Why Bitcoin is Better Than Gold, with Wences Casares

Why Bitcoin is Better Than Gold, with Wences Casares


Bitcoin is a new digital currency that is
perhaps the best form of money that we have ever seen. It’s important because most of
us don’t understand money very well and perhaps the concept that is hardest for us
to understand about money is that money is and has always been a ledger. And people often
ask: “What is money backed with?” And the truth is money’s not backed with anything.
It has never been backed with anything. The euro is not backed with anything in particular
and neither is any other currency in the world. And gold, for example for that matter is not
backed with anything either. Some people think that gold has value because
we use it for jewelry but it’s actually the other way around. Gold is valuable because
it’s very scarce and because it’s very scarce it has been the best ledger we’ve
found in 5,000 years. In bitcoin we have something that is as good a ledger as gold, meaning
it’s incredibly scarce. There will never be more than 21 million bitcoin. It’s even
more scarce than gold.But in history we have had this tradeoff between things that have
been very, very good store of value like gold for example and things that have been good
for payment like the Portuguese escudo, the U.S. dollar, American Airline miles, or Facebook
credits. Those things are better for payment but they’re not so good as a store of value
historically. And the things that are good for a store of value like gold are not good
for payments. In bitcoin we have something for the first
time that is incredibly superior than anything we have seen before as a store value and also
as a form of payment.It’s hard to have a rigorous discussion about bitcoin without
understanding money. And the best way to understand money is to understand the history of money.
Anthropologists agree that there’s no tribe, much less a civilization, that ever based
its commerce on barter. There’s no evidence. Barter never happened. And that’s counterintuitive
to most of us because we are taught in school that we first barter and then we made money
because barter was too complicated. Well, barter never happened and that’s one
of the key myths about money. So then you would ask the anthropologists, “So how did
we do commerce before money if there was no barter? There was no commerce.” No, there
was plenty of commerce and the way that commerce would happen is that let’s say that someone
in our tribe killed a big buffalo and I would go up to a person and say hey, “Can I have
a little bit of meat?” And that person would say “No” or “Yes, Wences, here’s your meat.”
And then you would go up to a person and say “Hey, can I have a little bit of meat?” and
that person said “Yes, here’s your meat.”And basically we all have to keep track in our
heads of what we owed other people or what our people owed us. And then someone would
come to me and say “Hey Wences, can I have a little bit of firewood?” and I would say
“Sure, here’s your firewood.” And I have to remember that I owe that person a little
bit, that this person owes me a little. And we all went about our business with these
ledgers in our minds of who owes us what and what do we owe to whom. Very subjective system
often these debts didn’t clear or clear in ways that were not satisfactory to both
parties. Until about 25,000 years ago someone very, very intelligent came up with a new
technology that really took off. So a person came to me and said “Hey, can I have a little
bit of firewood?” and I said “Sure, here’s your firewood.” And this person said “This
time we’re going to try something different. Here are some beads for you.” And I said “I
don’t want beads. I don’t care for beads. I don’t need beads.” He said “It’s not
about that. We are going to use beads as the objective ledger of our tribe. Instead of
each of us having to remember what we are owed the beads are going to keep track for
us. An objective ledger to keep track of debt.” It was such a successful technology that it
took off and in a couple thousand years it became impossible to find a tribe or a civilization
that didn’t have some form of objective ledger. In some cases it was wampum shells.
In other places it was salt, in other places rocks or beads. But this form of keeping track
of debts with an objective ledger took off. And anthropologists go as far as saying that
if you describe a tribe’s environment in detail they can predict what’s going to
emerge as an objective ledger as money because it’s always something that has six qualities.The
most important of which is that it be scarce, and it makes sense because if it’s not scarce
we can create, you know, if we were to use tree leaves for example, we could create debts
owed to us out of thin air and that wouldn’t be good. That wouldn’t be a good ledger.
But it also has to be durable. If it’s something that decays or corrodes it doesn’t store
the information well. It has to be divisible. It has to be transportable, recognizable and
fungible. This system really worked until about 5,000
years ago when trade began to extend a lot geographically and we began to trade with
other tribes. And different tribes were using different ledgers so they couldn’t trade
with each other. And what happened then, about 5,000 years ago, is that gold emerged as the
first universal ledger to keep track of debts.And it was gold because it was universally scarce.
That was the most important consideration. But also it was very, very durable, fairly
divisible, transportable, recognizable and fungible. And that’s why for 5,000 years
gold has been the best store of value we have ever seen. It’s incredible that today if you need to
leave $5,000 for someone for your daughter – not your daughter or your granddaughter
but some great, great, great, great, great, great, great granddaughter of yours 40 generations
from now – 900 years from now, we don’t know how to do that. If you leave it in just
dollars it’s not going to be worth very much. We know of no security that will last
that long. The only thing that we know can carry value for that long is you need to buy
$5,000 worth of gold, lock it in a vault and give the key to that person 900 years from
now. It’s incredible that in the twenty-first century this is the best answer we have. This is why bitcoin is so relevant because
it’s the first time in 5,000 years that we have something that is incredibly superior
to gold in each one of the six characteristics. It’s much more scarce than gold. There will
never be more than 21 million bitcoins. It’s more divisible than gold. Each bitcoin is
composed of a million pieces called Satoshis. It’s much more durable, divisible, transportable.
You know I can have a Skype call from here in New York to someone in Jakarta and I can
see them in real time and I can hear them and they can see me and they can hear me.
It’s incredible the technological accomplishment of that. But if after hanging up I want to
send them one cent to Jakarta even though I have the cent in my pocket and it will be
trivial if they were here, we don’t know how to do that. It’s not possible in the
twenty-first century to send a cent to Jakarta. One, because it will cost more than 50 cents
to send it. Two because it will take a week to get there. And three because just there
are no systems to do that. Well bitcoin fixes that and makes it real easy to send that cent
to Jakarta or a million dollars to Jakarta.You can attach a bitcoin to an SMS message or
an email and send it for free and in real time across the world. And it’s incredibly
easy to verify the second you get a bitcoin you know that it’s a good bitcoin. So it
has all of the qualities of a great ledger made in digital. And because of that it’s
probably the best form of money we’ve ever seen.

