Sunday, December 10, 2017

While neither a gold standard or a Bitcoin standard could replace the dollar alone, could a combination of the two be a possible antidote?

Most economic analysts agree that a return to the gold standard is not really feasible anymore because the greed and wickedness of both governments and men would make it as untenable as in prior eras.  And in this we are talking about historical periods where gold was eventually 'clipped' into worthlessness, or where government officials were unwilling and unable to live within the means of a budget.

However there is a growing trend towards the creation of a dual-currency system, where one is used domestically while the other is used for international trade.  And while it is also believed that a singular cryptocurrency like Bitcoin would not be sustainable for taking over in commerce due to its extremely volatile nature, discussions are beginning to brew about melding the two assets into one and forging ahead with a gold backed Bitcoin type of cryptocurrency.

Amid declining public and market participant trust in central bank monetary policies and governmental meddling with the economy, the Bitcoin gold system could replace the agonizing remains of Bretton Woods. 
Gold – the ultimate safe-haven asset – is already being priced in Bitcoin. The largest cryptocurrency has posted a stunning rise in value this year, from around $1,000 per coin to above $15,000. Now, Bitcoin’s accession to conventional financial markets might require some solid asset backing, as wild swings in Bitcoin’s value still fend off some investors. 
Here’s when the gold-against-Bitcoin trade steps in. 
In many ways, gold and Bitcoin are similar types of assets. Bitcoin’s value draws its main support from its limited supply, as it requires an enormous computer processing capacity to create new coins. The global supply of gold is rather tight as well, as gold mining is very labor and investment intensive. 
“The marriage of cryptocurrencies and gold enables alternative choices to holding more than fiat currency,” analysts of the Hutch Report wrote. 
“Although we can't imagine fiat currencies to be replaced overnight, the promises of gold backed cryptos do look compelling moving into the future and they are certainly important to follow.” – Sputnik News
Ironically a combination of the two are already being discussed between the BRICS nations as they prepare for both a new bi-lateral gold trade platform and a new Yuan denominated oil contract.  Additionally, both Russia and China are already in the process of creating cryptocurrency versions of the Yuan and Ruble, which means that melding them with gold one day soon may already be on the table.

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