I've been thinking a bit on this and want to pester @24 mor…

We have some empiricism from the physical world - many hundreds of different glass bead types at different times functioning as money in what today is Tanzania. Theoretical number of different beads are infinite (just change colors, shapes and patterns).

So when Venetians and others ‘cracked’ the monetary code of one tribe, and that area was flooded with such beads (pocketing nice seigniorage for the Europeans), the natives switched to a new, scarcer bead type. Being money was no protection, scarcity was.

A similar analogy can be made from the theoretically millions of different alloys possible with gold, silver and copper alone. Perhaps physicality is a red herring, and difficulty to dilute part of the true focal point.

In other words, BTC could hypothetically survive a failure of being the most liquid MoE, if its resistance to dilution could stay higher than the unlimited number of later copy cats. Evidence of this is good for now, but over 100 years, who knows.

Being scarce is a necessary but not sufficient condition for a thing to be money.

By eliminating the scarcity, the Venetians undermined the glass beads as money.

So, the money-ness was gone, therefore, they switched to a different form of money.

Scarcity, however, does not make a thing money.

Classic cars are scarce, but they are terrible as money.

You can certainly argue that BTC has non-money functions, such as being a collectible, but what other value is there, really?

And, what makes it preferable to altcoins for any purpose?

I agree with your first two twetches. What I try to understand is if BTC, if failing as money due to tx fees, can still compete with gold's function today despite being digital. In other words, I explore the relevance of the earlier mentioned focal point.

I'd say it can compete with gold at being a "store of value" just like water and sand can, or like titanium or silver can.

The question is more "how good is it for that purpose?"

So far, BTC doesn't have a good track record on that front.

The thing is, BTC has unstable pricing. It's volatile.

Additionally, people treat it as a "number go up" investment rather than a store of value.

The way it's treated is as a speculative asset, not as a store of value.

Could it be treated as a store of value? Possibly, but it has no other uses underpinning that purpose to stabilize prices.

Essentially, without other uses, (what Peter Schiff would erroneously call "intrinsic value,") the price action of BTC is pseudorandom noise based on the behaviors of people reacting to price behaviors. Circular chaos.

But that's stepping into some different territory, so I'm going to hold here for you to respond.

Ok maybe but now you're not proving that BTC is any good, just trying to prove that I haven't shown that it's worthless. You are better off competing against it than trying to defend it (which is not to say you should go all-in of course.)

This is misunderstanding the intention of the thread. It is not to defend BTC, but to dissect the framework that may or may not show if digital BTC can be compared to a physical 10T USD good or not - even if failing as money. Seemed important to me.

I disagree! The track record is still good, it has not in 10 years even been close in derailing from the max cap of 21M. Price movements irrelevant over the long run, you can't control how other people subjectively value a good.

My fear would rather be: how easy over the upcoming decades would it be for alts to also cement scarcity in the form of the protocol and decentralization. The easier that is, the less distinction BTC has.

Prices aren't irrelevant when "I'm going to exchange this later for the same or greater value" is the goal.

That a thing is scarce does not make it valuable in and of itself!

The "store of value" investment strategy requires stability or growth of price.

I actually think gold would be worth more if not used in industry. Other uses can be a nuisance. Example: silver stock consumed in industry has made dilution easier. I think Mises made this point but might have been one of the other Austrians.

That makes zero logical sense, unless you are claiming that different purities of metals is unimportant to those investing in it.

Dilution is a quality issue for what someone is investing in.

In any case, when used in industry, that increases demand for that good in a way that tends to increase stability of prices (which is valuable for the store of value use case.)

One easy way to observe it is: silver is used massively more in industry than gold. Yet has around 2% of gold's market cap. 'Non-monetary' uses for any MoE is at best a nuisance imo, and at worst fatal. Silver almost fully demonetized soon.

Market cap is a very poor figure to use there, especially considering supply figures...

187k tonnes of gold mined historically (https://www.gold.org/about-gold/gold-facts)

vs

1.5 million tonnes of silver mined historically (https://www.jmbullion.com/investing-guide/james/silver-supply/)

It's estimated that ~90% of silver has been thrown away, too.

Which implies a different value to it altogether.

IOW, you can't actually compare the two directly in the way you've tried to.

Yes but supply is to a degree consumed in industry. Gold diluted at most 2-3% per year. With silver, the more being consumed and so taken of the market, the less likely it will be with future low dilution numbers, it seems to me.

Are you suggesting that increased demand and decreased supply will result in lower prices?

I guess I just don't get your reasoning here...

We can't require anything of prices, they are just the records of economic exchanges of other individuals They have nothing to do with the actual physical or digital good itself. Price depend on fundamentals, not the other way around.

And yet, that's the "store of value" argument.

Don't get me wrong, I agree with you. I think it's a delusion to buy an asset as a "store of value" unless that asset is money itself, proven by its constant widespread saleability.

To my understanding, monetary goods can 'behave' this way. An increase in industrial demand can be more than off-set by decrease in monetary demand if the qualities as money deteriorates as a result.

That "if" is the biggest word in that sentence.

It's not industrial demand that is the cause, rather, changes in qualities of the good itself... But that's far more rare than you appear to think.

And, it'd be non-existent in Bitcoin and altcoins.