Why Precious Metals Are The Better LONG-TERM Store Of Value Over Bitcoin

Many precious metals investors are starting to question whether gold and silver are still the best store of wealth in the future.  The reason Alternative Media community is starting to have doubts about their gold and silver investments is due to the rapidly rising value of the cryptocurrency market.  Also, a number of precious metals analysts have jumped ship and are now only supporting the cryptocurrencies as the next best thing since sliced bread.

While some precious metals analysts now believe that Bitcoin and cryptocurrencies are the better assets to own in the future rather than gold and silver, I do not belong to that group or mindset.  I differ from these analysts based upon my energy analysis.  Unfortunately, these analysts that promote cryptocurrencies as the “New” digital assets of the future, are ignorant about the Falling EROI – Energy Returned On Investment, or are clueless to the dire energy predicament the world is facing.

I’ve received many emails from followers who wanted to know my opinion on the matter of “Precious Metals vs. Cryptos.”  So, I thought it would be a good idea to discuss the fundamental reason why I believe the precious metals are still the KEY ASSETS to own in the future.

GOLD vs. BITCOIN:  Price & Monetary Traits

While the gold price has increased significantly since 2000, Bitcoin’s price has gone up exponential in a short period.  The amount of gold that can be now purchased with one Bitcoin has increased dramatically from less than a half ounce at the beginning of 2017, to 3.4 oz currently:

(chart courtesy of xe.com)

Normally, exponential price rises do not last.  However, Bitcoin might be the one asset that is an exception to the rule….. FOR A WHILE.  Many cryptocurrency analysts are forecasting a $10,000+ price by early 2018.  I have no idea if Bitcoin will reach $10,000 next year, but I am more concerned about what happens in the next 5-1o years.  Even though the Bitcoin price might shoot higher, it could also correct much lower and trade flat for several years as it did after its spike in 2013.

Now, how does gold, fiat currency, and Bitcoin compare as “traits of money.?”  I came across this table in an article, but could not find the source to give credit.  However, I find this chart on the monetary traits of gold, fiat currency and Bitcoin interesting.  The individual who put this chart together is showing that Bitcoin has the larger number of “High” ratings compared to gold and fiat currency:

On the other hand, gold, the king monetary metal, suffers the lowest overall score in the group.  The reason gold has a lower rating that fiat currency or Bitcoin is due to advanced technology.  It’s much easier to buy groceries with $20 Federal Reserve Notes than using gold or silver coins.  Furthermore, the supply of Bitcoin is more scarce than either gold or fiat currency (especially fiat currency as it has been printed into oblivion).

While the table shows fiat currency and Bitcoin enjoy higher traits of money than gold, some factors in the graph above are misrepresented.  Let me explain.  First, the table shows that Bitcoin is highly durable.  This is true only if the electric grid and internet remain in a highly functional state.  Just look what happened to Puerto Rico after Hurricane Maria hit the island.  An astonishing 95% of the island is still without power…. and it will take months to restore power to the island.  How does Bitcoin or electronic money function in Puerto Rico today?

Even though Cash is king in Puerto Rico today, what would have happened if the U.S. Dollar went into hyperinflation at the very same time that Puerto Rico lost its power?  Instead of using cash, people would be bartering and using gold and silver for trade.

Second, the “predictable supply” category gives Bitcoin a “high” ranking while gold receives a “moderate” rating.  Bitcoin can only accomplish a predictable supply if the electric grid, internet, and energy supply continue to provide the power for bitcoin mining and transactions.  For Bitcoin to continue mining and providing transactions in the future, the world needs a cheap and growing energy supply.  Unfortunately, a cheap and increasing power supply is not in the cards.

I will be writing more articles-updates on why the U.S. and Global energy industries are in serious trouble.  However, I have written plenty of articles already that you can check out below:

Click Here: THE GREAT U.S. ENERGY DEBT WALL: It’s Going To Get Very Ugly….

Click Here: WARNING: The Global Oil & Gas Industry Is Cannibalizing Itself To Stay Alive


These are just a few of my energy articles that provide facts and data that something is SERIOUSLY WRONG in the U.S. and Global Oil Industry.  The situation will only get worse going forward.  Thus, advanced technology will come under a great deal of stress as energy production starts to decline.  The problem with the money traits shown in the gold-fiat-bitcoin table above is that the ratings are based upon a highly advanced technical system that is assumed will continue for the next 2-3 decades.  I disagree.

