Gold camp keeps clubbing Bitcoin (they wish....)

Bitcoin vs Gold -> Bitcoin AND Gold

Recently, I wrote about the surge in Gold vs Bitcoin articles with the general notion that Gold (and other precious metals, PMs) is (are) 'better money' than Bitcoin (and other cryptocurrencies). While I do not necessarily dismiss that notion, the general tone in the articles is on many points dismissive of Bitcoin and - worse - does not give readers any insight on the positive aspects of cryptocurrencies, their basis in truly free markets and the paradigm shifting force behind it.

That is a shame; the authors concerned do a tremendous amount of harm to their readers. Instead of empowering them, giving them a chance to learn about cryptocurrencies and the chance of hedging their bets against fiat currencies, they phrase their arguments in such manner that people are turned the other way (towards PMs of course). Quite understandable if your business consists of selling bullion but not the best for their readers.

The attacks keep coming

It did not take long for the umpteenth article to appear with the same game plan: Rory Hall of Sprott Money penned an article called Cryptocurrencies: The Unfolding Fiat Digital Scheme. Again, the main argument seems to be pointing out that PMs are 'better money' than cryptocurrencies. Fair enough, but the tone and phrasing highly suggest to readers that cryptocurrencies are a fad and not worth looking into. Referring to an older set of articles of himself, the negative bias towards cryptocurrencies is hardly a surprise. Got PMs to sell, right?

Rory takes offence in the idea that cryptocurrencies will "safe us from the banksters":

"Now we find that some of the most respected voices in the alternative economic/financial analyst space are turning towards a new type of illusory, fiat wealth and proclaiming it will “save us from the banksters”. The magic bullet has arrived and we should all jump on board. Sounds like something a bankster would hope we would do with their latest pile of derivatives nonsense"

Besides the fact that this is a general statement that may have been outed by certain people, but is by no means a general thought shared by every cryptocurrency adopter, there is an undertone of distrust and fear of a banker ploy at work when it comes to cryptocurrencies. Rory seems fan of a conspiracy 'by bankers for bankers' to unleash the evils of a cryptocurrency over humanity via an anonymous character called 'Sathoshi Nakamoto' who - without mincing too many words - is associated with some words written by the NSA in the past on electronic cash. He seems genuinely concerned about Bitcoin possibly being a scheme to lure people into digital cash, cutting off the use of real cash. Oh, those evil banksters...

How this (entertaining but facts-free) idea relates to Bitcoin being open-source, voluntary and unstoppable (peer-2-peer) is unknown. Perhaps the idea is that with Bitcoin (and other cryptocurrencies), the general population gets used to cryptocurrencies and then, those evil scums, introduce their own cryptocurrencies and enslave the people. Because people do not pay attention themselves of course and would chose money with worst characteristics than the cryptocurrencies that they just recently got used to. "Hey, have some Govcoins with undetermined issue scheme controlled by a cabal of 12 men in a dark back room, or stay with your shitty transparent and predictable decentralised Bitcoin.". Of course the crowd would run to Govcoin and Bitcoin would magically be shut down. Not really probable.

The real issue

Look, I am not in the business of pointing every critical article about cryptocurrencies, especially in the Gold field. In fact, PMs are probably 'better money' indeed. That is not the issue.

The real issue is currencies and more specifically: whether cryptocurrencies solve a problem that comes with fiat currencies.

As long as the world is not ending but hums along just fine, it is and will be currencies that people use for transacting (and they 'transact' quite a lot). For savings, there are numerous options: for instance, stocks, bonds, currencies and ... PMs. But currencies play a large role in people's financial lives.

When comparing fiat currencies:

• not (entirely) voluntary
• issue scheme is geared towards a small group in charge of the issue thereof
• non-transparent issue scheme
• centralised
• permissioned

with cryptocurrencies:

• 100% voluntary
• issue scheme written in stone (code)
• transparent
• decentralised
• permissionless

I see some traits in cryptocurrencies that definitely seem to be better than fiat currencies. Both work on the basic premise that the user has faith that the next recipient will accept the currency in question in exchange for a product or service (and that continued for the following transactions).

Although cryptocurrencies do not have the 'full force and backing' of a government or central bank behind it, the ordinary user probably does not care. The actions between fellow humans in ordinary transactions seems to be sufficient. Institutional investors perhaps see a need for government backing, but not ordinary users. Trust in governments/central banks also is lost many times as history proves. So although it plays a role, it is not a decisive factor.

The rise of Bitcoin and numerous altcoins prove that faith is easily born among humans. I think this is a good example of human nature's natural inclination to cooperate. There is only a low threshold of trust needed to get a 'trust system' off the ground.

So why be negative about a system of currencies that seems to be better on many fronts compared to fiat currencies? Why not inform readers of the potential of this new technology and the benefits it could have compared to existing systems? There is no need to dismiss cryptocurrencies only to make a point about PMs.

The more things change, the more they stay the same

I hope PM authors take heart and take a better look at this new technology. It would be an awful shame if their readers miss the early opportunity for the move to a better financial system. But we should not be surprised. The adoption of new technology generally follows the rules as recently referred to by Daniel Jeffries in an excellent interview. The summary can be found here: how people react to life-changing inventions. Most authors in the field of PMs seem to be stuck at 2. or 3.

Happy Steeming.