• 20 hours New Study Equates Luxury Cars With Low Self-Esteem
  • 23 hours Rio Tinto To Spend $1 Billion To Reduce Its Carbon Footprint
  • 2 days The Ultra-Wealthy Lost $140 Billion In One Day
  • 2 days Three Energy Casualties In The Coronavirus Crisis
  • 3 days Markets Crumble As Coronavirus Panic Peaks
  • 3 days Cobalt May Be The Key To Clean Hydrogen Fuel
  • 5 days How Taxpayers Are Bankrolling The EV Revolution
  • 6 days The Coronavirus Is Crushing China’s Car Market
  • 7 days Fighting For Survival In The Streaming War
  • 8 days Want A Job? Forget About A Bachelor’s Degree
  • 8 days Another Major Car Maker Is Backing Hydrogen
  • 9 days Are Americans Finally Sold On Soccer?
  • 9 days Is The Tech Bubble About To Burst?
  • 10 days Coronavirus Could Cost Tourism Industry $80 Billion
  • 10 days What Web Traffic Trends Can Tell Us About The World
  • 10 days Miners Face Greater Headwinds
  • 11 days Boris Johnson Proposes Billion Dollar Bridge To Northern Ireland
  • 12 days Goldman Slashes Oil Price Forecast By $10
  • 13 days Tesla Raises $2 Billion In Share Selloff
  • 14 days What The T-Mobile Takeover Of Sprint Really Means For Markets
Are Blockchain Stocks Poised For A Comeback?

Are Blockchain Stocks Poised For A Comeback?

Blockchain stocks came crashing down…

China's Boldest Move Yet To Ditch The U.S. Dollar

China's Boldest Move Yet To Ditch The U.S. Dollar

It appears that China's blockade…

Iran Looks To Launch Its Own Cryptocurrency

Iran Looks To Launch Its Own Cryptocurrency

Iran has proposed the creation…

  1. Home
  2. Cryptocurrencies
  3. Other

No, Bitcoin Is Not Digital Gold (But Here’s What It Is…)

The meteoric rise of crypto-currencies, including Bitcoin, captured the attention of many precious metals investors last year. Crypto’s potential to serve as private and decentralized currency – beyond the reach of bankers (central and otherwise) to corrupt and control – is an alluring combination for some speculative members of “honest money” crowd.

Investors are currently trying to determine what Bitcoin represents and what role it will play relative to precious metals. With that in mind let’s have a look at what Bitcoin is now, what it might become later, and also point out what it will never be.

Here Is What Bitcoin Is Now

Bitcoin is a disruptive new idea. It let the genie out of the bottle by introducing the world to decentralized (read “unstoppable”) networks which can be used to send and store value by anyone, from anywhere without central authorities and big institutions mucking around in the middle.

Banks and governments may be in the early stages of losing their monopoly on money as a means of profit and control. That would be a major leap for the cause of liberty.

But this vision has not yet been fulfilled. Crypto investors need to understand the Bitcoin tokens they buy are merely one attempt to deliver on the idea of free-market money.

The idea is a sure winner. The tokens, unfortunately, are far from it.

Bitcoin is a medium of exchange, albeit with limited use currently. It is great for sending value across borders without permission and for making payments to the very small number of merchants who currently accept it.

Finally, it is a highly speculative asset. Bitcoin can produce dazzling returns, such as we saw in 2017, as well as devastating losses, like we have seen over the past month. This volatility will likely remain until the basic problems of adoption and scaling are resolved and it achieves widespread utility. Absent that, hope and fear will be primary drivers and Bitcoin will be a roller coaster ride.

Here Is What Bitcoin (Or One of the Alt-Coins) May Become

Cryptocurrencies may someday be a medium of exchange with widespread or universal application. But developers in this space must finally figure out how to scale and meet other challenges.

If Bitcoin or other cryptos succeed as both a medium of exchange and as a store of value while remaining beyond the reach of governments to regulate, monitor and control, we win. Imagine a world where people are free to transact using means that nobody can control. Bankers and politicians would lose their stranglehold on money and be forced to work for people’s support.

Here Is What Bitcoin Is Not

Bitcoin is not “digital gold” as some in the crypto community claim. The term is intended to convey that Bitcoin is a store of value with some features in common with gold – such as privacy and limited supply. But the comparison is misguided.

Bitcoin is not beautiful, and it is not tangible. It will never offer utility in industry. It relies on electricity and the internet for its existence. It’s place in the market is vulnerable to developers building software which becomes a “better mousetrap” and renders Bitcoin obsolete.

In short, bitcoin tokens can never offer total assurance their value will be greater than zero.

Therefore, Bitcoin should not be represented or considered as gold. It is a very different animal indeed.

By Clint Siegner, Money Metals Exchange

Back to homepage

Leave a comment

Leave a comment