100 Comments

  1. I decided to do a simple read into Xapo, unfortunately I have to sign up for and agree to an account before even being able to read the terms or privacy statements.  It is also quite odd these 2 things are not highlighted. If this is truly a financial institution than proper presentation of account terms would be appreciated.

  2. Before you get stung by this scam, read about the Tulip Bubble in the Netherlands in 1637
    https://en.wikipedia.org/wiki/Tulip_mania

  3. bitcoin can be mined….how does that make it scarce?  All you need is a constant supply of electricity an internet connection and some easy-to-get knowhow. 

  4. …no evidence of barter throughout history?  So Mesopotamia doesn't exist?  Pheonicia?  Babylonia?  Egypt?  Hell, bartering was relatively common in the US in the 1930's thanks to the World War's.

  5. I disagree about the barter thing. Spend some time in any prison and you will see barter economies spring up very rapidly. Cigarettes, small packs of kool-aid, coffee, magazines, envelopes, ect. Eliminate one of these and a new item will quickly replace it. I do agree that scarce and useful items act as a form of ledger, but the bartering happened first. Bitcoin skipped the barter part of course and went straight to being a ledger.

  6. Not to nitpick, but he first says that a system of barter predating money is a myth.  Money didn't evolve from barter system commerce becoming too complex.  But then he goes to explain the first system of commerce, which as he describes is a system of Barter.  I mean, that is a blaring contradiction.
    Barter is a "this for that" exchange, regardless if our ledgers are written down or were in our heads, and regardless if the exchange happened simultaneously.  Just like I can give cash now, or check/credit which is the promise of payment.  His description of commerce may not have been the "cash now", or "I give meat for arrows or clothes", but  more a credit based "i give you meat today, and tomorrow you give me something in return".  But because money wasn't involved, that is defined as barter.  Perhaps he needs to return to an English course or something, or maybe in his native tongue that would not have sounded so contradictory.

  7. Oh cool another currency to confuse everyone from actual energy exchange that REALLY is going on. Backed by legitimate bullshit imagination like the good ol' greenback.

  8. The problem with saying Bitcoin is superior to gold is that it is predicated on the notion that a web-based economy, communication, and current socio-political economic models will persevere for "900 years from now" especially considering how rapidly all have evolved just in the last 100 years.  The fact that it may be superior within the context of current models is by no means objective evidence of lasting superiority.

  9. Bit coin is easier to steal from corrupt central banks. They did this recently by manipulating it's value by causing a massive sell off causing it's value to drop.
    They are also doing this to gold and silver with fraudulent future contract orders by issuing excessive contracts to purchases that can never be taken hold of. Each physical  metal may have 10 to 50 claims to it but no individual has yet actually taken physical hold of it since most purchasers sell off their positions to their brokerage houses for US dollars. These brokerage houses then sell these fraudulent contracts back to the central banks so they can be erased out of existence to prevent anyone from discovering it. Now you know why they never will allow an audit of the Federal Reserve since there is so much fraud within it.

