Digital Art sales

[Alan Edward Klein]

They never really were.
They were restricted to the amount of gold on hand, but the actual, non trading as a commodity value of the gold was and is far less than its artificial value as a market construct.
The gold doesn't have the value. Artificially inflating its price and rigorously protecting the market that upholds that price is where the "value" comes from.
It is like diamonds.
The world is awash with diamonds. But distribution is artificially minimized. Other than for some use in industry, the price for a diamond is entirely a construct of an industry whose entire purpose is maintaining an artificially high price on them.

But gold has had value in its own right for thousands of years. "There's gold in them thar hills." Its scarcity is what makes it valuable. It has functions in jewelry and some industrial use. And the dollar was backed by gold. Countries would present dollars to the US government that they earned when we paid them for their products (their exports to us) and we would pay them gold for the dollar they gave back to us. But we were losing all our gold. So President Nixon in 1971 took us off the gold standard, making our currency what's called fiat. Fiat is when there is no longer anything backing it up. So now we print without there being gold or anything else of value behind it. The inflation that causes makes the dollar worth less, like increasing the number of photo editions to 500 from 100. Of course, bitcoin is guaranteed not to increase its quantities of coins. But how can you trust that? Who is behind bitcoin? It's very risky.

 

[Alan Edward Klein]

They never really were.
They were restricted to the amount of gold on hand, but the actual, non trading as a commodity value of the gold was and is far less than its artificial value as a market construct.
The gold doesn't have the value. Artificially inflating its price and rigorously protecting the market that upholds that price is where the "value" comes from.
It is like diamonds.
The world is awash with diamonds. But distribution is artificially minimized. Other than for some use in industry, the price for a diamond is entirely a construct of an industry whose entire purpose is maintaining an artificially high price on them.

But both diamonds and gold have intrinsic value. Ask my wife.

However, you can't wear bitcoin or digital art. You can't show it off to your neighbors when you invite them over to your house. How do you frame it and put it on the wall? Stores of wealth should have inherent value on their own. Gold and diamonds fit that description. So would a Mona Lisa and a Lik, but the Lik decreases in value once you buy it, not a good store of wealth. Holding cash stinks too as inflation makes it less valuable. This might be the reason someone is willing to pay $67 million for digital art. A sign of the times.

 

[halfaman]

So now we print without there being gold or anything else of value behind it. The inflation that causes makes the dollar worth less, like increasing the number of photo editions to 500 from 100. Of course, bitcoin is guaranteed not to increase its quantities of coins. But how can you trust that? Who is behind bitcoin? It's very risky.

Goverment could also change the currency value of gold at will to control inflation and they did it of course. Gold standard can be as arbitrary as Fiat model. Money is just a vehicle for exchanges, nothing more, and Fiat model admits that it does not need any real inherent value to be useful for that. Many problem starts when people thinks money has intrinsic value...

Value is always relative, there is no absolute scale of value. Gold value for example has up to 100% variations in the last 8 years.

 

[Alan Edward Klein]

Goverment could also change the currency value of gold at will to control inflation and they did it of course. Gold standard can be as arbitrary as Fiat model. Money is just a vehicle for exchanges, nothing more, and Fiat model admits that it does not need any real inherent value to be useful for that. Many problem starts when people thinks money has intrinsic value...

Value is always relative, there is no absolute scale of value. Gold value for example has up to 100% variations in the last 8 years.

You have it backward. Fiat currency, with nothing of inherent value behind it, is the problem. Because its quantity can be inflated at will, it loses value. Everything starts to cost more and your savings depreciates in value.

Fiat currency is why people buy digital art and other assets. They're trying to get into an asset that might have real value and not depreciate when currency is inflated. Of course, like copyrighted photos, you can't replicate digital art legally. But others can make something similar that would depreciate all digital art and photos, which is what's going to happen. Just like the wide availability of photos, in general, has depreciated its individual value and the services of photographers behind it. When supply goes up, cost and value go down.

 

[halfaman]

You have it backward. Fiat currency, with nothing of inherent value behind it, is the problem. Because its quantity can be inflated at will, it loses value. Everything starts to cost more and your savings depreciates in value.

