Precious Metals = Cryptocurrency
My attitude towards cryptocurrencies (e.g. Bitcoin) is very similar to my attitude towards pyramid schemes. However, I think there might be a silver lining in the cloud! Cryptocurrencies might finally awaken everyone to the ludicrous nature of so-called “precious metals” (e.g. gold and platinum), as well as their priceless cousins (e.g. rubies and diamonds).
Cryptocurrencies are digital currencies that are kept rare to a certain specification, and they are not backed by any military in the world, and you cannot force a storekeeper to accept your cryptocurrency when you want to buy food. In much the same way, you can show up at Walmart with gold and diamonds in the back of your truck. However, the Walmart manager is not going to let you buy anything with it.
U.S. law states that businesses must, at the very least, accept U.S. currency. U.S. law states that U.S. currency must always be accepted for public and private debts, which essentially guarantees it will hold its value and be accepted by private businesses for regular transactions. No such law exists for precious metals, or just as dubiously, for cryptocurrency.
Furthermore, even if the Walmart manager wanted to trade for your geological rarities, he would not have any equipment on hand to verify the authenticity and purity of it. You would have to wait around in the parking lot, hoping someone would eventually show up who believed that gold and diamonds were, for some reason, worth U.S. cash, and would trade for them. If nobody showed up, you would be stuck with near-useless geological artifacts in the back of your truck, and no way to buy the groceries you need.
(It should be noted that gold actually has a use in electronics parts, and diamonds have a use in drilling machinery. However, the value in those aforementioned uses do not come close to justifying what those commodities trade for.)
Petroleum is rare, and it’s also extremely useful. Barring a new and unexpected discovery that reveals an amazing second use for people’s jewelry, the same cannot be said for precious metals. In just the same way, cryptocurrency has no intrinsic use or value. It’s (artificially) rare, but it has no inherent use and no inherent value, nor is any value imbued into it by a national military. Like precious metals, your only hope is that someone else will think that, against all facts, it might be worth something in the future.
If there is to be a silver lining in the obvious cloud of cryptocurrency, it’s that once it crashes, people might start to realize their jewelry is surprisingly close to worthless.