[cryptography] Digital cash in the news...

[James A. Donald]

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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