Fiat currency is why people buy digital art and other assets. They're trying to get into an asset that might have real value and not depreciate when currency is inflated. Of course, like copyrighted photos, you can't replicate digital art legally. But others can make something similar that would depreciate all digital art and photos, which is what's going to happen. Just like the wide availability of photos, in general, has depreciated its individual value and the services of photographers behind it. When supply goes up, cost and value go down.

And I tried to explain very briefly that gold standard does not prevent inflation or deflation of prices, they existed also and in a very dramatic way. Currency value in gold is also an ilusion because money does not have inherent value.

 

[MattKing]

Alan, like many others, believes in the value of gold. Like all religious beliefs:
1) if the belief is shared by many, it has a value of its own; and
2) the belief cannot survive any logical analysis.
I did a lot of work at one time for clients who were heavily involved with the cranberry industry. The value of their business, and the cranberries they grew and sold kept building, because the international Ocean Spray cooperative aggressively supported a controlled international marketplace for cranberries.
And then what was effectively a cartel got attacked by competition, and the prices and "value" plummeted.
The Russians could do the same tomorrow for diamonds - they have enough.
The same could be done for gold.
The thing that stops that from happening is that the entities that control the market also control the production, so the prices are kept artificially high.
By the way, it isn't "Fiat" money, it is "fiat" money. Fiat is both an Italian acronym (Fabbrica Italiana Automobili Torino) and the company that owns Chrysler, and made my wife's car!

 

[cliveh]

Gold is a precious metal which has solidity and value. Digital currency is like virtual imagery. You try to grasp it and your hand and it slips through like a ghost image. Anybody who is thinking about investing in digital currency should lie down in a dark room and question their sanity.

 

[MattKing]

Gold is a precious metal which has solidity and value. Digital currency is like virtual imagery. You try to grasp it and your hand and it slips through like a ghost image. Anybody who is thinking about investing in digital currency should lie down in a dark room and question their sanity.

Anybody who invests in currency of any kind should be prepared to for really high risks.
Our former dentist is now accepting bitcoin payment. I've seen bitcoin "bank" machines at a US shopping centre. There are very real attractions to bitcoin for people who trade internationally - including people who have no need to hide transactions from authorities.
There are governments who are actively investigating setting up a regulated and legally transparent system for electronic currency.
At the present time though, it is an unreliable place to play - sort of like the stock market, but with even fewer rules.

 

[Arthurwg]

Gold is less practical value than copper, except that we artificially assign a higher price to it.

There's much less gold on the planet than copper. I understand that all the gold ever mined would make a cube 90ft on a side. and it becomes more difficult to mine it every day.

 

[MattKing]

There's much less gold on the planet than copper. I understand that all the gold ever mined would make a cube 90ft on a side. and it becomes more difficult to mine it every day.

And more than 2/3 of all gold mined has been mined since 1967.
Most of it is used in jewelry, followed by bullion and coins.
A very small but important portion is used in electronics.

 

[cliveh]

Gold value goes up when the markets get scared.

 

[MattKing]

Gold value goes up when the markets get scared.

Gold price goes up when the markets get scared.

 

[MattKing]

I'm fond of a lot of things related to Robert A. Heinlein, and this quote comes to mind:
“Commercial financing could be done for a service charge plus an insurance fee amounting to much less that the rates of interest charged by banks, whose rates were based on supply and demand, treating money as a commodity rather than as a sovereign state’s means of exchange” — Robert A. Heinlein
Gold makes sense as a commodity. Money makes sense as a means of exchange.

 

[Arthurwg]

Gold value goes up when the markets get scared.

Gold comes in handy when things turn difficult. But it's kinda heavy when running. Better to carry diamonds sown into the hem of your jacket.

 

[Alan Edward Klein]

I'm fond of a lot of things related to Robert A. Heinlein, and this quote comes to mind:
“Commercial financing could be done for a service charge plus an insurance fee amounting to much less that the rates of interest charged by banks, whose rates were based on supply and demand, treating money as a commodity rather than as a sovereign state’s means of exchange” — Robert A. Heinlein
Gold makes sense as a commodity. Money makes sense as a means of exchange.

