Not A Bit of Gold — How Bitcoin & Gold Are Dimensions of Value Apart.
In The Metacurrencies White Paper, we discussed the way in which currency value can be represented in a multi-dimensional construct. In such a construct, gold (or any commodity) is zero-dimensional, meaning it has zero dimensions of currency value other than its own source.
Fiat, we hypothesised, is 1D, meaning that Fiat currency and cryptocurrency as a financial unit contains one additional dimension of currency value; that value is its supply, which is manipulated at source on a frequent basis by a country’s central bank or whoever is manufacturing a crypto.
In 2D we found were investments; securities, real estate and so forth. The additional dimension that investments have is that of their intrinsic values, which are affected by altering the way in which they are priced and what assets etc. are behind that process, specifically.
Metacurrencies, we found, were different in that they contained all the above value attributes with an additional third dimension of value. The term Metacurrencies is one that we used to describe a currency for which payment utility (think: 1D) or income value (think: 2D) is not mutually exclusive, but rather, combined in the way they both function as a single concept.
The additional third dimension of currency value such financial units contained was that of their ability to manipulate payments, or, you can say, income utility.
Income utility is a very, very new idea. We observed in the White Paper that the occurrence of income utility took place via someone making a profitable payment. Profitable payments are an unusual concept to get your head around at first, being an economic occurrence that principally only happen in hyperinflation and hyper-deflation economies.
When a profitable payment event occurs, the payment itself leads to a profit in the form of another type of payment either immediately or at a later date in time.
Top 3 Most Popular Cryptocurrency Hub Articles:
1. With Simple Token, Starbucks can finally create the digital currency it really wants.
Bitcoin & Gold
When you analyse Bitcoin with the benefit of these clear distinctions in currency value in place, it is suddenly very obvious that Bitcoin and gold are not at all one and the same thing.
But there are other reasons why comparisons between Bitcoin and gold are ludicrous, and in this post we want to get into that comparison a bit more. The comparison helps to illustrate how valuable Metacurrencies are and how transformative their role in the world of digital assets is likely to be.
The reason that Bitcoin and gold are different, apart from being in two different dimensions of currency value, is not because you can see or touch gold, or because gold has lasted thousands of years of financial turbulence with its price in inflation-adjusted terms still intact, or even because gold is shiny and yellow and men and women all over the world consistently wear it.
It’s because Bitcoin is nothing more and nothing less than a technology that will likely outdate very soon (if that process is not already underway) and gold is a natural resource over and above which other natural resources will not be produced to outdate it.
To grasp what we mean here, think back to the first portable music player, the Sony Walkman. The first Walkman was released on July 1, 1979.
The product retailed in Japan for around $150, which is anywhere from $500 to $800 in today’s terms, depending on which country in the world you were in where it was sold. You can still purchase one of those first 30,000 limited edition Walkman models for roughly the same value, so as investments go, it’s not great: while you haven’t lost any money, a 0% return isn’t going to buy you a Lambo any time soon.
As far as subsequent models go however, the Walkman’s net return is dreadful. Check up the price for a standard 1980s Walkman on eBay and you’ll find the product, which retailed up into the thousands of dollars in inflation-adjusted terms, is now less than ten bucks in value. While about 0.0075% of Walkman holders have broken even on their portable stereo investments then, the rest are more than 99% in the red.
And yet the portable music market has done nothing but boom, creating trillions of dollars in wealth as it has transited from cassette player to compact disc player to MP3 player, becoming nimbler, more versatile and more durable in each of its latest disruptive incarnations. (Walkman alone made nearly a trillion in inflation-adjusted terms.) Look at who is making the money, however.
It is not the purchaser who makes anything — 99.9925% of lost more than 99.3% of their money buying Sony’s portable cassette player in the subsequent 3 decades. It is the manufacturer and the retailer, who are both capturing short-term profit margin spikes.
And so it is with cryptocurrencies. The whole reason why tokens ascend so rapidly upon creation is for the same reason all tech products do: they are new and dynamic and you want to have them for that reason. Once you get used to them, their value fades. Their value dies completely once another shiny new technology comes along.
Manufacturers of cryptocurrencies are the miners, most of which live near one of us, in mainland China. The retailers are the companies such as CoinBase, with billions in VC funding. Bitcoin will die, and just as for Sony and shopping malls, Mr. Miner and Mr. Wallet Exchange will remain merrily counting profits long into the future, well onto the next new thing by that time.
This is not to suggest that the investor cannot extract a handsome short term gain off speculating on the early launch of newly issued cryptocurrencies. That they most certainly can do. But to talk of Bitcoin as a sensible long-term investment in which families ought to have niche portfolio holdings for the kids’ college fund is sheer foolishness and amateurism.
We are not in the camp that believes cryptocurrencies are worthless at all. Rather, we are in the camp that believes that very soon, if not already, the maximum amount of value that could have been extracted from Bitcoin will have been and there will be no point in holding it any more. That Is why none of us owns BTC. The King is dead.
There is nothing unfortunate in that. In fact, it’s a stunning feature of modern decentralist economics that clearly propelled Bitcoin into such an aggressive run for so long. But who will be the new King to survive long into the next decade and beyond? That’s where Metacurrencies come in.
Metacurrencies are so-named because of the Greek word meta-, which in its most basic sense means to be altered with some non-core but nevertheless fundamental improvement. It is in this exact way that Metacurrencies are cryptocoin alterations of their own utility-driven economic paradigm.
Their values are directly derived from the profits made off the payments they incur. This means that their value is driven at source of fundamental utility, but unlike a security, that value is not the only aspect of the meta’s utility: it can be used to effect payments in a whole range of ways.
The good thing with metas as investments is that they don’t saturate unless a very obvious cause such as extant market manipulation or fraud is filling up in the market (so you would expect some regulation to be interposed here for this reason).
The bad thing is they are not as tough tech-wise as some of the more robust Masternode-enabled Blockchain buildout have been.
But being the central thematic paradigm via which value-enabled tokens will expand, that is really no issue. It’s the MP3 player but it’s wrapped in Uber shares and gold leaf.
For more you can go to www.dunaton.com.
