Ocean Gold versus Bitcoin

An article in Forbes by Trevor Nace has been generating some excitement on Twitter. It’s about the fact that there is an estimated 20 tons of gold in the ocean, that could be valued at $771 trillion, but the big question is; how do you get it?

And it’s not a case of mining it: the gold, says, Nace, is actually in the ocean water. Nace says, “Unfortunately, the concentration lies on the order of parts per trillion, making it extremely difficult to get.” Extracting it would be a monumental task as each litre of seawater would only contain approximately 13 billionths of a gram of gold.

Essentially there is no cost effective way of removing gold from seawater — at least not yet –although Nace recounts stories of attempts, some legitimate, some scams.

He tells us that in the 1890s, pastor Ford Jernegan came up with a plan for a “Gold Accumulator” in a fever dream. His plan was to extract gold from the Long Island Sound using a process involving mercury and electricity treatments.

The pastor set up the Electrolytic Marine Salts Company and persuaded wealthy investors to raise $1 million (about $26 million in today’s dollars) in cash. In 1898 the investors started asking questions about how the project was running and wanted evidence that the plant was working.

Oddly enough, the pastor disappeared at this point, taking all the cash and leaving behind a useless contraption that was supposed to extract the gold.

There have been several attempts since then, but none have worked. But as Nace says, the prize is too big for an ambitious inventor to ignore, and he does say it is a “pipe dream for the most creative wealth seeking inventor.”

Bitcoin versus Gold

So why did this story inspire a conversation on Twitter?

I took a look at the conversation and noted that one Twitter user @Kamyl_kk tweeted, “You are neglecting the concept of supply and demand here. With that much gold or any other commodity, prices would have drastically dropped. Gold then would be selling at a throw away price.”

This is an important point, to which another user, replied, “That’s why we bitcoin sir.” To which Kamyl_kk responded with “Rightly so.” Others suggested why collect gold when you can collect bitcoin.

The important thing to remember with bitcoin is that it is limited to 21 million and that ‘limit’ is a very important element in driving the price. The price of gold is also connected to estimates of how much is still left in the ground. But if the entire ocean is filled with gold, and we could extract it, it would drive the price of gold down.

As one of the Twitter users said, gold would become the equivalent of iron in terms of value.

For so long gold has been one of our most valued commodities, but if we harvest it from the sea, that status will be lost forever. So, indeed, bitcoin would be a better investment option, because we know its supply is capped.

Ocean Gold versus Bitcoin was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.