BreakingModern — What do gold and Bitcoin have in common? They are both currencies that those who despise or distrust the fiat currencies created on central bank printing presses desire to have in their holdings.
How do gold and Bitcoin contrast with each other? Gold is a metal taken from the earth that has been a store of value for thousands of years, while Bitcoin is an invisible digital specie which was conjured up by computer coders in 2008.
Today, there are signs that the two non-fiat currencies, frequently the topics of financial conversations these days, are coming together.
Tech visionary and Bitcoin evangelist George Gilder waxes exuberant about the world’s biggest — and most controversial – crypto-currency.
Gilder tells us that far from being a haven of anonymity for those who may attempt to conceal illegal or fraudulent activities with it, Bitcoin’s time-stamped irreversibility makes it the most transparent form of monetary exchange there is. And — for better or for worse — this makes it attractive to government, so that it will keep the crypto-currency around and not interfere (much) with it, in Gilder’s view. The touted — and feared — anonymous quality of Bitcoin lies in the fact that sensitive, personal information doesn’t need to be divulged in order for you to complete a transaction with it, because Bitcoin enables provable transactions that don’t require intermediaries.
Gilder has much more to tell us, too.
Bitcoin, he says, is “the currency the Internet deserves — and needs.” He also points out Bitcoin doesn’t need to be regulated by government because its regulatory structure is already built into via “the passage of time and the pursuit of irreversibility.”
Perhaps most importantly of all, Gilder says:
“Capitalism is deflationary…Wealth is knowledge…Learning is economic growth…(People are only afraid of deflation) because governments constantly screw up economies, screw up monetary systems, and cause prices to go up. (Then they) blame the currency…(Bitcoin is deflationary because) when it reaches its full maturity with 21 million coins, which is the (asymptotic) cap that has been imposed through the algorithm itself, (then Bitcoin) will tend to be deflationary…Money can’t be abundant in the same way that (products are because) money has to be the way to prioritize and evaluate.”
Gilder envisions a shining future that includes both gold and Bitcoin because, he says, “Gold and Bitcoin share fundamental roots in time. They aren’t chiefly governed by the capital function.”
Catch the full video right here:
With that, Enter DNA Precious Metals, Inc. The penny-stock traded company operates out of Montreal, Quebec, Canada. It originated as a gold mining company.
James Chandik, the company’s CEO and president, explained in June of 2014,
“The management of DNA Precious Metals, Inc., was approached by some crypto-currency miners recently and they presented us with an opportunity that we did not want to pass up. They proposed that we should become part of the Bitcoin mining industry and we saw the potential to deliver value for our shareholders as we continue to work towards bringing our mining operations on the Montauban Mine Property into production…This new business is an extension of our core mission. The new subsidiary will be mining online whereas DNA Precious Metals, Inc. will be mining at the Montauban Mine Property. Bitcoin businesses that are well thought-out and focused have been well received by microcap investors in both the U.S. and Canada.”
When a gold mining company also begins mining for Bitcoins, it looks like Gilder’s envisioned future is now taking shape in the present.
Is Bitcoin Really Money?
Bitcoin proponents say both Bitcoin and gold, unlike fiat currencies such as the post-1971 U.S. Dollar, have intrinsic value.
But the digital currency’s many harsh critics call into question its “moneyness.” They wonder what backs Bitcoin to make it worth anything as money. Sure, gold and silver have intrinsic market value because they can also be used in non-monetary ways in industry. But, if a sound paper currency needs to be backed by gold or silver for it to have real value, then what gives Bitcoin any intrinsic value?
Mark Rees at Bitcoin Magazine has 22 answers to that critical question (not all of which I agree with). Among his answers:
- Short-term, it requires no “full faith and trust”: you cannot make counterfeit Bitcoins; Bitcoin’s wallet ID tells the world who owns it; its validity is public record; and, transactions with it require no central clearing house.
- By making wallet IDs public, we’re able to track the flow of money through other transparent wallets, thus rendering Bitcoin utterly transparent. You can’t do that with any fiat currency, gold or silver.
- “It can be programmable.” According to Rees, there are already plans to produce product layers on top of Bitcoin to make it spendable based on contracts that can be programmed to be completed with built-in variables. As a parent, for example, you could program your Bitcoins that you give to your children so that they’re only valid for purchasing certain items. It might also be programmed to “settle contracts based on certain events such as date, proof of ownership, death or a host of other factors that can be validated programmatically without a third party to validate if the conditions were met.”
- “It can be spent over the Internet without a bank account, credit report, identification, and pre-permissions.” The only limitation on Bitcoin’s usage right now is merchants’ acceptance of it; and as its advantages become ever clearer and more publicly known the more merchants are going to accept it.
- Your identity cannot be stolen through Bitcoin transactions because Bitcoin “is nobody’s debt. Paying with Bitcoin isn’t a “promise to pay.” It is “payment in full.”
- Bitcoin can thwart capital controls. “You call that subversive? I call that liberty!”
Bitcoin does indeed have an abundance of “moneyness” and intrinsic value despite what the naysayers insist.
Bitcoin is now being taken so seriously that some former naysayers are reversing their views of the crypto-currency. For example, experienced financial analyst and gold pundit Peter Schiff said in 2013 that Bitcoin was merely “a Ponzi scheme.” But now his investment firm, Euro Pacific Capital, has announced that it will gladly accept payments in Bitcoins.
Bitcoin is more than just a new currency. It’s also a new technology — and as with any new technology we will watch it falter at times. But like gold, it’s here to stay and will come to play an enormous role in our lives.
For Breaking Modern, I’m Brant David.
Image Credits (from top down): “Bitcoin-coins” by CASASCIUS. I hereby release this work into the public domain. Casascius (talk) 22:36, 18 November 2021 (UTC) - CASASCIUS. Licensed under Public domain via Wikimedia Commons, DNA Precious Metals.
Header Image: “2021-06-10 Rundeskatten” by Chell Hill - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.