Categories
Bitcoin

Bitcoin Is Superior To Gold

Bitcoin vs Gold

The bitcoin vs gold debate rages on with investment circles unable to deny exponential patterns of growth which characterize Satoshi Nakamoto’s bitcoin payment system. Gold has been used as a form of currency and trade for thousands of years and has a reliable track record for preservation of wealth. However, as the newcomer onto the scene, bitcoin may be the kind of financial and technological breakthrough to challenge gold as the monetary kingpin once-and-for-all.

Early on in its life cycle, prescient investors began questioning the legitimacy of bitcoin value and debating how such a commodity could command a market price. What differentiated bitcoin from a mere collectible and what made it similar to precious metal assets?

Among many circles, especially gold bugs and older-generation investors, bitcoin was not considered a valid investment up until very recently.

In order to properly analyse the value proposition of bitcoin vs gold, we must clarify which attributes of gold are valuable and prop them up against the promise of bitcoin. When we measure the implications of today’s economic environment, it is clear to see why bitcoin is being considered the ‘gold of the 21st century’, or as some pundits have advocated, a ‘digital gold’.

Bitcoin vs Gold

Gold has perceived value because it is scarce, quasi-indestructible, and serves an industrial purpose. Bitcoin inherits all of these attributes then enhances the characteristics of portability and divisibility. Both are exceedingly durable and cannot be counterfeit. The main advantage for bitcoin over gold as a commodity is that bitcoin is highly portable, while gold must be insured, stored, guarded, and verified that the integrity of the substance has remained intact and not mixed with other filler metals.

If you are moving precious metals across borders, you must declare it. However, no amount of border authorities or cash sniffing dogs can detect if you hold bitcoin, as ownership can be distilled down to memorizing a private key.

If you are attempting to buy something with gold, it usually needs to be exchanged for currency first. Bitcoin payments need only a smartphone to transact.

One of the main reasons to add gold to an investor’s portfolio today is as a hedge against economics disaster, that of collapse or hyperinflation. Outside the gold-bug crowd, and among the current generation, gold as a valid form of transaction is something of a stretch of the imagination. In such a disastrous event, would people be exchanging pieces of gold if internet connectivity were still available?

At the blurring rate of current technological advancement, does considering a shiny metal to be valuable seem like an increasing or decreasing trend?

Gold may have been reliable in the 20th century, but among a generation of digital natives who are connected psychologically to their mobile devices, bitcoin will increasingly be the method of choice for commerce. This is the information age, and in it, information represents the most valuable form of commodity. Bitcoin is financial information stored on a collective, distributed computing network. Gold comes nowhere near to competing with this network of trust.

In terms of commodity fungibility, having one unit exactly similar to all others is important. With bitcoin, this is guaranteed by cryptographic algorithms, yet every transaction carries the entirety of its history. With gold, this is not so simple. Metals can carry dilutions and value estimates can differ depending on the mint which issued the coin or bar. We also know that the benchmark used by investors and central bankers to determine the value of precious metals has been (and continues to be) heavily manipulated.

With bitcoin, network integrity can be cryptographically proven, representing an asset which has transcended physicality and operates within the cyber domain. It’s very possible to send millions of USD worth of bitcoin within seconds and only the sender and receiver are aware of the identities involved. Physical actors cannot exert control over the portability of this commodity, and therefore, ‘digital gold’ represents bitcoin accurately.

Gold is a store of value which relies on tradition to support its value base along with a few minor industrial purposes. When you take away this perceived tradition of value you are left with a few manufacturing uses and nothing more. Tradition has built an idea in the consumers’ mind that gold holds tremendous value.

It could be argued that the valuations behind precious metals are artificially high due to a market perception which has vastly underestimated the quantity of these metals. Despite what a merchant may tell you, we have no clear idea on the supply of gold. We have barely begun to explore the depths of the ocean let alone mine deeper than a scratch in the Earth’s crust. Who is to say how much gold and precious minerals near-Earth asteroids contain? It’s possible that gold’s perceived scarcity may prove to be illusory in 20-30 years when businesses or government are mining rocks in space.

The fact that bitcoin is instantly transferable across the globe with the ability to be divided ad infinitum, is why it holds a tremendous advantage over precious metals.

Bitcoin, and other developments in cryptocurrency, will challenge precious metals as history’s de-facto store of wealth.

Categories
Bitcoin

Who Is Satoshi Nakamoto?

Satoshi Nakamoto set in motion the unraveling of the nation state and the end of central banking … two closely related institutions that have directed history since history has been recorded. The creator of bitcoin is one of the greatest disruptors in modern history, and this is reason enough not to want an identity attached to the source code.

So who is Satoshi Nakamoto?

Information on the creator of bitcoin remains obscure. It has since evolved without their direct input, put forth for anyone willing to experiment with the technology. Satoshi’s last call was to deemphasize their unknown identity. As it still remains today, the true identity of Satoshi Nakamoto is unknown and the alias is considered a pseudonym. Whoever the creator was, they wanted to remain invisible, and thus far they have achieved such.

When Satoshi had the basic foundation of the bitcoin client built, they transitioned the responsibilities to a group of early enthusiasts and withdrew back into the shadowy depths of anonymity. Nothing tangible has been heard since.

