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Gold Vs Bitcoin: Pro-Gold Argument Takes Shape

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By John Rubino  /  Dollar Collapse

Sound money advocates who love the concept of cryptocurrencies but don’t want to abandon precious metals have been trying to clarify their thoughts of late. Risk Hedge just helped, with a comprehensive statement of the pro-gold position. The following is an excerpt. Read the full article here.

All the Reasons Cryptocurrencies Will Never Replace Gold as Your Financial Hedge

Despite what the crypto-evangelists will tell you, digital tokens will never and can never replace gold as your financial hedge.

Here are six reasons why.

#1: Cryptocurrencies Are More Similar to a Fiat Money System Than You Think.
The definition of “fiat money” is a currency that is legal tender but not backed by a physical commodity.

It’s clear that cryptocurrencies partially fit the definition of fiat money. They may not be legal tender yet, but they’re also not backed by any sort of physical commodity. And while total supply is artificially constrained, that constraint is just… well, artificial.

You can’t compare that to the physical constraint on gold’s supply.

Some countries are also exploring the idea of introducing government-backed cryptocurrencies, which would take them one step closer toward fiat-currency status.

As Russia, India, and Estonia are considering their own digital money, Dubai has already taken it one step further. In September, the kingdom announced that it has signed a deal to launch its own blockchain-based currency known as emCash.

So ask yourself, how can you effectively hedge against a fiat money system with another type of fiat money?

#2: Gold Has Always Had and Will Always Have an Accessible Liquid Market.
An asset is only valuable if other people are willing to trade it in return for goods, services, or other assets.

Gold is one of the most liquid assets in existence. You can convert it into cash on the spot, and its value is not bound by national borders. Gold is gold—anywhere you travel in the world, you can exchange gold for whatever the local currency is.

The same cannot be said about cryptocurrencies. While they’re being accepted in more and more places, broad, mainstream acceptance is still a long way off.

What makes gold so liquid is the immense size of its market. The larger the market for an asset, the more liquid it is. According to the World Gold Council, the total value of all gold ever mined is about $7.8 trillion.

By comparison, the total size of the cryptocurrency market stands at about $161 billion as of this writing—and that market cap is split among 1,170 different cryptocurrencies.

That’s a long shot from becoming as liquid and widely accepted as gold.

#3: The Majority of Cryptocurrencies Will Be Wiped Out.
Many Wall Street veterans compare the current rise of cryptocurrencies to the Internet in the early 1990s.

Most stocks that had risen in the first wave of the Internet craze were wiped out after the burst of the dot-com bubble in 2000. The crash, in turn, gave rise to more sustainable Internet companies like Google and Amazon, which thrive to this day.

The same will probably happen with cryptocurrencies. Most of them will get wiped out in the first serious correction. Only a few will become the standard, and nobody knows which ones at this point.

And if major countries like the US jump in and create their own digital currency, they will likely make competing “private” currencies illegal. This is no different from how privately issued banknotes are illegal (although they were legal during the Free Banking Era of 1837–1863).

So while it’s likely that cryptocurrencies will still be around years from now, the question is, which ones? There is no need for such guesswork when it comes to gold.

#4: Lack of Security Undermines Cryptocurrencies’ Effectiveness.
Security is a major drawback facing the cryptocurrency community. It seems that every other month, there is some news of a major hack involving a Bitcoin exchange.

In the past few months, the relatively new cryptocurrency Ether has been a target for hackers. The combined total amount stolen has almost reached $82 million.

Bitcoin, of course, has been the largest target. Based on current prices, just one robbery that took place in 2011 resulted in the hackers taking hold of over $3.7 billion worth of bitcoin—a staggering figure. With security issues surrounding cryptocurrencies still not fully rectified, their capability as an effective hedge is compromised.

When was the last time you heard of a gold depository being robbed? Not to mention the fact that most depositories have full insurance coverage.

The gold vs bitcoin debate has a long way to run. But if the outcome is a world in which money is what the market — rather than the government — says it is, then hopefully there will be room for both.

https://dollarcollapse.com/currency-war-2/gold-versus-bitcoin-pro-gold-argument/

Read more great articles here: https://dollarcollapse.com

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    • raburgeson

      Gold coins in your pocket are fine. I’m a supporter for platinum, it has value for catalytic reasons. Any industrial rare material is cash. Make it safe and do not carry radioactive materials. Other forms of material such as a 2 ton roll of stainless has value. Don’t get stuck on what the FEDs price fix too much.

      • Anonymous

        Bit con is nothing but training wheels for the CASHLESS SOCIETY. Begun by the NWO to acclimate the GOYIM CATTLE into the idea of “SDR” electronic FIAT nonmoney- which is even less intrinsically valuable than paper, physical FIAT money. Because nonpaper FIAT Bit o’ Con allows them to track, stalk and totally control the holder.
        The NWO presented this latest schtik to the masses as if it was a “revolution resistance” tactic against them- when its THEM who push it. Same concept as the phony ARAB SPRING scam- get the Useful Idiots to push our program for us, thinking they are ‘defying’ us by utilizing our own plan. lolol Dont the cattle ever think or learn??

    • DK

      Gold is a store of wealth if and only if there is a society willing to trade for it after a collapse when you have not been stripped of this asset (1933) robbed or traded it for peanuts for something you actually NEEDED to survive, then it will need to be assayed and you will find out that honest banking brokerage or goldsmith sold you a tungsten brick or that new one swaps it for one at the counter. Whatever you will find still it fetches a fraction of what you paid for it unless you wait for decades. This is one time having a distillery and breaking the law makes sense, since alcohol was Americas second currency in the Blue Mountains.

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