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The inherent confusion of inherent value, gold, and Bitcoin.

We’re fans of both gold and Bitcoin, because we believe that both are valuable investments/hedges/stores of value.

So seeing gold proponents like Rand Paul and Jim Rickards pick on Bitcoin makes us believe that there is a deep misunderstanding in defining terms.

US Senator Rand Paul said that Bitcoin would “have real value” when it’s tied to something else like gold or stock, because he’s a “believer in a currency having value.”

We agree that currency should have value, but Mr. Paul doesn’t care to note the $430 per bitcoin price on the markets, it seems.

Even a new crypto-currency called Minacoin was made with gold-backing in mind.

Rand Paul

Rand Paul holds “real value” in his hands

Money out of thin air

Those who follow the Bitcoin technology often are the strongest critics of the Federal Reserve and central banking in general, and see the advantages in the transparent monetary policy hard-coded into the system.

As investment banker Jim Rickards says, both dollars and bitcoins are, yes, created by computers:

Dollars emerge from and vanish into thin air — just like bitcoins. Dollars come from computers at the Federal Reserve. Bitcoins come from computers all over the world not controlled by any central bank or government.

Gold and bats both come from caves, but that doesn’t make gold fly.

Where Bitcoin and fiat currencies differ is that we know how many bitcoins exist now, how many will exist at any point in the future, and we know that the recipients are miners.

The Federal Reserve has been printing money at their own behest, even secretly, and giving it to recipients they themselves choose.

This monetary policy style that has reigned supreme over the last decades has driven many people to gold, because of the inability to create money arbitrarily – not to be confused with predictably creating money.

Those who believe that the act of creating money is inherently detrimental to the system it creates confuse very different systems of monetary creation.

This is where monetary policy and “inherent value” intersect.

  • Where Bitcoin and Fiat are the same:
    The dollar’s and euro’s and even Bitcoin’s “inherent value” is based on its monetary policy, i.e. trust in the authority of the money.
  • Where Bitcoin and Fiat are different:
    Trust in the authority of USD or EUR is placed with people, whereas trust in the authority of Bitcoin is placed in transparent, predictable, and democratic math.

Buy gold or Bitcoin? Why combining the two are better than banking on one.

Gold/BTC Price Comparison (Jan 2014)

Gold/BTC Price Comparison (Jan 2014)

 

Maybe it’s the lack of any backing or pegging that is fueling Bitcoin’s rapid growth, as an analysis by Dr. Francis Smart shows the lack of relationship of Bitcoin’s price to that of gold.

The question is not whether Bitcoin should be backed by gold, the question is if you should be backing your finances with gold and Bitcoin.

Gold4Btc is Europe’s Gold store for buying precious metals with Bitcoin.

Send a link, Pay with Bitcoin! All4Btc lets you buy anything with Bitcoin.

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Gold vs. Bitcoin: Advantages of Bitcoin over Gold

See us talk about the advantages of Gold over Bitcoin here

Bitcoin: Why the hate? Why the love?

So you already have gold and other assets in your portfolio, but have been holding off on considering the investment value of Bitcoin.

If you’ve already been following what the major finance outlets have been reporting about Bitcoin, you’ve probably heard common misconceptions get more airtime than the actual technological advantages it possesses.

Bitcoin is often treated in the press much like many of the Goldbugs are treated whenever they are on air or in the papers.

There have also been plenty Bitcoin critics that are traditionally fond of gold and libertarian values and the debate of Gold vs. Bitcoin has been held a number of times.

Is this poor coverage all due to ignorance?

Well some yes and some no.

The perspective is important to note when talking about

  • Bitcoin the asset,
  • Bitcoin the currency,
  • and Bitcoin the technology.

To question Bitcoin, it is necessary to define which part you’re referring to.

A new concept

The technology of Bitcoin, the invention it is, is the kernel of its value.

Much of what’s in the press isn’t even about the killer features of Bitcoin, if they are even understood by those presenting it.

The currency of Bitcoin is well understood by many financiers.

Hence, almost all major financiers criticise its volatility, unfriendly interface and comparatively small acceptance rate.

The asset that is Bitcoin is also downplayed by its volatility and by the fact that it is such a new and sophisticated financial instrument.

Many holders of gold have dealt with criticisms of the gold market and its dismissal as a serious asset.

The “inherent value” that is seen amongst Goldbugs is mostly driven by the fact that gold was the first ever globally-accepted currency, and still exists as such.

When talking about Bitcoin, you’re simply not going to have the same history.

However, it is the first globally-accepted digital currency that is unlikely to be stopped.

Bitcoin is not the first digital currency, but it is the first digital currency with a distributed consensus-based ledger.

What is that?

It’s called the block chain, and it’s the true innovation inside Bitcoin.

It can’t be gamed, tricked, hacked, or shut down by any single entity while enabling all the participants in this market to play by the same transparent rules.

Being this innovation, Bitcoin has many advantages over gold, which gives it its own “inherent value” that is quickly becoming adopted across the world.

Advantages of Bitcoin vs. Gold:

  • Divisibility –  One bitcoin contains 100,000,000 “Satoshis”, the smallest unit of Bitcoin. If needed, this could be quickly divided further. No matter how much the world economy grows, you can still buy your morning coffee without counting atoms.
  • Higher utility of transfer – Sending bitcoins takes seconds and costs about 20 cents per transaction, regardless of the amount or the distance between sender and receiver.
  • Harder to fake – It is very easy to verify whether the bitcoin you receive is real and to secure the ownership over it. No more worries about tungsten-filled gold bars, no more expensive assaying to verify. With Bitcoin it just works.
  • Limited supply – It is absolutely clear how many bitcoins will be mined, and the rate at which they will be produced. After 2140, all available bitcoins will be either in circulation or destroyed. From today’s perspective, the supply of Gold appears limited, it is not certain how much gold will become available over the coming decades via undersea and asteroid mining.
  • Fast innovation – As mentioned above, Bitcoin in and of itself is a huge technical innovation with countless possible applications. Building on top of this innovation, many programmers are working to improve it further and market test applications and improvements. We have only seen the beginning of the age of crypto-currencies!

