The Difference between Bitcoin and Gold (I)
Some people always like to call Bitcoin "digital gold". What are the similarities and differences between Bitcoin and real gold?_DJMINER
For most people, Bitcoin is still a completely unfamiliar concept, which is not surprising, because they may have only heard about it occasionally, maybe once or twice. When something is not understood correctly, wrong information will come to us.
A fundamental misunderstanding of the Bitcoin is that its main purpose is to pay. This makes it impossible to understand the true value of Bitcoin. If you ask most people in the street what bitcoin is, maybe they will tell you that this is a product that distinguishes Alipay, Visa and PayPal, another kind of coffee that can be used to purchase or to realize payment function.
Anyone with these ideas will not be too optimistic about the future of Bitcoin.
Because 7 transactions per second, it is too slow to catch up with the consumption experience provided by Alipay, WeChat and Apple Pay and other existing means of payment. Moreover, it also needs high transaction fees and transactions. If you think so, it's natural to conclude that Bitcoin has limited potential.
In fact, Bitcoin should not compete with PayPal, Wechat Payment or Visa. It may become a new form of currency, just like gold._DJMINER
Let's first look at what money is.
Throughout human history, money exists in many forms. Shells, hides, stones, livestock, weapons, salt, metal and paper were all currency forms widely used in human society. These goods can be used as money because they are indeed scarce goods at some time in human society. In addition, whether it is a handmade metal dagger or a beautiful string of jewelry, for people of a certain period, these things are difficult to make and imitate, and their rarity gives them value.
Some rare goods have the property of exchange of money value, not to obtain the goods themselves, but because they can be used as intermediaries for other goods transactions. For example, if I want to buy the fresh fish you just caught, but if I have only one axe as a medium of exchange, the potential difference in the value of these items will make trading difficult. Therefore, a valuable and portable third-party item is needed to calculate the value of fresh fish and then complete the transaction. This third-party value media needs three characteristics:
Value Storage: Its value is accepted by the public and still has value over time.
Exchange media: can be used as a third-party media for other items, and will not be used up;
Value Criteria: Used as a medium of exchange, it has gradually become a measure of the value of goods._DJMINER
What do these three characteristics have to do with Bitcoin?
Like beads, shells and sheets of metal long ago, Bitcoin is another form of currency. Essentially, only when the user thinks something is valuable can it play the role of money. The value of this thing depends directly on the difficulty of its production.
Today, gold is the most valuable of all metals, mainly depending on two factors: how much we have mined (gold reserves) and how much we have mined from the earth every year (gold circulation). Why is the industrial demand for copper, tin, lead and silver much higher than gold, but the value of gold much higher? It boils down to inventory flow ratio (SF). The total amount of gold we dig out from the earth every year is about 2% of the existing gold reserves. That is to say, the ratio of gold stock to gold flow is 50.
Such a high inventory flow ratio allows you to buy gold boldly, and even if the supply of gold suddenly increases, your investment price will not plummet. Even if gold production doubles, the inventory flow ratio will only increase from 2% to 4%, which will hardly have a big impact on gold prices.
It is precisely because of this characteristic that gold has maintained its role of storing money in value throughout human history. No other item in history had such a high stock-to-flow ratio as gold until Bitcoin appeared._DJMINER
For most people, Bitcoin is still a completely unfamiliar concept, which is not surprising, because they may have only heard about it occasionally, maybe once or twice. When something is not understood correctly, wrong information will come to us.
A fundamental misunderstanding of the Bitcoin is that its main purpose is to pay. This makes it impossible to understand the true value of Bitcoin. If you ask most people in the street what bitcoin is, maybe they will tell you that this is a product that distinguishes Alipay, Visa and PayPal, another kind of coffee that can be used to purchase or to realize payment function.
Anyone with these ideas will not be too optimistic about the future of Bitcoin.
Because 7 transactions per second, it is too slow to catch up with the consumption experience provided by Alipay, WeChat and Apple Pay and other existing means of payment. Moreover, it also needs high transaction fees and transactions. If you think so, it's natural to conclude that Bitcoin has limited potential.
In fact, Bitcoin should not compete with PayPal, Wechat Payment or Visa. It may become a new form of currency, just like gold._DJMINER
Let's first look at what money is.
Throughout human history, money exists in many forms. Shells, hides, stones, livestock, weapons, salt, metal and paper were all currency forms widely used in human society. These goods can be used as money because they are indeed scarce goods at some time in human society. In addition, whether it is a handmade metal dagger or a beautiful string of jewelry, for people of a certain period, these things are difficult to make and imitate, and their rarity gives them value.
Some rare goods have the property of exchange of money value, not to obtain the goods themselves, but because they can be used as intermediaries for other goods transactions. For example, if I want to buy the fresh fish you just caught, but if I have only one axe as a medium of exchange, the potential difference in the value of these items will make trading difficult. Therefore, a valuable and portable third-party item is needed to calculate the value of fresh fish and then complete the transaction. This third-party value media needs three characteristics:
Value Storage: Its value is accepted by the public and still has value over time.
Exchange media: can be used as a third-party media for other items, and will not be used up;
Value Criteria: Used as a medium of exchange, it has gradually become a measure of the value of goods._DJMINER
What do these three characteristics have to do with Bitcoin?
Like beads, shells and sheets of metal long ago, Bitcoin is another form of currency. Essentially, only when the user thinks something is valuable can it play the role of money. The value of this thing depends directly on the difficulty of its production.
Today, gold is the most valuable of all metals, mainly depending on two factors: how much we have mined (gold reserves) and how much we have mined from the earth every year (gold circulation). Why is the industrial demand for copper, tin, lead and silver much higher than gold, but the value of gold much higher? It boils down to inventory flow ratio (SF). The total amount of gold we dig out from the earth every year is about 2% of the existing gold reserves. That is to say, the ratio of gold stock to gold flow is 50.
Such a high inventory flow ratio allows you to buy gold boldly, and even if the supply of gold suddenly increases, your investment price will not plummet. Even if gold production doubles, the inventory flow ratio will only increase from 2% to 4%, which will hardly have a big impact on gold prices.
It is precisely because of this characteristic that gold has maintained its role of storing money in value throughout human history. No other item in history had such a high stock-to-flow ratio as gold until Bitcoin appeared._DJMINER
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