Tectonic Metals gets funding for gold exploration in Alaska
The company's Flat gold project is located 40 km north of the giant Donlin gold project.
Bitcoin GIF by reddit user Plazmotech
Bitcoin has had the ride of a lifetime this past week, and the investment community has taken note.
Fuelled by strong demand from China and general hype over the crypto-currency, the price of one bitcoin reached nearly $900 mid-week, compared with $12 just last year.
But the currency’s success has sparked a big debate over its actual value, and famed investor Peter Schiff has weighed in, publishing a video titled ‘Gold vs. Bitcoin’ on his YouTube channel on Thursday.
In the video, Schiff explains why Bitcoin is not “gold 2.0” but modern day alchemy.
“While I have a lot of sympathy with what the bitcoin community is trying to acheieve, I just think they have the wrong vehicle,” Schiff says.
“Bitcoins really replicate all of the properties of gold, even improving on some of them, but here’s the problem: They replicate all the properties except the single most important one: Value. Intrinsic value of the metal itself. Bitcoin doesn’t have any.”
Bitcoin vs. Gold as explained by Peter Schiff
10 Comments
David
In a future dominated by the Internet – gold is a little cumbersome in comparison to bitcoin. The real advantage of bitcoin is it makes banks redundant due to it’s decentralisation and I feel like that combined with being instantly transmissible and tamper proof is why most people are in for bitcoin. Gold has little real intrinsic value and when I say real I mean – think about it – it is indeed a luxury good and of little real practical value. Disclosure – I have zero bitcoins but enjoy a good debate. Peter is absolutely right – for bitcoin to be a success it needs market adoption. So for me – I’m not watching the price of bitcoin – I’m watching the growth of places that accept bitcoin which so far looks promising.
david95
You completely missed the ‘reason” for the use of Gold. Intrinsic value? Name ONE value of the dollar “other” than for trade? Name on “value” of the bitcoin”other” than trade. Even though I ususally don’t bring this up, becasue it’s the inability to “counterfiet” gold that makes it so secure, but can gold be used to anything other than “trade”? Absoutely. It is used in jewerly, electronic components. How many paper bills or bitcoins is used to make your computer and electonics? I see gold having far more value, it just may be a little “harder” to trade with today. Whihc is why you don’t use gold to trade, you back a currency with gold.
I have no idea what our future holds. But if I were a betting man. I would say in, I’ll go to the extreme here, 500 years, nobody will except a dollar bill anywhere in the world in trade for anything. But I bet, gold will still hold value to trade commoditites with. You see, the world won’t be swamped up to its neck in Gold. Becasue man cannot “make” with a printing press or the push of a button.
BTW. My 23 year profession is building and supporting the internet. So I know how valuable, and how easy it is to manipulate.
Thomas Guyot-Sionnest
Hi,
You spent the whole time trying to explain why Bitcoin isn’t like Gold, so first of all Bitcoin has NOT been created to replace or mimic Gold, but to make online transactions possible without relying on a central bank. Like the dollar it has no intrinsic value except the fact that it can be used to make cheap transactions without borders. As more and more merchants accepts Bitcoins, people will WANT them to be able to buy things without having to pay the bank fees.
Indeed no one can predict what will happen with Bitcoin prices, and although it’s likely being in a bubble right now I hardly think it’s going to fully crash; as I said above, there will always be a use to Bitcoin for making transactions, sending money overseas, etc.
Right now the price is very volatile because Bitcoin is in a ramp-up period where more and more people use it every day, and because of that more and more speculators want to profit on it too. The speculators will cash-in eventually, but as no one wants to cash in during a crash the current bubble-and-crash effect that has been caused by newly arrived speculators will smooth out, especially as the ratio of users to speculators will grow.
Finally, the point of Bitcoin not being “legal tender” is totally moot – legal tender only means that you must accept it for selling goods, but it doesn’t mean you cannot accept other currencies. Actually there’s already a few other local private paper currencies in the US and they’ve been working very well so far. Furthermore, when it’s time to pay taxes you can always sell you Bitcoins, and that is if the government doesn’t decide to accept Bitcoins directly (and why not? If it helps people paying their taxes why wouldn’t they allow it?).
So I still agree with you that Gold is a much safer value for people who don’t trust fiat money, however it doesn’t change a thing about Bitcoin: they are here to stay and in the long term they’re going to remain a deflationary currency.
P.S.: At one point you mention it’s easy to create a digital currency backed on gold. I don’t disagree, but it’s not going to be anywhere close to Bitcoin: for it to work you need a central trusted authority that can ensure proper backing. The whole point of Bitcoin is that it’s 100% peer-to-peer with no central authority, and this is what made it so cheap (for transactions) and so popular. Your gold-backed digital currency would be just like the *many* other digital currencies that’s been around for so many years, and none of them ever managed to get even close to the traction Bitcoin has been getting so far.
John
This argument about intrinsic value being something of substance is out. It’s like arguing against cause and effect because we can’t see it. Out.
Alshark22
The biggest difference between bitcoins and gold is that while gold can be mined it can never be produced. Bitcoins on the other hand at the moment seem as though they cannot be produced, but give it 20 or 30 years and I wouldn’t be suprised if that algorith isn’t discovered to have flaws.
It can be a pet project but I would never invest in it.
Tim Harry
One problem with bitcoin is that while it has been built with upward finitude, its fractional power is actually unleashing the potential for the same printing press characteristic of the fiat currencies. From thousands of units buying a pizza, in time a 10 to the power of -20 fraction may be buying the pizza place.
Surprisingly the bitcoin is still allowed to exist and this tells me that human nature is deeply rooted in greed and corruption. Another danger with bitcoin is that it is seen as carrying the promised intrinsic value of anonymity. An interest for anonymous transaction can appear in buying weapons or drugs or organs of choice. An ethical person should consider that participation in the holding of bitcoin is fraught with the potential for crime, war, inequity. Or is this what we are betting on?
David
I feel like you’re confusing inflation with deflation? Does this same principle not apply to gold? Let me know when you can buy a pizza store with a gram of gold.. No sir – we are betting that the world has a place for a universally trusted public ledger which has a finite unit of account but can also be used for the transferal of property rights – time stamping patent applications etc etc. A protocol which has been designed from the ground up to be completely open and transparent. You may audit the principle mechanism of operation as well as the activity or ‘transactions’ in near real time. Consider the payment of taxes with crypto-currency. You would be able to track what the government does with your wealth in near real time.
idigmines
I believe a large driver of Bitcoin value is the naive belief that Bitcoin transactions are anonymous. If Bitcoins make anonymous transactions possible they would enable tax evasion, money laundering, fraud, terrorism and other criminal enterprises.
How long do you think it will be before the govt steps in and requires detailed records of all Bitcoin transactions? Do you really think the NSA hasn’t been tracking Bitcoins already?
I hate to sound like a conspiracy theorist, but get real. A currency that allows Iran to circumvent economic sanctions is probably more closely scrutinized than Mitt Romney’s off-shore accounts. Huuum, I wonder if Mitt has a Bitcoin wallet?
Once a whale is nailed for tax evasion by using Bitcoins they may lose their virtual metallic luster with investors.
A Bitcoin is just an ephemeral computer file – a string of ones and zeroes. Who doesn’t know what happens to old computer files? They just disintegrate in cyberspace. Ever heard of entropy?
idigmines
I guess we haven’t learned anything from the flash and programmed trading catastrophes that have occurred on the major equity and derivative exchanges in the last couple of years.
Bitcoin Cloud
nice story. thank you for the info.