Satoshi Claims

Satoshi claimed to reside in Japan, although searches and inquiries into their true identity turn up few results. In their early days working on the project, Satoshi was known for a business-like demeanor and very seldom revealed details about themselves, instead focusing feverishly on the bitcoin project. If the work of the bitcoin client was produced by one person, and began in 2007 as Satoshi claimed, then it must have required serious commitment for several months before releasing it.

At one point, when early adopters aimed at increasing its popularity, after users began lobbying for WikiLeaks to accepting bitcoin donations, Nakamoto intervened. Giving decisive orders to the team, Satoshi wrote, “No, don’t bring it on. The project needs to grow gradually so the software can be strengthened along the way. I make this appeal to WikiLeaks not to try to use bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.”

Then, as mysteriously as they had appeared, Satoshi Nakamoto vanished.

Easter Eggs

Satoshi listed their date of birth as April 5th, 1975, and at first glance this appears to be insignificant. However, upon further analysis we find that On April 5th, 1933 U.S. President Franklin D. Roosevelt signed two executive orders: 6101 of Civilian Conservation Corps, and 6102 which forbade the hoarding of gold coin, gold bullion, and gold certificates by U.S. citizens. We then find that in the year 1975 gold ownership was relegalized for citizens of the US.

The birth dates coupled with the insertion of a link buried within the genesis block to a London Times article entitled ‘Chancellor on Brink of Second Bailout for Banks’, make it clear Satoshi Nakamoto was politically motivated and displayed such through easter eggs hidden within their work.

What’s In A Name?

Some researchers proposed that the name ‘Satoshi Nakamoto’ was derived from a combination of tech companies consisting of Samsung, Toshiba, Nakayama, and Motorola. The notion that the name was a pseudonym is clearly true and it is doubtful they reside in Japan given the numerous forum posts with a distinctly English dialect.

Linguistic Analysis

British formatting in their written work implies Nakamoto is of British origin. However, they also use American spelling which may indicate they were intentionally trying, somewhat successfully, to mask their writing style – or that Satoshi is more than one person.

Many in the bitcoin space also believe Satoshi to be of American nationality, asserting that the time frames for code submission coincided neatly with someone living in an EST time zone.

Technical Analysis

As for the code itself, it has been dubbed multi-disciplinary and of extremely high expertise in the area of cryptography and C++ programming language, causing many to believe Satoshi Nakamoto is a small group of computer programmers rather than a single individual. Nakamoto claimed to have begun work on the bitcoin project in 2007 and published the whitepaper in the following year.

In 2008 Satoshi first released their work through a cryptography mailing list, where one of the first partners in development was cryptography expert Hal Finney. Based on analysis from other programmers who worked on the source code, it does not appear to be written by someone who is well versed in professional programming but rather has a strong academic or theoretical knowledge of cryptography.

He was the oracle to which we would go for questions about the system, but he rarely followed standard engineering practices, like writing unit or stress tests or any of the standard qualitative analysis that we’d perform on software. Several things had to be disabled almost immediately upon public release of Bitcoin because they were obviously exploitable.

– Jeff Garzik, early bitcoin developer

Adam Penenberg of FastCompany came to the conclusion that Satoshi Nakamoto may in fact be a trifecta of programmers, arguing through linguistic analysis that phrases from the whitepaper match in very unique sense to a patent application for updating and distributing hashing functions, which was filed around a remarkably similar time frame as the bitcoin.org domain name was registered. The domain was listed as being registered in Finland, and one of the patent authors had traveled there months before the domain was registered.

Regardless, all three programmers deny the claim to the Nakamoto throne.

In any case, when bitcoin.org was registered on August 18 2008, the registrant actually used a Japanese anonymous registration service, and hosted it using a Japanese ISP. The registration for the site was only transferred to Finland in May 2011, which weakens the Finland theory.

I exchanged some emails with whoever Satoshi supposedly is. I always got the impression it almost wasn’t a real person. I’d get replies maybe every two weeks, as if someone would check it once in a while. Bitcoin seems awfully well designed for one person to crank out.

– Laszlo Hanyecz, early bitcoin developer

Blockchain Analysis

Based on a blockchain analysis technique created by Sergio Lerner, an authority on bitcoin and cryptography, a dominant entity believed to be Satoshi Nakamoto had been mining the network from block 1 up until their disappearance, with identical performance. Lerner claims this miner is “the only entity that has shown complete trust in bitcoin, since it has not spent any coins,” estimating that Satoshi holds around 1 million BTC.

Many in the early community wondered why Satoshi had forsaken them in a project they poured their energy into for so long. Perhaps it was the fact bitcoin was starting to gain traction, evolving without their direct counsel, and the decision to hand the reins of power over was necessary.

However, the question still lingers, have we seen the last of Satoshi Nakamoto?

Categories
Bitcoin Forecasting

Advantages & Disadvantages of Using Bitcoin

Bitcoin will transform the distribution of financial information similar to internet technology.

This article is available to subscribers only. subscribe login
Categories
Cybereconomy

What Is Money?

Money is perhaps the most complex and misunderstood topic today.

This article is available to subscribers only. subscribe login