Quote:
Originally Posted by GGG
That’s exactly how gold works. An any point in time there is a relatively fixed supply as changes to production capacity take time to produce to market.
If there is 10 trillion in gold and no one is selling it the price rises until it meets demand and people by smaller amounts. Now over time the price of gold comes back down as more gold is mined.
The argument against Bitcoin as an inflation hedge is that other coins will be able to be continually created which means an infinite supply of virtual currency and therefore it is inflationary.
It’s not that there is too little.
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They are not the same at all.
You are suggesting infinite divisibility, in order to have enough value to cover needs. That is not at all what happens with gold.
I once read a good explanation on gold (that is now very antiquated but still makes the point)... "400 years ago, an ounce of gold would buy a nice gentleman's suit. One hundred years ago, an ounce of gold would buy a nice gentleman's suit. Twenty years ago, an ounce of gold would buy a nice gentleman's suit. And today, an ounce of gold will buy a nice gentleman's suit."
That is why it is THE inflation hedge.
Gold has been gold forever. If you store a bunch of it (say, because you are a sovereign government), you can rest assured that, a year from now, or 5 years from now, or 50 years from now, it will still be what it is, behaving the same way (financially)
Bitcoin is not that. Not at all. It could be rendered worthless by new technology, getting hacked, or simply a loss of faith.
They are not the same thing and Bitcoin will never replace gold.