The Bitcoin Debate

A speculative frenzy has pushed the volatile cryptocurrency Bitcoin to a new record high, attracting hot money to the digital currency and generating new enthusiasm for it.

Go for the gold.

Gold offers safety and security, unlike Bitcoin.

“Bitcoin is establishing itself as a credible store of value,” claimed digital currency strategist James Butterfill of CoinShares, in a Bloomberg News interview. BlackRock Chief Investment Officer for Fixed Income, Rick Reider is also a believer, recently telling CNBC, Bitcoin is “here to stay.”

But the fact is Bitcoin offers none of the safety and security of gold. The digital currency has no intrinsic value and relies entirely upon counterparty risk. At its record price of more than $19,000 Bitcoin has a market capitalization only three percent the size of the global gold market.

Go for the gold.

Gold offers safety and security, unlike Bitcoin.

Moreover, gold has been a store of value for centuries. Bitcoin has only a record of extreme volatility during its few short years of existence. Given its short history, Bitcoin could easily be replaced by a different digital currency, even one backed by central banks, as governments are likely to fight to maintain their control over issuing currency. Plurimi Wealth Chief Investment Officer Patrick Armstrong, who allocates more than six percent of his discretionary funds into gold, told Bloomberg it’s, “possible Bitcoin has no value in years to come, which I do not think the same can be said of gold.