  10. Let's be honest, the only reason he says this is because his business venture relies on people taking Bitcoin seriously. It's an interesting talk but it's difficult to take it seriously once you factor in that it's in his financial interest to be biased.

  11. The security of BitCoin will be jeopordised one day when the encryption is broken, like all online security. Quantum computing is the 'hydrogen bomb' of online security. Just a matter of time.
    Offline is more secure.
    I would be happy for someone to provide a better solution.

  12. This does a great job explaining the first part of bitcoins and why they are a good, potentially viable currency system. The next questions I always get that I hope they do a follow-up video on are the how do we know there will only ever be 21 million bitcoins? Why is it so hard to fake one? How can sending one over SMS be secure, etc? This covers why it is a good currency, but the next questions are always about how we know it will actually remain a scarce or secure currency.

  13. I'd say using bitcoin for storing short term value, but I would keep my pension savings in it. Then I'd rather hold gold.

  14. Gold is tangible like silver or any precious metal or gem.  How is Bitcoin tangible or of value?  If there were an apocalypse and the Internet destroyed, how would a person access Bitcoin?   Even though there is debate on the value of paper currency and coins, at least with paper currency we have access to something that we can trade for a good or service if technology no longer exists.  Banks don't permit access to Bitcoin so how does a person even purchase something with Bitcoin?

  15. LOL I have never seen someone so full of shit talking about something he obviously knows little about. He makes 3 false statement with in the 1st 1:44 seconds of this SALES VIDEO and should automatically make anyone with a brain and knowledge of history realize he is full of shit. Not completely but when you start with a lie you tend to end with one. so………Bit coin is nothing more than another form of CURRENCY. Its value , much like gold and silver is based on how much VALUE it has to the person wishing to poses it and how much the person selling it is willing to part with it for. The ONLY reason bit coins have value is because someone wishes to HAVE it. What Bit coins HAVE to rely on is the fact that it will be around to see another day. Bitcoin users have to worry about hacking and the need for there to be ELECTRICITY and access to the internet or other device like a bitcoin safe to transfer this digital currency. with gold all you need to do is look at the stock exchange for what it is selling for and worry about someone trying to physically take it from you. To say you cant move gold around anonymously, even in this day and age, is completely ignoring history of the past. and present. It is still done ALL THE TIME. Bit coins will never be better than gold but maybe as good as in the very near future. That is if the world banks don't CRUSH IT once they realize it cannot be corrupted or taken over by them. Oh that would be another reason WHY gold is still better than bitcoins.

  16. Can somebody enlighten me on something?

    If bitcoin has a cap of 21 million, how can there be mining of bit coin? Do they not produce bitcoin out of nothing (well not really nothing since you use electricity but you get the idea). The only logical assumption would be that there will be 21 million bitcoin maximum, they are not all out in the market yet. 

    So the questions rising are. How many coins are there currently in the market? And how much will it take for all of them to surface? Is it a small fraction? Like just 5 million and the rest will take a long time to mine? But then, doesn't that mean that you have a monetary system with planned inflation (when has ever inflation been a good thing)?

    And more…
    If the scarcity of bitcoins is set, if the population using it increases that would mean it needs more and more divisions. And that raises another problem. The ones who started with the system bought cheap coins, and they can sit on them until they are worth enormous amounts. Paper currency and banking has the same problem, but taxation is kind of relative with wealth (the more you earn the more you pay), so they at least have a small mechanism of balancing the currency (even though is not 100% effective). The other thing is that inflation also affects them, but with bitcoin, inflation is not a real problem. So the bitcoin rich will actually be richer and richer by having done nothing other than starting the bitcoin in the first place (I imagine it to be a bigger gap in wealth than the current monetary system). And that is not all, since all money is really related to resources of the planet, the rich usually will own more of them than ever before.

  17. More durable than gold ?
    Let's talk about Pong or Myspace or Minitel or…
    Every time I watch "BIG THINK" it just ends up being "SMALL TALK".

  18. you can tell he doesn't even believe what he is saying himself. He is shaking his head no in disagreement with what he is saying the whole time.

  19. Lmfao the amount of technology skeptics in this comments section is so beyond hilarious. You are the kind of fools that tried to convince everyone that currency was a scam and would never work, the same with airplanes, and TV, and VHS, and radio, and EVERY OTHER PIECE OF TECHNOLOGY WE HAVE AND USE TODAY

    Stay classy ignorant close-minded people.

  20. Scarcity itslef doesn't matter, the only thing that actualy matters is a utility value that is a derivative of people's belief in that some attributes are of value to them (bling and scarcity for gold or decentralised digital noninflationary currency for bitcoin). The difference between gold and bitcoin is that people believed in gold for ages and that makes it a better store of value then bitcoin that has only been around for couple of years.

