A New Rival of Gold, Bitcoin

Bitcoin pile

Financial crisis hit the world in 2005, and the world is trying to recover but there are no solid results till now. The new generation X and generation Y are now advancing as the leaders of large corporations replacing the baby boomers. This new generation, the innovative leaders, were brought up during the information revolution and had a first-hand experience with the real potential of the internet.

Many of these young leaders disagree with their former front-runners, and they tend to rewrite the rules rather than clash with them. Their way in demonstrating their disagreement with the current monetary system was creating an alternative system, the digital currency, outside the boundaries of the current legalizations till new laws and acts are implanted. They are trying to decentralize the world because they were the first to benefit from globalization and Facebook from a grey area.

The most popular digital currency now on the internet is Bitcoin. Its inventor intended it to be the world currency in the experimental stage. The bitcoin project started at 2008, with growing popularity and dependence on the digital technology advancement. The good news is the world understands now the importance of communication and it is trying to eliminate these obstacles of communication such as languages and currencies. Maybe that’s the reason for calling the gold standard once again till a new system is fully established.

There is resistance, sometimes over-reacting from the world leaders. But that was always the case with new invention. The internet itself faced similar resistance before coming into the light. Automobiles, electric lights and telephones were mere toys to the mainstream. But later on, these inventions became the modern age basics and foundations. Bitcoin is no exception. Bitcoin is not a scam, and it is what a portion of the cyber population chooses to have as money such as some chosen gold instead of paper money. It found solutions of some problems of the current monetary policies. Until the world solves the bureaucracy and the monopoly of the financial industry, current leaders are required to implant legalization and regulation of using decentralized digital currencies such as bitcoin.

Let’s face it, we are now entering the post-modern era. Telephones are not sufficient to handle the current pressure and that’s why internet grew and became the post-modern way of communication. The same applies to the economic system. Our current monetary system is reaching its limits and a new system needs to be researched and developed. Bitcoin is a good example to study digital currencies. Let it prosper and judge it later, it’s not fair to treat it like an abomination child of globalization and free-market monetary system. Otherwise, we should treat Facebook credit, Google wallet, PayPal and other online payment systems the same. Not to mention banning the internet and shutdown digital industries.

This new currency, if it gained enough momentum and strength, should affect the good-old-gold. The increasing popularity of Bitcoin and the new gold trading easy-to-use platforms makes the merger with the Forex market seems quite an appealing idea. Especially, after Forex established now a solid ground with its decentralized system and its high liquidity, and the easiness to trade in commodities such as oil, gold and silver.

Both, Forex and Bitcoin share some common features. Like said before, they are both built on the concept of decentralization, meaning there is no single entity that can corner the market, as long as there is enough investors and traders. Another common feature is they both widely dependent on communication technology, specially the internet and mobile portfolios. Remember that bitcoin is a digital currency, while Forex is a foreign exchange market. How the average man uses it as a mean of investment or a hedge asset is what concerns us.

The advantage of Forex over bitcoin is its far greater liquidity of the Forex market compared to bitcoin, actually over any market. This might end with more and more people converting some of their cash to bitcoin. Overtime, it will probably reach a comparable level with Forex. The Eurozone recession and Cyprus crisis recorded quite the volume immigrating to hedge with bitcoin along with gold, and running from paper money to the digital market and physical gold buying.

Bitcoin have an edge over Forex, which is its nature as a digital currency, not a market. Bitcoin is designed to be a new world’s currency that faces no boundaries in the cyber space, and can be used later on to replace fiat money. It is much similar to gold, meaning that it is seen as an asset or a commodity, but it is really behaving as money. The main deference here is, gold is physical asset, while bitcoin is digital one.

If people agree to trade with something then it is “money”. Be it gold, digital currency, or dollars and fiat money in general, it is treated as “money”. So, bitcoin is another rival to gold, but good-old-gold doesn’t mind to have a new player in the money market. It welcomed oil, paper money and stocks long before and still have the same features as before, why doesn’t it accept bitcoin and digital currencies as new members?

You can buy gold with bitcoin. Some Forex brokers such as Bit4X accept bitcoin as payments, and some coin sales are made with bitcoin like in Coinabul. This merger with established market is what makes bitcoin the biggest digital currency. Till now, it should be treated as high risk asset, and it can be shutdown at any time, thanks to conservatives’ lawsuits and world leaders who doesn’t want to lose their monopoly iron grip on the monetary system. Maybe after a while, we could buy ETFs and groceries with bitcoin.