{"id":151,"date":"2014-09-01T20:05:00","date_gmt":"2014-09-01T20:05:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/could-bitcoin-be-replacement-for-gold\/"},"modified":"2023-12-20T00:20:17","modified_gmt":"2023-12-19T22:20:17","slug":"could-bitcoin-be-replacement-for-gold","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2014\/09\/could-bitcoin-be-replacement-for-gold.html","title":{"rendered":"Could Bitcoin be a replacement for Gold?"},"content":{"rendered":"
(CoinDesk<\/a>) Gold has been used as a store of value for eons,\u00a0thanks\u00a0to its beauty and almost magical ability to never tarnish. Furthermore, despite radical shifts in human values over the\u00a0past 100 years,\u00a0its worth still has not diminished\u00a0\u2013 even\u00a0soaring to\u00a0over\u00a0$1,000 an ounce in recent times.<\/div>\n
Now, though, there is a new, digital challenger on the scene that, when its price chart is compared\u00a0with that of gold, bears\u00a0some striking similarities<\/div>\n
It\u2019s no wonder, then, that\u00a0companies like Netagio now\u00a0allow people to trade bitcoin for precious metals<\/a>\u00a0like gold \u2013 it is a sign that investors want the ability to trade BTC\u00a0seamlessly with other investment vehicles.<\/div>\n
In a sense, bitcoin could be considered an upgrade from gold. Some even\u00a0consider it as gold with transformational, information-like properties.<\/div>\n
<\/div>\n

\"bitcoin<\/p>\n

Digital gold with a twist<\/h2>\n
George Gilder<\/a>, author of the forthcoming book\u00a0Bitcoin and Gold: The Information Theory of Money<\/em>, is impressed with bitcoin and has developed a well-thought argument for bitcoin as a sort of “next-generation gold”.<\/div>\n
That\u2019s because bitcoin\u00a0builds upon the properties of gold and has spawned an information-based variation, he said.<\/div>\n
Gilder told\u00a0CoinDesk:<\/div>\n

\u201cSatoshi [Nakamoto] was right with bitcoin. That\u2019s what amazes me. Satoshi arrived at a foundation for the value of bitcoin that\u2019s valid.\u201d<\/i><\/p>\n

\n
Gilder sees economic uncertainty as advantageous to bitcoin<\/a>, a fact evidenced by the\u00a0increasing interest in bitcoin observed in Argentina<\/a>\u00a0and other countries hampered by volatile fiat currencies.<\/div>\n
\n

\"argentine<\/p>\n<\/div>\n

<\/div>\n

The decline of the Argentine peso versus the US dollar from 2013 to 2014.\u00a0Source:\u00a0exchange-rates.org<\/a><\/em><\/p>\n

As an example, Gilder believes that\u00a0increased\u00a0government control of money, such as capital controls or quantitative easing, means more uneasiness in terms of economic sentiment.<\/div>\n
\u201cThe more money [governments] print, the more uncertain the people become,<\/em>\u201d said Gilder. \u201cBitcoin is based on the understanding that the money supply doesn\u2019t really matter.<\/em>\u201d<\/div>\n
Adrian Ash, the head of research at BullionVault, a gold storage company, pointed out:<\/div>\n

\u201cDigital gold currencies have been tried and failed many times in the last 20 years. They came to nothing thanks both to state resistance, but also to lack of adoption.<\/em>\u201d<\/p>\n

However, it\u2019s safe to say that bitcoin has progressed\u00a0further than its failed predecessors. That may be, though, because previous electronic money alternatives like E-gold were backed by gold, and not by cryptographic keys. As a result,\u00a0bitcoin might be the first to offer a substantial alternative that would appeal to gold enthusiasts.<\/div>\n

Role as a\u00a0currency<\/h2>\n
Another characteristic\u00a0of bitcoin that makes it seem like an upgrade\u00a0over gold is its\u00a0protocol that allows\u00a0value to be moved quickly around the globe. Regardless of how supportive gold enthusiasts are of their favorite store of value, there\u2019s no denying it has limited appeal to mainstream consumers.<\/div>\n
Bitcoin adoption by the average person remains a hurdle to overcome to ensure success, but the digital currency\u2019s combination of novel innovations\u00a0might allow it to complement\u00a0existing methods of exchange.<\/div>\n
\u201c[The] chicken-and-egg situation [of adoption] might be resolved by bitcoin\u2019s most exciting aspect \u2013 zero-cost exchange of value,\u201d said Ash.<\/div>\n
Along with adoption as a\u00a0means of exchange, bitcoin could become a very useful\u00a0currency, commodity and recording mechanism via its block chain. According to Gilder, the problem\u00a0of velocity, or how much people spend a thing of value, is what will ultimately make bitcoin a success. Or a failure.<\/div>\n
Gilder said:<\/div>\n