Knowledge is Power

Arming yourself with the knowledge of what Bitcoin is capable of allows you to recognize the inherent value in Bitcoin.

The aforementioned advantages together with the ever-growing number of people trading bitcoins reinforce the mass media attention it has been getting.

Despite its comparatively tiny market capitalization, Bitcoin has created substantial amount of business growth.

This 5 Billion USD market is just beginning to grow, because it has as much potential as the Internet itself did in the early 90s.

Especially considering the potential impact on current financial instruments governed by banks, credit institutions and exchanges.

Bitcoin has the potential to digitize these financial tools and combine them into something more powerful than the current financial state of the art.

Have we covered the main points? Or can you think of more?

Let us know by commenting.

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Gold vs. Bitcoin: Advantages of Gold over Bitcoin

See us talk about the advantages of Bitcoin over Gold here

Bitcoin, like Gold…

So you bought some Bitcoin, and you know all you can and you would know more if your eyeballs could stay open for that one extra reddit post, bitcointalk.org thread, or news article?

You now can say you have a portfolio and have learned how to read a candlestick chart.

But what about adding another asset?

Bitcoin has been called gold for nerds and that sounds good, but what about the real kinda gold, the stuff that kings and emperors and banks have had? 

Gold is money

Although Ben Bernanke may disagree, gold is the first money, and it still is money.

Gold was the first universally accepted currency that has lasted the test of time, and it’s still an asset many are bullish on.

Given the fact that central banks are printing more money than ever before, the foundation for this fiat money is trust, and that trust is quickly fading.

The recovery from 2008 is still not over, and it doesn’t look to be over anytime soon.

Gold has been the one currency that has stood the test of time, and by holding some for yourself, you can have the control of your own money while being assured nobody is going to print more to make your gold worth less.

This decentralized and distributed trust that there is “only so much gold” is much like Bitcoin in the fact that its value/supply is more transparent.

Gold can diversify your portfolio and with a longstanding success rate.

Advantages of Gold vs. Bitcoin:

  • History – The biggest advantage of gold is its history, and therefore trust. For thousands of years it has been used as a currency and as a store of value. While it has been sidelined as a currency for the last few decades it is still a good measuring stick for the shortcomings of fiat money. It’s deep cultural penetration from fairy tales, movies like The Italian Job to coin collectors’ conventions.
  • Physicality – Many people still prefer something they can touch and tuck away under the mattress. This is also an advantage in apocalypse scenarios, where digital communication fails.
  • Little alt-coin threat – Over the millenia, other precious metals have been used as currency and store of value, however gold has been established as the clear leader and appears to remain so. No marketing campaign or algorithm improvement is going to change this.

If you look at the history of money, first there was gold, then there was notes and fiat, then there were crypto-currencies.

We know that 2 out of 3 is more secure, but we also know that 3 out of 3 is even more secure.

To add gold to your portfolio means to give yourself the chance to secure your future by holding on to the oldest and most trusted and accepted form of money, gold.

Much like Bitcoin prices now, gold appears to be massively undervalued.

It is often speculated that the current price of gold is held artificially low to keep up the make believe system of the value of fiat.

Once this illusion disappears, gold is bound to massively increase in value when measured in fiat terms.

Rather than get rich with gold, stay rich with gold, while everyone else gets poorer.

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If you have some bitcoins you’d like to use to buy gold, we have the shop for you at Gold4btc.

Have we covered the main points? Or can you think of more? Let us know by commenting.

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Gold4btc is online!

Buy an old commodity with a new one

Are you done with Fiat?

Still want to diversify your savings portfolio beyond Doge and Max Coins?

Ever dreamed of owning some gold?

Well now you can buy Gold with Bitcoin on gold.all4btc.com!

A few of you approached us on all4btc.com to buy precious metals for Bitcoin.

This led us to do some research into the area of precious metals and talk with a number of different suppliers.

To provide better service to you, we decided to set up a dedicated shop instead of handling gold orders case by case.

This ensures:

  • Consistently great prices – we work hard to ensure very competitive prices
  • High quality – we only work with Europe’s most trusted players in the field
  • Great variety and availabilty of the most popular bullion coins and bars
  • Speedy processing – secure and insured delivery or pickup in Berlin, Vienna or Munich


You can now select from a great wide variety of 
gold coins and gold bars to invest in.

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Bitcoin vs. Gold

Obviously there is a huge debate in both the Bitcoin community as well as the gold community over the benefits of one over the other.

We will explore this topic more in future posts.

For now, enjoy this new way of trading between currencies!

One thing is for sure, just like with Bitcoin, the most critical aspect of owning Gold is, to be in control.

Just like you don’t want others to hold your private key, you don’t want others to store your gold for you.

To be completely sure of your gold holdings, make sure to own physical gold and have it handy when needed.

 

Gold Support

If you’re feeling at all unsure about buying such an important investment with us at Gold.all4btc.com, just know that we are available via phone support during Berlin business hours (9am – 6pm), and also via email at [email protected]

Learn more about us and who we are at our About Page, and why we love Gold and Bitcoin so much.

Go to our shop

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