Is Bitcoin lowering the demand for gold?
Overdate
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My understanding is that Bitcoin serves as a unit of account, a store of value and a medium of exchange, and that it is not controlled by a central bank or other government entity. If this is the case, are Bitcoin and other digital currencies true competitors to gold, and are they decreasing the demand for gold? What do you think will be the long-term effects of digital currencies on the price of gold and other precious metals?
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many who favor bitcoin never favored gold.
Digital currencies are in competition with and are an alternative to fiat currencies.
Is not bitcoin simply a digital promise, not really much different than a paper promise? And that digital "wallet" that holds your bitcoins - how secure is it?
I would never buy digital gold nor store it in a digital vault; asking for trouble. Defeats the primary advantage to owning gold.
While it is profitable for some, to me bitcoin is nothing more than a speculative, derivative play. Those who own gold for the right reasons would not trust any derivative as more than a very short term investment nor would they divert their gold investment money into it.
Bitcoin, for now, is for speculators. In the future it may become an independent form of currency. It will never replace the insurance against fiat money and fiat leaders that gold offers.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Bitcoins are a digital commodity, not a currency. If you have to figure its value in terms of dollars, it is not a currency. The difference is slight, but meaningful. Gold is also a commodity, as is the euro when not in Europe.
To your question, I don't think it matters. Both commodities are bought and sold on speculation, gold as GLD tracking stock and bitcoin on the trading sites that offer it.
If you purchased an item online using Bitcoin and the person doesn't make good on their end and decides to keep what you gave them can they be charged with fraud or theft?
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I've been pondering this since you first wrote this some time ago.
I have to figure my foreign travel from euros, pound, yen or yuan/rmb to us$ to decide if the price is right or even what price I am paying.
are the euro, pound, yen, or yuan/rmb commodities instead of currencies?
I suppose the reply is that the locals don't need to convert.
I am not sure how adept the frequent users of bitcoin are with valuation of an item in bitcoin. It'd be interesting for the sake of this discussion to find out.
if you were doing a deal in a trade of item or service for an item or service, and one side balked, would it be theft of services or theft by conversion, etc?
I think so, except in the area of illegal items.
there are storefronts that advertise they take bitcoin. it's not all on the dark web.
Bitcoin has all the standard attributes of a currency, and is used as such. The euro is a currency regardless of where it's located. No currency can be spent everywhere, but that does not disqualify it from being a currency. All major currencies can be treated as commodities to some extent, but the reverse is not true. Gold and silver have limited use as currencies, but lead, iron and zinc do not.
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One point that may be overlooked.... bitcoins will not survive an EMP.... should one occur.....Cheers, RickO
Bitcoin has backups, but a big enough EMP would disrupt nearly all goods and services.
[https://reddit.com/r/Bitcoin/comments/17h3ys/what_happens_in_case_of_a_massive_emp_blast_power/
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I don't believe it will penetrate the walls of my safe.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
"Bitcoin has backups, but a big enough EMP would disrupt nearly all goods and services."
Since all backups are electronic, and since electronics will be destroyed... consider the backups as worthless as the original worthless items. Cheers, RickO
True, but many people who are new to the alternative currency scene might gravitate to Bitcoin and other digital currencies rather than gold, especially as such digital currencies become easier to spend. In the long run, I think this could depress the demand for, and price of, gold.
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Agree, it's a digital age and the fact that bitcoin is all digital will attract the younger, fat finger generation who are all trusting of the cloud and don't want to be bothered with the effort of storing the physical stuff. I'm waiting on an app that will mow my lawn.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
didn't bitcoin just get hacked recently? I believe they handled it buy distributing the loss over all accounts?
seems ripe for the crooked to loot.
To clarify, Yes, the Euro is a currency in Europe, and it is described as a currency when we talk about it as a thing. But it is not a currency here in the US, because you can't spend it here. It is a commodity that needs to be converted to dollars in order to behave like a currency when not used in Europe. The bitcoin is described as a currency, but when you want to buy something with it, you have to calculate the exchange rate to dollars to see if it is a good deal for you. There are two meanings for the word currency - one is the object of the money, the other is its use. I think it would be better to call bitcoins money rather than currency.
Never bought a bitcoin. I can't say that about a gold coin.