Convert your paper & bitcoin to gold
The case for converting bitcoin, (ether or any other cryptocurrency) & paper ( fiat money, fiduciary currency) to gold.
bitcoin bɪtkɔɪn/noun a type of digital currency in which encryption techniques are used to regulate the generation of units of currency & verify the transfer of funds, operating independently of a central bank.
Bitcoin has traded in a range from USD 1124.76 to USD 0.08, over the last few years. It’s USD 580 today. As with the price of oil, copper, tin or any other commodity, do you know where the price of bitcoin is headed next?
Trader: Are you betting on the price of bitcoin, like a futures trader in wheat, corn or soybeans?
Investor: Do you have the risk appetite for a constant fluctuation in the value of your money & wealth stored in bitcoin?
Businessman: While the blockchain securely records transactions, what is the value of a bitcoin transaction when measured in fiat? Or gold? What about moving in & out of fiat or crypto?
Does bitcoin have intrinsic value?
There will be no real non-controlled currency in the world. There’s no government that going to put up with it for long.
Jamie Dimon, Chairman and CEO, JPMorgan Chase, at the Fortune Global Forum, “Jamie Dimon: You’re Wasting Your Time With Bitcoin”
Pro: M-Pesa proved, the poverty riddled villages with no access to banking were able to lift themselves out of poverty with simple abilities to pay suppliers and start businesses.
Gives the unbanked population access to banking features they might not otherwise enjoy. As the much smaller digital currency M-Pesa proved, the poverty riddled villages with no access to banking were able to lift themselves out of poverty with simple abilities to pay suppliers and start businesses. With the cross border scale and usability of bitcoin, imagine the same results x 1,000. Are there any national currencies up to this task?
Con: Nobody in the Bitcoin world has the power to compel usage.
Nobody in the Bitcoin world has the power to compel usage and unlike, say, a commodity, a Bitcoin provides no beauty or functional use outside of that of a trading vehicle.
Thus, Bitcoin, unlike fiat currency (which is backed by the force of law) or commodity-based monies (which have some intrinsic value via use or beauty) is only of value because someone else will accept it, or pay more for it than what you bought it for.
Digital money backed by precious metals
In a twist of irony, one of the world’s oldest currencies — gold — has found new relevance as a way to mitigate the volatility of bitcoin, and even paper money. Not only has it held its value against the dollar and other fiat currencies over time, gold has come back into fashion as a means of payment as well as storing value for digital currencies.
For instance, publicly traded Canadian startup BitGold lets people purchase gold directly on its payments platform. Users can redeem gold in physical form. But perhaps more interestingly, they can make transactions using vaulted gold holdings and pay through a MasterCard debit card or transfer money to another account holder. You get the quick digital transaction without exposure to volatility. This exchange offers free transactions, while PayPal charges 3 to 6 percent plus a 30-cent per transaction fee. Bitcoin based transactions usually charge a small fee.
How different is this from Bitcoin-based payment systems like Bitpay and Coinify? Mainly, gold isn’t volatile, despite the numerous economic, political and global upheavals that the world has suffered in the past century. In fact, gold has out-valued the US dollar historically, with the dollar losing more than 90 percent of it’s value since it was last backed by gold in the early 1970s.
Currencies like Bitcoin often seem more suitable these days for financial speculation and quick money transfers. Sheer volatility and instability make cryptocurrencies a difficult investment option, particularly when they lie in the grey area of legality. Platforms like BitGold are worth considering because they offer the security of a traditional commodity and cutting-edge technology that ensures quick and cheap transfers.
The U.S. dollar is up, the Chinese yuan is down and both have had a ripple effect on the entire global economy. With…www.pymnts.com
Paper, Fiat Money
A government has the capacity to generate money by its own fiat, will, or whim. This authority is the cornerstone of our modern financial architecture. It is also the root of inflation.
A price is a value expressed in terms of money. The more money generated, the more prices increase.
How has paper money fared as a store of value?
Are paper currencies are designed to lose value over time?
The Economist’s Big Mac Index tracks the price, over time and over currencies, of a common good, a McDonald’s Big Mac. Different countries, different currencies, different purchasing power, different Big Mac prices.
Compare the price of bread over the last 60 years when measured in paper money. In 1940, one cent bought one loaf of bread. Today, you need more than three dollars for a loaf.
Gold is simply permanent units of energy, labour, and time. Gold emanates from the canceling of those 3 but then forever represents them.
Gold has stood the test of time, as a store of value. This is because gold has evolved into money because of physics; not economics. The laws of physics guarantee gold’s perpetual superiority as money.
Goldmoney makes it possible for you to insure yourself against crypto volatility & paper degradation by converting crypto & paper to gold.
Goldmoney is an internet software service that makes vaulted gold accessible for savings and mobile payments; the first full-reserve ‘online bank’ like platform with e-payments and a debit card to spend gold.
Gold for transactions
Your gold, stored in Brinks, Loomis or G4S vaults, can be easily liquefied to use as money. You can accept & receive payments in gold; buy, send, receive, spend & redeem gold: the first time gold has been truly liquefied. Gold can now be used for transactions.
Payment in Gold Bullion
The 100% Reservists:
Given the difficulties of leaving currency issuance to either the bankers or governments themselves, some have argued that payment should be made entirely with gold bullion itself. In essence, mining companies make the money. I have chided some of these arguments unfairly with remarks like “I can’t really see myself paying for my Amazon.com order by Fedexing a gold coin to Seattle.” But, this was a misrepresentation. Typically, these proposals involve some kind of payment system where each banknote or check able deposit account corresponds to equivalent bullion held in storage. Thus it is a “100% reserve” system. This was actually the norm throughout history, from 2600 B.C. until about 1800. As far back as Babylon of 1900 B.C., and earlier, monetary payment could be made in gold or silver bullion, or also as a deposit transfer (basically a checking account) recorded at the Temple, which served as the central bullion depository and payments clearinghouse. More recently, the 17th-century Bank of Amsterdam (in principle) served as the bullion payment clearinghouse, in a Dutch monetary system otherwise based on metallic coinage. Banknote issuance after 1800 was commonly left to private bankers and then central bankers, who then tended to maximize their profit with the use of debt as a primary reserve asset.
100% Reserve systems tend to be particularly robust, and immune to bank insolvency or currency over issuance. It also removes the issue of who receives the profits of currency issuance, since there are effectively no profits.
Variants of this notion are already active today in institutions like GoldMoney (beginning 2001) and its successor, BitGold, which is run by the former CEO of Paypal Canada and is listed on the Toronto Stock Exchange. Many other proposals are already on the table, sometimes related to recent legislation liberalizing the use of gold as money in states like Utah.
These “100% Reserve” systems may use banknotes, or may be “wholly electronic” like Goldmoney or BitGold, which is a funny term for a system that could also be called “wholly metallic.” In any case, the system can work well and eliminates many issues related to either central banks or government currency issuers. The main problem is that it could demand very large amounts of gold to be held in reserve if applied on a global scale. However, smaller scale systems could certainly be introduced with no particular issues, and already have been.