Quote: "The intrinsic value of gold is that it's shiny and somewhat rare. It's a good conductor of electricity but it's too malleable to be truly usable without creating an alloy. So you're saying that a shiny kinda-sorta practically useful thing is inherently more intrinsically valuable over something that demonstrably has more inherent properties to create value in a modern money system?
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Absolutely. The functionality of bitcoin is only worth as much as it's perceived value as a currency. In other words, if the value of the bitcoin drops to be worth essentially nothing, the cool functionality of bitcoin is also worthless. Gold has intrinsic value because it has demand outside of it's perceived value as a currency.
Quote: "I just don't get why you think gold has an objective value when just about everything else has a subjective value."
I don't think gold has objective value. It is still subjective. It is still only worth what people will trade for it. The difference is that gold has properties that make it useful outside of simply being a currency. Bitcoin does not.
Quote: "And about the volatility, how long has the USD been around? ~200 years? Bitcoin has only been around 3-4 years, I'd give it more time before calling it quits."
The value of the US dollar was built on the gold standard. It became the reserve currency of the world because it was redeemable for gold. When the US ended backing the US dollar with gold in 1973, they got away with it for a couple of reasons. First, so many world governments were holding US dollars as their reserves. If they tried to move away from the US dollar at that point, their reserves would have quickly become worthless. The main reason though is the agreement that the US made with Saudi Arabia that all transactions for oil would have to be made in US dollars. This means that anyone wanting to buy oil, must buy US dollars first. It is the link to oil that gives the US dollar stability.
Quote: "You'll always find someone willing to use bitcoins (as long as the it is still functioning as intended).
A million bitcoin clones can pop up and it wouldn't change a thing, as long as the system still works (ie no flaws are found), the coins will be worth something. Why? Because there's still a limited supply, and that's all you need in order to have something you can use as a currency."
That just isn't true. Limited supply isn't what gives something value. Demand is what gives something value. Limited supply is only one component that makes things have demand.
Like I mentioned above, the US dollar has demand because people need dollars to buy oil. But, the supply of US dollars has essentially become unlimited. The US Federal Reserve Bank has printed trillions of dollars to bail-out foreign governments. There has been inflation, but not nearly as much as there should have been. It is stable because the demand for US dollars has seen little change despite an un-proportional growth in the supply of money. Here is a simpler example: Let's say you have tickets for a really big concert. You buy them for $100. The tickets are in such demand that you can easily sell them for $300. But you decide to wait it out until closer, expecting the value to grow even more. Then, all of a sudden, the lead singer dies in an over-dose and the concert is cancelled. There is still a limited supply of concert tickets, but the value of them is now pretty much nothing.
Such a HUGE part of the bitcoin demand right now people seeking the huge return potential. The problem is that if the value of bitcoin stays so volatile, then people are going to become increasingly weary about using it. If it stays low, then it is going to have trouble becoming widely distributed because the mass interest will also stay low. If it remains high, then it opens the door to bitcoin clones. People will put their money into clones because they are looking for the huge return potential. This will depress the value of bitcoin because it will decrease the demand.
a.k.a WOLF!
