I often hear bitcoin and other cryptocurrencies compared to gold and other precious metals. There are some clear similarities between the two asset classes, limited supply, storage of wealth, etc. In gold's case, its industrial uses in electronics don't justify its price, so it seems many people come to conclusion that its value largely comes from its capabilities in storing value due to its capped supply, just like bitcoin. However, I think a huge factor that gives gold value, that people seem to brush off, is its visual display of wealth. People do buy gold to store their wealth, but many people also buy gold to make into jewelry and other forms to "show off" their wealth. I believe that this may be a core reason of why gold is valuable, and its capabilities to be a store of wealth are a RESULT of this. You have two types of consumers competing for gold's limited supply: people who want gold to show others that they can afford it and then those who buy gold as a store of value. I think this is something that bitcoin has going against it; you can't have a bitcoin-plated necklace or a mansion made out of bitcoin bricks. What bitcoin DOES have is incredible liquidity as a transfer of value (well... except for its fees), it is very censorship resistant, decentralization, etc. As a advocate for cryptocurrency, I DO think that these traits give it value, but I am concerned in the long run whether this "visual display of wealth" factor that precious metals have are actually a very large portion of what maintains their value.
I'd love to hear your thoughts on this Louis, I really enjoy hearing your perspective on things and I'm a huge fan of your videos.