The global fiat system is being pushed to the edge, or so I think, but it remarkable remains afloat due not to fundamentals but to our hopeless dependency on it. We are actively fighting to protect a broken system by transacting in fiat we still trust its value, and as we stuck holding the bag, those who can create fiat will have free range to do as they please.
The robust nature of this trade-off leads to wide-scale abuse as we see governments, banks, corporations and individuals who are close to the money creation process remain wildly overleveraged and able to do so as policies benefit them.
A lot of people speak about the move back to the gold standard to have a second Bretton Woods as this would help curb the crazy amount of money printing going on. Other gold bulls say we use a gold standard without fiat money and even go as far as to say that gold will be the currency of the future.
If gold was a currency practically speaking the majority of people will store it like fiat with a custodial service. This means funds are centralised; they come to cost to hold and transfer as this 3rd party service wants to make money as well as subject to government regulation. It also makes it easier to seize, and confiscation from bail-ins or government insolvency can make your gold reserves seem like a quick fix.
Bitcoin doesn't have this problem; if companies or governments want BTC, they need to mine it or buy it from the open market simple as that. You are the bank, in your pocket the moment you open up your first wallet.
Gold is not a fungible asset; it comes in various shapes or forms and can be diluted with other metals to increase its mass. Not all Gold is created equal, and it takes someone to authenticate gold if you are to trade it. While the rich may work with reputable companies and have the ability to get premium purchase power for their gold, the poor can't.
A poor person won't have access to those markets so their gold can be bought at lower prices as they are desperate or fooled by the trader. This makes gold susceptible to trickle up and not practical for poor people to use to trade and maintain their purchasing power.
Bitcoin doesn't have this problem, as soon as a transaction is performed and confirmed by the network the settlement layer is complete authenticity is proved, and you're good to go in a matter of minutes with no 3rd party disputes.
Transporting physical gold anywhere would be a mission for supply chains, it would add an insane amount of cost as to physically move gold between countries and individuals, especially when done in large amounts.
While this could be done via paper gold and redeeming it by various banks, you can see the arbitrage issues when banks need to move gold between one another.
It also leaves banks and individuals exposed to theft.
Bitcoin doesn't have this problem, all you need is a public key, and you're good to send or receive.
Privacy and physical ownership
Since taking ownership of gold would require you to provide your personal details if it were a currency, you lose that privacy attribute, and if you operate in the shadow gold world, you will have to pay premiums.
You will also need to make a choice between the perceived safety of custodial ownership or the physical ownership, which means you are the point of failure. In both instances, governments or thieves can seize your physical gold, and you would need to take out contracts to ensure against this if you are with a custodial service or privately owned.
Bitcoin doesn't have this problem, all you need is your keys, and you can restore it to any device, anywhere at any time.
By no means a gold hater
I'm not saying gold is a bad investment; I just can't see it being the way we move forward with a currency that can match the growing demands of a digital economy and drive other markets like AI, Internet of things, microtransactions and other deflationary innovations.
Have your say
What do you good people of HIVE think? Can gold still function as a currency?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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