Gold and Bitcoin, Hand in Hand

Precious metals and bitcoin have had an interdependent relationship for many years now, with gold dealers initially accepting the bitcoin as a digital currency seeing to the prompt take-off of the relationship between the two.

Gold and Bitcoin, Hand in Hand

With bitcoin considered a form of digital gold owing to gold’s unwavering value, MORO & Kunst d.o.o., based in Central Europe, decided to collaborate with BitStamp in 2015, offering bitcoin users the chance to exchange the digital currency for physical gold products from MORO’s exclusive partners Argor Heraeus, Switzerland and The Austrian Mint.

Nejc Kodrič, BitStamp’s CEO, stated that he had been thinking about collaborating for some time, describing bitcoin as an “evolutionary step of money and store of values”, even going so far as to say that it was the “last step in this evolution”.

Under the belief that money is an abstract concept, he also went on to tell that “all it takes is for a critical mass of people to believe something has value. To hold this value, it needs certain properties. Gold is just a rock. It has value because it has the properties that bitcoin copies. A lot of goldbugs have a quasi-libertarian mindset, so they don’t trust government nor paper money, and more such people are becoming interested in bitcoin.”

Mr. Kodrič doesn’t seem to be the only one to think so highly of bitcoin; Josh Crumb, Chief Strategy Officer of GoldMoney has described bitcoin as the “greatest experiment in money of the last few hundred years,” adding that “digital currency was always designed to mimic gold equity-based money, instead of debt-based money.”

GoldMoney’s CTO was one of bitcoin’s early community members and so he managed to build a bitcoin wallet into the recently opened Bitgold site, which now functions as GoldMoney.

Mr Crumb goes on to highlight that the company in no way feigns anonymity or full decantralisation and emphasises the “equity-based” nature of the money and its “good store of value”, which in turn inspired GoldMoney; using the “open nature of bitcoin” in order to allow him to make cross-border microtransactions across the Internet for gold.

According to Crumb, GoldMoney uses the basis of decentralization, and compares their business to that of Coinbase, a bitcoin exchange based in San Francisco, explaining, “people are trusting bitcoin to the custodial nature of Coinbase”. Using Brinks and Royal Canadian Mint as custodians which deal with the confirmation of transactions and act as “clearing agents” assures security for the customers, who he stresses are important to know well.

However, there is some skepticism behind the relationship between gold and bitcoin. Andy Hoffman, monetary expert who writes for the Miles Franklin precious metals website, believes that there is higher risk involved in using bitcoin than gold, but also claims that he has not been able to find an alternative currency resembling that of gold and silver in his entire career that betters bitcoin, describing them as “natural allies”.

Similarly to Mr Kodrič’s “evolutionary” view of the bitcoin, Mr Crumb also thinks that bitcoin is making people reflect more about money and whether it really serves us as well as it could. He explains that GoldMoney was inspired by bitcoin to “take gold from an archaic business to a modern technology” and assures that the company is “happy gold and bitcoin are having an influence on central banks together.”

So, despite a little skepticism and varying opinions about the relationship, it seems that gold and bitcoin go hand in hand quite nicely and will make a comfortable couple for the foreseeable future.

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