Is bitcoin the modern gold

Bitcoin or gold - is that the question?

Bitcoin has to find itself first. FA Hayek would still have been delighted.

Let's talk about bitcoin. It's about time, don't you think?

Strictly speaking, this Bitcoin thing has been the "bigger", the "more exciting" story since the beginning of this blog. The Internet and at least half of the gold bugs that publish there have a violent affair with Bitcoin, the online crypto currency, the "digital gold".

Disclaimer: No, I don't own any bitcoins. And yes, I'm a little annoyed not to have gambled with it for at least a while. Bitcoin has everything that appeals to the modern, enlightened libertarian in me: a self-governing digital currency without a central bank and far from state control? Bring it on!

 

Denationalization of currencies

Seriously, FA Hayek would certainly have had his real joy with Bitcoin and the currency's popularity does indeed mark a new chapter. (So ‚Äč‚Äčthat we understand each other correctly, dear keyboard leftist: Bitcoin is so NEOLIBERAL in your sense of the word that Milton Friedman turns on his ears. :)

The question of how this "next chapter" ends is left open here. Prophecies are somehow dubious.

So we get to the point: The recent rise in the cryptocurrency was once again spectacular, Bitcoin was around USD 1200 for a short time and thus almost at par with one troy ounce of gold.

 

No coffee brewing possible

Gold experienced a "mini-meltdown" again today because some US data was "better than expected" and for some reason incomprehensible to me, many speculators still seriously believe that "quantitative easing" will be phased out as soon as the Fed agrees Has printed jobs here.

Bitcoin did not experience this "mini meltdown".

What can we possibly conclude from this?

That we haven't found a stable price level for Bitcoin for a long time. That Bitcoin is not the "digital gold" that many people think it is. At least not yet. It is still purely an object of speculation.

That's not to say that I believe Bitcoin will "burst" like the tulip bubble once did. It is possible, but it is also possible that Bitcoin will level off at a rate of USD 40,000 apiece. Or 400,000. We do not know it!

And we can't even read coffee brews like so many online gold experts do on their charts because this bitcoin thing is so new and unknown.

 

Gold is "a little bit" deeper

Called. It is possible that Bitcoin could just keep rising. However, it is more likely that Bitcoin will make a hard landing, then rise sharply again, then crash again, and so on and so forth. In theory, this can go on for years.

And gold? That is much more dependent on monetary policy. And the market is a little deeper, which makes the price less volatile. "A little" is, of course, an understatement. If we leave out the speculative money in paper gold and assume only 170,000 tons of physical gold, the following picture emerges.

 

Bitcoin "Marketcap": $ 12 billion

Gold (physical) market cap: $ 6,800 billion

 

None of this is intended to represent a valuation. Bitcoin or Gold? There is no question: why not both?

 

Here is the ECB's paper on Bitcoin. The Europeans are pretty relaxed about the whole thing.