  21. Yet another pseudo-guru washing brains of the simple working class – the people who dream of getting rich overnight with the help of some magic "bitcoin" – their new savior! What happened to the "good old" stock and indice options?! 50% a day is possible!! What? Options did not make you, naive sheep, rich? They actually left you or you neighbor broke? Options… Stocks alone are enough to leave those folks crying over "portfolio" cursing the WS pundits and those in the Fed. The times have changed! Wences Casares will explain to you why!!! Bitcoins are not from WS !!

  22. Gold is one of the basic materials modern technological civilization is based on – without gold (platinum and the like) there would not be electronics, no computers, no space flight, no modern medicine, etc… Paper money used to be backed by gold, now it is backed by the economical power of the issuing country: its industry, financial systems, by its military. Now, WTF is BitCoin? 

  23. The only thing that has real value is something that can actually produce something like agricultural land. The only reason things like gold, silver and money has value is because we believe it does. And we shouldn't trust our belief systems.

  24. Bitcoin is a Fiat Currency it's value comes from what people feel like it's valued at, when Silkroad was shut down the price dropped like a rock and devalued alot of peoples coins for a small period of time, while I like that governments can't control it I don't like the fact that a simple computer glitch and it's gone, I'm content with Silver

  25. If the economy takes a massive downturn, would Bitcoin be of any use at all?
    Say if the power goes out or something goes wrong and you lose all of your digital Bitcoins.
    Who will reimburse you?
    Wouldn't being able to have a currency that you can actually hold in your hands (gold, silver) be more practical?

  26. Looks like an intentional misrepresentation of what gold is and why it has value, what money and currency is, and Bitcoin itself. The currency scammers, money manipulators, and bankers of the world will never change.   

  27. Gold has intrinsic value. Gold is gold, it doesn't have to be backed: other things ARE backed by gold. Without Gold (platinum, …), there would not be modern electronics, medicine, space flights, … think about, you stupid BC worshippers

  28. Mr. Wences Casares, good luck, sir, in your journey to the gullible and yet greedy folks' pockets – there are lots of them! I actually envy you: if only I knew or were prepared to talk such nonsense with so serious face like yours 🙂

  29. It's a great idea… for the initial investors, but a non-replenishing form of currency becomes obsolete and worthless as it loses its relevancy. Now imagine inheriting 100 bitcoins that nobody will trade, but you still get taxed on the value.

  30. I can't understand the fifth quality of money that he says. He lists scarce, durable, divisible, transportable, [something I can't make out], and fungible. Recognizable? I don't know.

  31. bitcoin is not better than precious metals. it's a great way to diversify your anonymous wealth without the greedy bank having a cut. invest in gold, silver and bitcoin.

  32. I do not believe Bitcoins or any other virtual currencies is going to be the backbone of money. Gold, on the other hand, will be the main stay. There are a many advantages that virtual currencies possess over gold that is mentioned. But the one factor that virtual currencies lacks that gold don't is the intrinsic (natural) value. What I mean by that is the chemical properties attached to gold. Bitcoins do not have any. They are not tangible.

    Gold has a wide range of chemical properties. Gold glitters, they do not corrode, they are malleable, they are an excellent conductor of heat and electricity etc.

    Due to the chemical properties of gold. Numerous industries have to use gold in their products in order to function. The electronics, jewelry and dentistry industries utilize gold in their products.

    Because of the properties of gold, there will always be buyers of gold, hence, a constant demand and intrinsic value comes along. That is why gold has been money for 4,000 years.

  33. Bitcoin fluctuates far too much to store for long periods of time, it has less than 10 years on the market and its already crashed and jumped like crazy. The only thing it has over the dollar is that its virtual and cannot be destroyed.

  34. I'm not even going to bother pointing out the inaccuracies this guy said….just to simply put it, he's a moron and has not idea on how currency and commodities works

  35. Why not just invest in tangible things of worth, such as precious metals/cars/houses… ect. This just seems like a huge disaster waiting to happen. If the united states, Russian, Chinese government, even the U.N. treasury can get hacked, (all of which have all ready happened BTW) Whats to stop these "less powerful" entities with less financial backing, from getting hacked? I mean look what Edward Snowden, one man, got away with. And what he took has little to no monetary value. Imagine the internet hounds clamoring at a chance to get some cryptocurrency on websites with mediocre security protocols and servers.

