Wednesday, October 25, 2017

At this point in time, gold isn't really money and Bitcoin isn't really a currency

To be specific, today we cannot label either gold or Bitcoin based on their true definitions and attributes, but instead on what they are perceived to be in the real world.  And the reality is that gold is no longer money as it once was used as in most countries for thousands of years, and Bitcoin is not a currency since it is extremely limited in what it can purchase by way of goods and services.

Now this doesn't mean that either in certain rare circumstances cannot be used in their true forms, nor that they may not one day emerge (or re-emerge) in the capacities of their namesakes.  However as of today, the amount of buyers and sellers using either gold or Bitcoin in everyday purchases is too miniscule to track.

What they undeniably are however are assets, and as such they have intrinsic powers and capabilities as collateral, and as a medium of exchange beyond that of common retail.

In an example made recently by a few financial journalists over at Business Insider, they went around New York City to a number of places attempting to offer both gold and bitcoin as a medium of exchange.

And the results for both were relatively as expected.
In an effort to fairly compare gold and bitcoin in this vein, we went out into the world to see how easy it was to spend both in everyday transactions. It turns out it isn't easy to spend either. The only person we could find who accepted gold in New York City was Donald Trump in 2011. 
Bitcoin is slightly easier to spend. We couldn't use our bitcoin at Subway, which is on a few lists of retailers that accept bitcoin. Le Village, a restaurant in New York's East Village that many have reported accepts bitcoin, was closed down when we tried to eat there. But we did have some luck spending bitcoin. We found that it was easy to use bitcoin on Also, my daughter's preschool accepts bitcoin for tuition payments. But if you really want to use bitcoin in everyday transactions, you can get a debit card that allows you to spend bitcoin easily. 
But maybe we are simply using the wrong words when we talk about bitcoin. As Adam Ludwin, the founder and CEO of Chain, says in his open letter to Jamie Dimon, "since this isn't about cryptocurrencies vs. fiat currencies let's stop using the word currency." He goes on to say that he prefers to think of them as "crypto assets." – Business Insider
There is one interesting and innovative invention that has emerged for both gold and Bitcoin, and that is through the creation of third party conduits where either asset can be held in accounts that allow depositors to then spend their stored wealth in a given fiat currency such as in dollars, euros, or yen.

But again this third party system is only a proxy for individuals to be able to directly spend either gold or Bitcoin to the vast majority of retailers.

So perhaps it is time people stopped with much of the hoopla about both gold and Bitcoin, at least until there is a global paradigm shift where either asset emerges as a direct form of exchange in commerce.  And instead let us recognize each for what their primary strengths are... ie... gold as the purest form of wealth protection and Bitcoin as a highly liquid form of encrypted currency exchange.


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