Bitcoin’s Golden Future – by David Fickling (Bloomberg News – September 5, 2017)

https://www.bloomberg.com/gadfly/

Could bitcoin be the next gold?The idea has a lot of intuitive appeal. Gold bugs and bitcoin fetishists tend to share a deep distrust of fiat currency and the nation state, an impregnable bullishness about their favored asset class, and an obsessive attention to details of market movements combined with a blithe disinterest in bigger-picture issues.

The idea has become particularly popular as the value invested in bitcoin and other cryptocurrencies has marched upward over the past year. Even after this week’s selloff, prompted by China declaring initial coin offerings illegal, the value of all cryptocurrencies in circulation is around $155 billion, according to Coinmarketcap.com.

That may sound small compared to the $7.8 trillion notional value of the world’s 187,200 metric tons of gold. At the same time, it’s already about a tenth the value of the 40,000 tons of yellow metal used for investment as bullion bars and coins, and has overtaken the amount held in gold exchange-traded funds.

At more than $78 billion, Bitcoin alone isn’t far from overtaking the $90 billion-odd invested in all gold ETFs.There are two main reasons to doubt bitcoin’s viability as an investment.

One is an engineering issue: Its creaky infrastructure is likely to be a turn-off for all but the hobbyist fringe. Another is more philosophical: Digital currencies have no fundamental value, so have no place in a portfolio.

For the rest of this article: https://www.bloomberg.com/gadfly/articles/2017-09-06/seventy-eight-billion-reasons-why-bitcoin-s-the-new-gold

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