[cryptography] Digital cash in the news...

James A. Donald jamesd at echeque.com
Sat Jun 11 01:12:42 EDT 2011

On 2011-06-11 1:58 PM, Peter Gutmann wrote:
> I wouldn't call bitcoins digital cash.  They're more like digital tulip bulbs,

Monetary value is always speculative.  It depends on the expectation 
that they will be used as money.

There is a small but not totally insignificant chance that after fiat 
monies collapse, the world will go bitcoin standard.  There is a large 
chance that the world will go gold standard.

There are about ten billion ounces of gold in the world, therefore 
fifteen trillion dollars worth of gold.  This value only makes sense if 
there is large chance that gold will be money.

There are about three hundred million dollars worth of bitcoins.

Therefore the market is valuing the chance that the world will go to a 
bitcoin standard at

The current value of gold looks about right to me.  So the current value 
of bitcoin is also about right - that all the gold in the world is worth 
about five hundred thousand times all the bitcoins in the world.

Which is probably a fairly conservative estimate for the prospects that 
the world will go bitcoin.

If the current price of gold makes sense, the current price of bitcoin 
makes sense.

I would recommend putting most of one's cashi in gold, and a tiny bit of 
one's cash in bitcoin.

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