Bitcoin, not gold, has the Midas touch

bitcoingoldsilver27 Nov 2013 / Market Watch – It’s an alternative to paper currencies. It can be traded anywhere in the world. It has a limited supply. And it should be a secure haven if financial markets start to crash. That is a fairly accurate description of gold. It is also an accurate description of bitcoin, the digital currency that is gaining in popularity all the time.

But here’s a puzzle. The price of gold has been falling for most of this year, and it would be a brave investor who called this as the bottom of the market. And yet the price of bitcoins has been soaring. The goldbugs will tell you that the price of gold is being suppressed — it would be a lot higher if it was not being manipulated downwards. Others will argue that bitcoin is a faddish bubble, a nerd-ish equivalent of 17th century Dutch tulips. Its soaring price tells us nothing — except that people are as easily fooled as they always have been.

Bitcoin: Is the currency becoming more real?

Is bitcoin another flash in the pan? Or are the early investors onto something that will make them rich? WSJ’s Jason Bellini has #TheShortAnswer.

The actual answer is more interesting. Clearly there is a demand for alternative currencies, and bitcoin is in many ways a better product for that market. The price divergence is an illustration of how bitcoin is edging gold GCG4 +0.11%  out of the “alternative money” market — and that is hardly bullish for the precious yellow metal.

For the few people who have not yet heard of it, bitcoin is a purely digital currency, minted in limited quantities by a pre-determined algorithm. No one knows who invented it, and no one controls it. Right now, there are 11 million bitcoins in circulation, and the algorithm will eventually create around 21 million of them. And that will be the lot — production will stop, and there will be that amount of digital money available, and no more…… Read more

http://www.marketwatch.com/story/bitcoin-not-gold-has-the-midas-touch-2013-11-27

Follow Twitter

Exchange Rate

Cart