Gold is money. Currency is not. Currency used to be an IOU before we went off the gold standard; a guarantee for an exchange in gold of a specific amount. So that made the dollar valuable. It also prevents inflation or should have. Now that it's backed up by nothing, it's fiat and worthless except for the promises of the US government who keep printing them like running off the same picture out of a photo printer, each one worth less than the one before. I'd buy an Ansel Adams print before buying a bitcoin. Its value will outlast the bitcoin.

 

[MattKing]

The retailers must dread it when you come into the store and try to buy your groceries with gold.
Gold isn't legal tender in most jurisdictions I am aware of - certainly not Canada.
The same applies to cryptocurrencies like bitcoin.
But it is completely legal to trade either one for goods or services. Those transactions are treated as barter transactions.
It is just that very few will accept gold, and more and more will be accepting cryptocurrencies.
You know that the role of cryptocurrencies is growing, because governments have already put in place taxation tools to deal with it.

 

[Alan Edward Klein]

The retailers must dread it when you come into the store and try to buy your groceries with gold.
Gold isn't legal tender in most jurisdictions I am aware of - certainly not Canada.
The same applies to cryptocurrencies like bitcoin.
But it is completely legal to trade either one for goods or services. Those transactions are treated as barter transactions.
It is just that very few will accept gold, and more and more will be accepting cryptocurrencies.
You know that the role of cryptocurrencies is growing, because governments have already put in place taxation tools to deal with it.

I agree. Gold isn't easy to exchange. That's why we use currency. It's easier to carry around. That's why we use to have dollars backed by gold and silver as well. But when currency is backed up by gold as an IOU, then the currency acts like money or gold or whatever it represents. But when the paper is not backed up by anything, like fiat currency, crypto, then it's easy to print more and it's not worth anything intrinsically.

You can't barter with crypto. I believe bartering is an exchange of things or services that have intrinsic value. Like I barter my photos for your tripod. Crypto is supposed to take the place of currency like dollars, so it's a medium of exchange, a currency of you will.

Here's what a gold certificate looked liked. They don't exist anymore. It guarantees to the holder that there is the amount stated ($10,000 in this case) kept in gold in the US Treasury. It's an IOU to that gold to the bearer of the certificate. This is a lot safer than our current fiat Federal Reserve Note or fiat bitcoin, which are backed up by nothing.
https://en.wikipedia.org/wiki/Gold_certificate#/media/File:US-$10000-GC-1934-Fr.2412.jpg

Here's the current Federal Reserve Note It guarantees nothing. Well, it does say In God We Trust on the back. Unfortunately, that's the only trust you'll find with it.
https://www.pinterest.com/pin/331999803773006227/

 

[Alan Edward Klein]

The retailers must dread it when you come into the store and try to buy your groceries with gold.
Gold isn't legal tender in most jurisdictions I am aware of - certainly not Canada.
The same applies to cryptocurrencies like bitcoin.
But it is completely legal to trade either one for goods or services. Those transactions are treated as barter transactions.
It is just that very few will accept gold, and more and more will be accepting cryptocurrencies.
You know that the role of cryptocurrencies is growing, because governments have already put in place taxation tools to deal with it.

I believe Canada sold all its gold. I always associated Canada with gold, snow, and hockey. When my wife and I cruised to Alaska twenty or thirty years ago, we stopped in Skagway. It was a jumping-off place for the gold miners prospecting in the Yukon gold fields back in the 1800s. When we were there, we bused to a little town where we panned for gold and actually came up with some dust which I still have Scotch-taped in the photo album for the vacation. At that time, the guy said it was worth about 70 cents which means it must be worth a few dollars today. It might be the only money I have that has real value. It's always a kick to see that gold when I look at the album.

 

[MattKing]

I actually sold some dental gold (replaced gold crowns) recently. An additional $250 in my pocket was nice.
My former dentist wouldn't have accepted it for payment. He will accept bitcoin.
My current dentist has the sort of practice that uses film x-rays, so bitcoin isn't likely to appeal to him .
Gold is no longer attached to the value of currency, so governments have no interest in protecting its price. If someone tells you that the investment in gold they are trying to sell you is a "sure thing", they are trying to scam you.

