"The numbers man" John Paulos is very good, as was Martin Gardner (and Yakov Perelman before them).
Bitcoin (based on "nothing" you can hold in your hand but can hold and transfer in cyberspace) is the antithesis of the "gold standard" (based on "something" you can hold in your hand but can't transfer in cyberspace) so most "gold bugs" will hate it just on that basis. Which is kind of interesting because, as a finite (and possibly diminishing, due to losses) resource (somewhat similar to gold, including the "mining" reference) the price inflation of the currency "value" is inherent, built in.
But how and, more importantly, when would you like to use "currency" that, within a span of a few days or even hours can double in "value" (relative to most accepted convertible currencies) as well as be cut in half of its "value," i.e., you become a currency speculator and arbitrageur, whether you want it or not. Would you hoard it or spend it? If you are a shop accepting bitcoins, how often would you keep repricing the items based on extremely volatile currency?
Remember the Linden Labs and Second Life's LindenDollars and collapse of the Ginko Financial Bank?
Not to mention that due to the inherent characteristics of cyberspace and distribution of bitcoins, the entire supply of bitcoin is far more susceptible to attacks and/or theft or control change than more than a fraction of the entire distributed world supply of gold in existence.
The Auric Goldfingers and Hunt brothers of cyberspace are already licking their chops over cornering the bitcoin market : Bitcoin Is Broken :: Hacking, Distributed. Tulips, at least, were impervious to this kind of subterfuge, though the barriers to entry into the "tulips market" were kind of low and tulip seeds were sold as an "investment" rather than "money" though anybody could use them as currency.
Heck, how long do you think it would take the NSA or for that matter, any entity with massive parallel/distributed computing power and crypto algo expertise (Google, IBM, etc.) to take over Bitcoin?
There is something real that I accumulate until it's meaningful. If one uses Amazon's credit card they accumulate Amazon credits which can be used for purchases there. It seems much more real than bitcoins do. I know how they accumulate for me and how they can be used. They have a real dollar value. I can spend them for anything I want on Amazon, but they're not something I can hold in my hand or use as money outside of Amazon-land.
I have another money question. (is there a good website for Q&A about this stuff?) It's about gold. People think they own gold if they have a gold mutual fund or a certificate that someone is holding "x" amount of gold for them in a safe vault somewhere. It seems a little naive to believe that. If I owned gold, I'd want it to be in my immediate control and in a form so it can readily be identified as trustworthy gold. Am I being too cynical?
That's why it seems to me that old silver dollars might be the most identifiable thing there is to retain universally accepted value.
Thanks for your interesting post.
My sense of the currency is that a substantial part of its ‘value’ is that it can be used anonymously. Absent that, its risks seem to far outweigh its benefits. To my limited understanding, anyway.
BTW, as I’m not savvy enough to independently confirm that alleged anonymity, I don’t use the currency. Er...not that I have any reason to make anonymous purchases.