\u201cVelocity is what determines value. Not just printing money. Satoshi [Nakamoto] has an absolute 21 million bitcoin limit. Bitcoin is determined by velocity, by turnover rate governed by the people holding the coins.\u201d<\/i><\/p><\/blockquote>\n

Bitcoin might be an iteration of\u00a0gold \u2013 a 2.0 version. People can hold stores of it, as well as spend it \u2013 a property that gold cannot compete with.<\/div>\n
\u201cIt\u2019s important to note that\u00a0gold\u00a0isn\u2019t used as currency anywhere today,\u201d said\u00a0Ash.<\/div>\n
Given that even Ash concedes this point, bitcoin\u2019s long-term success may lie in adoption. In other words, whether bitcoin is able to triumph and replace gold will lie with its peer-to-peer network, and just how large this base of bitcoin believers becomes in the years ahead.<\/div>\n

Bitcoin believers<\/h2>\n
It\u2019s hard to tell how many bitcoin users there really are. New bitcoin products and services are seemingly announced every day, and Mary Meeker\u2019s presentation of bitcoin\u2019s growth via the use of a chart showing the number of wallets in use (see below) shows there is traction.<\/div>\n
While wallet use is growing, it\u2019s not a one-to-one correlation \u2013 or even if many of the newly created wallets actually have bitcoin in them. It does show increased awareness overall, however.<\/div>\n
\"Source:<\/a><\/div>\n

Source:\u00a0CoinDesk<\/a><\/em><\/p>\n

However, it can be argued that gold investors will have to see the promise of bitcoin\u00a0over the precious metal\u00a0not only as a store of value, but also as a spending and transactional innovation.<\/div>\n
The rise of consumer services continues, and energy focused on\u00a0that particular sector of the bitcoin economy is notable.<\/div>\n
For instance, in\u00a0Canada<\/a>, there are a number of options for people to buy or sell bitcoin. Not only do residents of Canada have access to an established\u00a0exchange for the Canadian dollar, there are storefronts and even bitcoin ATMs available in most major cities.<\/div>\n
Access to bitcoin for gold investors is the best way to prove the value of bitcoin to this subset of the market, and this is especially true in the US market.<\/div>\n
In a poll conducted by Harris Interactive in December 2013, when bitcoin prices were at their all-time\u00a0pinnacle, the majority of people still didn\u2019t even know what bitcoin was. And, likely because of this, they indicated that they would much rather invest in gold over bitcoin.<\/div>\n
\"Harris<\/a><\/div>\n

Harris poll question: Would you rather invest in gold or bitcoin?\u00a0Source:\u00a0CoinDesk<\/a><\/em><\/p>\n

The key to bitcoin as a new form of gold is to improve upon the precious metal. And that means making the most of\u00a0its transport and currency capabilities.<\/div>\n
For this to happen, an increase in awareness is needed \u00a0\u2013 and some proponents of gold already understand\u00a0this fact.<\/div>\n
Companies like the UK\u2019s GoldMoney have been\u00a0offering bitcoin as a storage option<\/a>\u00a0along with gold\u00a0for some time. Furthermore.\u00a0investment broker\u00a0and\u00a0author\u00a0Peter Schiff, while making waves about his insistence that bitcoin could become worthless, is still nevertheless\u00a0accepting it<\/a>\u00a0at his company, SchiffGold<\/a>\u00a0\u2013 a\u00a0fact\u00a0that should make\u00a0gold investors take the digital currency\u00a0a little more seriously.<\/div>\n<\/div>\n

Open your free digital wallet here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n","protected":false},"excerpt":{"rendered":"

(CoinDesk) Gold has been used as a store of value for eons,\u00a0thanks\u00a0to its beauty and almost magical ability to never tarnish. Furthermore, despite radical shifts in human values over the\u00a0past 100 years,\u00a0its worth still has not diminished\u00a0\u2013 even\u00a0soaring to\u00a0over\u00a0$1,000 an ounce in recent times. Now, though, there is a new, digital challenger on the scene […]<\/p>\n","protected":false},"author":1,"featured_media":642,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,37,76,192],"tags":[704,764,872],"yoast_head":"\nCould Bitcoin be a replacement for Gold? -<\/title>\n<meta name=\"description\" content=\"In a sense, bitcoin could be considered an upgrade from gold. 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