold bugs, when comparing monetary systems, to analyze both the unit and the ledger, and then come to their own conclusions.
This is a guest post by Luke Groom. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.