 

[Alan Edward Klein]

I actually sold some dental gold (replaced gold crowns) recently. An additional $250 in my pocket was nice.
My former dentist wouldn't have accepted it for payment. He will accept bitcoin.
My current dentist has the sort of practice that uses film x-rays, so bitcoin isn't likely to appeal to him .
Gold is no longer attached to the value of currency, so governments have no interest in protecting its price. If someone tells you that the investment in gold they are trying to sell you is a "sure thing", they are trying to scam you.

Gold is a commodity like oil, wheat, iron, lumber. It has a function besides being considered money. Whether governments use a commodity to back their currency up is beside the point. Money used to be backed up with tobacco in the SOuth, pearls elsewhere. Gold has just been one that has been used across the world for thousands of years. Private buyers and sellers, just like bitcoin, digital art, photos, etc., determine the buy and sell price. China is collecting gold more than any other country in its attempt to become a reserve currency like the US dollar. If America continues to devalue its dollar as its doing, other countries may switch out of the dollar, especially if China goes on a modified gold standard and offers their currency backed up by a percentage of gold. A lot of countries might make the jump if the Chinese back their currency with gold.

 

[Tel]

I've always thought that gold (and diamonds) were valuable to us humans for the same reason that we gladly pay thousands for a new car: it's a pretty color and it's shiny. Have we really evolved beyond our two-year-old selves?

 

[MattKing]

Gold is a great material for dental crowns and wedding rings. Gold is a lousy material to base a financial system on.

 

[Alan Edward Klein]

Gold is a great material for dental crowns and wedding rings. Gold is a lousy material to base a financial system on.

Why? It worked better before 1971 when we were still on a gold standard. Since then, the dollar has become almost worthless due to printing. In the 1970s the dollar devalued 55% between 1970 and 1982. So if you had $100 in 1970, you could only purchase $45 worth of goods in 1982. We're facing that kind of stagflation again. A product that cost $1 in 1970 would cost $6.78 today in 2021.

 

[MattKing]

Why? It worked better before 1971 when we were still on a gold standard. Since then, the dollar has become almost worthless due to printing. In the 1970s the dollar devalued 55% between 1970 and 1982. So if you had $100 in 1970, you could only purchase $45 worth of goods in 1982. We're facing that kind of stagflation again. A product that cost $1 in 1970 would cost $6.78 today in 2021.

The success (or not) of the financial system before 1971 had nothing to do with gold. Gold was chosen as a reference, but that choice was essentially arbitrary, except for the fact that it was easy to sell the idea to others as a result of historical factors.
Silver, platinum, diamonds, Leica cameras - all could have been chosen as the reference.
If everybody agrees to the same choice, then that reference substance can be put into a vault, and as long as a country agrees to limit the currency issued to the amount of the substance in the vault, then you will have the effect you seek.
It isn't gold that did that for you, it was the agreement to limit currency that did that. You would have had the same effect without the gold.
You could do it now with bitcoin, as long as all parties to the economic system agreed and participated.

 

[Alan Edward Klein]

The success (or not) of the financial system before 1971 had nothing to do with gold. Gold was chosen as a reference, but that choice was essentially arbitrary, except for the fact that it was easy to sell the idea to others as a result of historical factors.
Silver, platinum, diamonds, Leica cameras - all could have been chosen as the reference.
If everybody agrees to the same choice, then that reference substance can be put into a vault, and as long as a country agrees to limit the currency issued to the amount of the substance in the vault, then you will have the effect you seek.
It isn't gold that did that for you, it was the agreement to limit currency that did that. You would have had the same effect without the gold.
You could do it now with bitcoin, as long as all parties to the economic system agreed and participated.

Without gold or some real good of value as an IOU against the note, the government can print as much as they want even if they at one point agree they won't do it. It happens every time with fiat money. It's called inflation and we got oodles of it now, in every country around the world.

While it is true that BitCoin supposedly has a maximum amount, there are other coins in the market that tends to diminish its value. It's like the Wild West. With no standards, the pricing is erratic which makes it impossible to use as a currency. If I make a deal with you to sell a camera for 1/100 of a bitcoin today, then when I deliver it to you next week its value went down by 20%, I'll lose my profit and more. While currencies fluctuate, they don't do so radically.