You just turned around and used my same arguments and proved my point again.And people have often said gold could collapse if financial markets were to stop valuing it. But there's a HUGE difference between a rare commodity who's physical production is limited. That difference is everything. No one is really to say more bitcoin can't just be created, or counterfeited. Or something else come along such as Litecoin. Bitcoin can't really be compared to a physical commodity with centuries of experience backing it as value - that circular sort of agreement is everything. And, in fact, if there should be some big new discovery of gold reserves its value WOULD collapse to reflect that.
The currency argument is wholly different and not comparable. It's backed by the full faith of govt, and it has value because people want to buy and trade it for purchase of goods and services produced in that country - the world could reject the USD but I could still go into a McD's in NY and buy a hamburger with it.
- First, you just said there is a huge difference between a physical commodity whose production is limited. Bitcoins are limited. They will run out in 2140. We don't know when/if gold will run out. The fact that gold is physical is irrelevant. The US Dollar isn't physical, even though it has a physical representation.
- Second, the USD can be counterfeited. Why do you think our government spends millions of dollars every few years making new money with harder ways to fake it? The US Secret Service focuses on chasing counterfeiters for a reason. A bitcoin is encrypted so it is actually much harder to counterfeit than an actual physical dollar.
- Third, you make the argument that the USD is backed by the full faith of the government. That means it is backed by "our" faith in our government. If our government collapsed or our faith in our government collapsed, it will tank in value.
- Fourth, you say that the USD has value because people want to buy and trade it for goods and services produced in that country. People buy and trade the bitcoin in the "country" of the internet for goods and services they consider valuable.
Just so you know kodiak, I am not picking on you, nor trying to be deliberately argumentative. We could be seeing the birth of a new form of currency that might shape the future. The fact that it isn't backed by a particular institution means it isn't controlled and manipulated. Because of this it might actually hold its value better over time. It's possible it will just be a passing fad and will eventually fade away, but it isn't something that is easily dismissed, and it is great food for thought!