Ethereum: 1000x from Here

Crypto’s biggest winner will replace gold as state-free, global money.

Gold as a Currency

Some people claim that gold has accrued value due its usefulness via jewelry and smartphone manufacturing. However, jewelry is inherently unuseful and the amount of gold used in smartphone production is negligible: $1.82 worth of gold per smartphone, which, at 10bn smartphones, renders $20bn of utility, a far cry from gold’s $8trn market cap. Thus, gold’s success as the world’s store of value can be attributed solely to its scarcity: alchemy has proven impossible, and expensive mining expeditions can only inflate gold’s supply by 1–2% per year. In fact, it is gold’s scarcity that renders its utility in the jewelry business — if there were a more scarce metal, it would likely be more sought after than gold as both a store of value and a watch.

Gold’s best-in-class scarcity has allowed it to be a viable store of value for thousands of years: despite equity markets continuously growing in terms of fiat currencies, their growth in terms of gold looks like a somewhat typical sinusoidal graph. Investors flock to gold in times of distress — when both equities and debt show little room for growth, gold subsists as the default option.

However, what would happen if oil, the most world’s most useful commodity, had a pre-programmed, guaranteed inflation rate that was not only similar to gold’s but also allowed oil investors to earn more oil in interest…