  36. Wences Casares wrong, saying "gold is good for a store of a value but not good for payments", becouse with a BitGold we can store and spend Gold easily! http://tracking.bitgold.com/SHC6

  37. Use BitGold. A new international system that allows individuals and businesses to make payments based on gold. Set up is free and you get a free deposit to get you started. Happy days! bitgold.com/r/Y8OiS3

  38. Is the value in bitcoin due to there being no counterparty risk? That is supposed to be the feature that makes gold valuable beyond its uses for jewelry.  Is it possible that bitcoin will eventually change the monetary system such that gold will only be valued for its use in industry and jewelry?  That would probably mean gold is incredibly overvalued and people should sell their gold.

  39. Great talk, Wences. I'd like to point out, though, that because of the open nature of the blockchain, Bitcoin isn't entirely fungible. Since all transactions can be tracked, it's possible for companies to not accept or "blacklist" certain bitcoins associated with illegal/immoral activities such as gambling, porn, etc. Don't get me wrong, I love bitcoin. But that one draw back could prove problematic down the road when bitcoin is more popular. For that reason, I've begun to diversify into Monero, which is a cryptocurrency that is truly fungible.

  40. Fiat paper money isn't backed by anything? Utterly laughable. What is the only thing the STATE accepts as payment of taxes. The money it creates. What is going to happen to you if you don't pay your taxes? They are going to lock you up in a concrete box with pedophiles and murderers. So unless you are a looney tune that thinks the STATE is going anywhere soon I suggest you get your hands on some government money.

  41. Bitcoin can't be hacked? That's what the Nazi's thought about the Enigma machine. They had total confidence in the technology. How long did it take the FBI to crack that terrorist's cell phone? What happened to the Bitcoins at Mt. Gox? What's the annual budget of the NSA? Put your faith in 1s and 0s on a data stick all you want. It's your money, or should I say, "money."

  42. Gold Thugs are here, they are bag holders, just ignore them. Gold Pushers call them selves gold Bugs too look cute but they are just con artists car salesmen types trying too sell another fools investment at peak high when they thought the whole system was going too collapse and they bought at worst time and trying too cut there losses.

  43. In the end all countries that uses gold reserves are rich and crypto currency countries always relies on internet to pay their needs and wants. What if other countries will ban bitcoins and other electronic money? Its a risky idea and imaginary millions you have

  44. New video idea: "Why Bitcoin is basically obsolete/worthless now while gold is still increasing in value after thousands of years"

  45. Hahaha I'm sorry but just in the first 0:43 seconds I realized this guy is clueless as to WHY Gold has ALWAYS been money.

    It fulfills the PROPERTIES that give intrinsic VALUE to gold that Bitcoin won't EVER have.

    These are:
    1)Durability (Bitcoin doesn't fulfill this either, since it exists in cyberspace and requires electricity to exist)
    2)Portability
    3)Divisibility
    4)Uniformity
    5)Limited Supply (NOT true for Bitcoin. Do you think they won't "mine" more than 21 million if they're worth $100k?)
    6) Acceptability
    *7) Some people argue stability of value is ALSO ideal (Gold is worth because of it's physical properties and you can make at the least jewelry and other items). Bitcoin on the other hand doesn't have intrinsic value and it's value is determined by the forces of supply and demand.

    There are less than 300 known elements in the world… GOLD(AU) is one of them. Bitcoin exists only in cyberspace. If there is no electricity Bitcoin will cease to exist.

  46. The dollar is backed with the U.S. military; it is the worlds reserve currency. Any country that refuses to trade with the dollar,  the U.S. bombs them. North Korea and Iran and a couple small countries are the only ones not using the dollar and the U.S. is talking about bombing them and that is on national media. Of course the U.S. is saying its for other reasons. He said there will never be more than 21 million Bitcoins. If the miners of bitcoin decide to make it 42 million 10 years from now, then there will be 42 million Bitcoins.

  47. How they weren't there was plenty of barter to it's just there's no written history if it would cut back that far there's a lot of lot of history that's been lost

  48. The best thing to you also have to think about your family's well-being what you had and how much it was going to last and how long

  49. The irony is that to mine bitcoin (computers) and to use bitcoin (cellphones/computers), you have to use physical gold. Gold is in every cellphone and every computer; they would use another metal if it was cheaper, but gold must be used in computer and cellphone technology.

  50. Without electricity and the internet its infrastucture Bitcoin disappears. Without electricity gold and silver is still around

  51. Never underestimate the power of crypto. Just made 0.7btc with mike harry trading. I think that’s much more better than Gold

  52. 5 years later … bitcoin has scalability problems, transactions take ages and are expensive, miles away from adoption. For now bitcoin can be digital gold, but not digital money.

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