When the dollar crisis broke out in America, hundreds of self-styled experts (which don’t know what to do with the dollar and the euro crisis, but still speculate pompously about the economy) began moaning in unison that “the dollar is secured by nothing”, “earlier the American dollar was secured by gold, but now it is not the case, which means that the dollar is just a slip of paper”. Any right-minded person will then and there ask the following questions: What gold is secured by? What value does it have in itself? Why should we pick on namely it as a universal measure of value?
If we throw off naïve ideas from children’s fairy-tales, it will appear that gold is not only secured by nothing, but also serves almost no purpose. Oh, right…little gold is required in industry and for making different jewelry. Nothing more. Gold has value because it is accepted as a means of payment – no more, no less. The same goes for the dollar and the euro. The dollar and the euro have long ago become an imputation, just like shells , and the modern financial system is 99 % psychology-based. In fact, they are just pieces of paper, but they have value, because they can be exchanged for wares. This can be compared with sweetie papers. As soon as they start being accepted as a means of payment, they’ll obtain value.
But whereas it’s possible to print more dollars, bitcoin is much like gold: it’s very difficult to synthesize it industrially and the only way to obtain it is mining. Gold mining = bitcoin mining.
Now let’s return to the subject “Bitcoin vs. Gold”. Gold (and not, for example, elephant ivory that can’t be made out of nothing either) has become so popular chiefly thanks to industrialists, for which it was convenient to exchange wares, using gold as a universal accounting unit. However, everything has changed and now the global economy is ruled by big IT-companies (Google, Apple, Samsung, Yandex and so on), not by industrialists. In no time it turned out that they are not interested in gold, because they don’t have it and it’s very inconvenient to use it.
Moreover, it was important that, using any classical gold-value system, the companies had to share with a load of intermediaries, including the government. The latter wanted not only to take percent for control, but also had the opportunity to freeze all the accounts any time and could actually have an urge to announce default and break the whole economy. Obviously, the market’s high rollers didn’t like being in such a dependent position. Then the appearance of the decentralized payment system bitcoin was very much to the point. On the one hand, it couldn’t be considered as money by states, because it was absolutely virtual and, on the other hand, the government fell short of the possibility to control it.
Now we can observe a very amusing situation: the government has gold and those that don’t possess gold have bitcoin. However, bitcoin is not just a virtual counterpart of gold. It is something more convenient and modern. The global transition to bitcoin will bring benefits for everybody, except for those that possess gold. I’d like to enumerate five key advantages of bitcoin over gold:
- Bitcoin is a decentralized currency. It can’t be controlled from outside, so the situation like this is essentially impossible.
- It’s difficult to speculate because the economy based on bitcoin is transparent.
- It’s convenient to buy goods and make transfers.
- There are no intermediaries and controlling organizations.
- High anonymity and security.
Gold don’t have all the above features:
- Gold and forex reserves are kept in one place, to which no one has access. In majority of countries it is prohibited to keep gold at home or, at least, there are many limitations to it.
- It’s very easy to speculate with gold, because all reserves are controlled by a rather narrow group of people.
- Gold in pure form is not suitable for exchange and it’s necessary to make paper currencies which are inconvenient. There is no need in extra abstractions.
- A load of intermediaries amass a fortune from scratch and 99% of gold reserves are once again controlled by a very narrow group of people.
- There is no anonymity and security with gold. Moreover, it’s almost impossible to exchange gold in pure form.