Gold and silver have been stores of “Economic Energy” (coin termed by Mike Maloney) for thousands of years.  They will continue to provide this function even as energy production and advanced technology suffer in the future.

Gold Still The Key “Safe-Haven” Asset To Own

While Bitcoin and the cryptocurrency market cap has increased over the past year, it is still 20 times less than total global gold investment:

Currently, the total value of all gold investment is $2.9 trillion versus $143 billion for the crypto market and $47 billion for silver.  Thus, the value of all gold investment is 20 times higher than the cryptocurrency market and 61 times greater than the entire global silver investment.

Yes, it’s true that the cryptocurrency market may still experience a huge increase in its total market cap to $1 trillion or more.  However, the crypto market cap could also suffer a massive collapse in value, especially as the world’s energy situation disintegrates.

We must remember, physical gold and silver will still provide a store of “economic energy” in a post-industrialized world, as it has for thousands of years.  Again, I will discuss this in more detail in future articles.

Lastly, the U.S. Stock Market continues to increase even as a barrage of negative news hits the press.  James Kunstler wrote about his in his article, Kunstler: “Nothing Can Faze This Mad Bull, Apparently…”:

Nothing can faze this mad bull, apparently. Except maybe the $90 trillion combined derivatives books of CitiBank, JP Morgan, and Goldman Sachs, who have gone back whole hog into manufacturing the same kind of hallucinatory collateralized debt obligations (giant sacks of non-performing loans) that gave Wall Street a heart attack in the fall of 2008.

Europe’s quaint doings must seem dull compared to the suicidal potlatch of life in the USA, but, believe me, it’s a big deal when the Spanish authorities start cracking the heads of Catalonian grandmothers for nothing more than casting a ballot.

Evidence of the Mad Bull Market is shown in the following chart:

The Dow Jones Index continues to move higher, disregarding any bad news in the press.  After the horrific mass shooting in Las Vegas, the Dow Jones added another 130 points on Monday.  Today, it is up another 76 points to a record 22,633.

As we can see in the chart above, the normal correction phase takes place about every seven years.  If a healthy correction took place, the Dow Jones would be at least 10,000 points less than what is its today.  However, if the Dow Jones Index suffered just a 20% correction, it would gut the U.S. Retirement Market and Pension system.  If the U.S. Pension System isn’t in enough trouble already, a 20% decline in the Dow Jones Index would most certainly push it over the edge.

The Dow Jones Index and other assorted Ponzi stock markets will likely continue higher as that is the only way they can go.  Unfortunately, stock market valuations are now reaching insane levels as Americans suffer from increased BRAIN DAMAGE or over-prescribed FRONTAL LOBOTOMIES.


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55 Comments on "Why Precious Metals Are The Better LONG-TERM Store Of Value Over Bitcoin"

  1. Good to see that you are not jumping ship like that weasel Andy Hofmann.


    • Andy Hoffman never jumped ship. He diversified.

      • He got fired by Miles Franklin with a big kick in his slim ass. Now he promotes fluffy BitCoins.

    • Wrong! Wrong! Wrong!
      It’s the Market stupid, can make any arguments but always fall to what market wants. Manipulation or not, energy is nothing to do with anything, let market decide, if silver producing cost is higher than spot price, no one is forcing to produce. Simply for average Joe does not pay to company to go to work. Soon, market will do what it does best, meantime make as much profits as you can either in crypto or PMs. If you happen to be the one that waits for 5 thousand years of history, keep waiting. Bitcoin is not only token in blockchain, there are hundreds so make wise decision. We are in this to make profits not here to witness a history that might not repeat. Wake up!

      • Craptocurrency means nothing to anyone who isn’t connected to the internet 24/7. it’s just as fake and intangible as fiat. Who gives a **** about the block chain. If there is a societal collapse and the power is intermittent because of massive shortages, the last thing anyone wants to see is some ****sucker with a smartphone holding it up and going ‘I’ll give you some of this digital bull**** for real world food and water’. I’d shoot the ****er on principle in a situation like that.

        • You are crypto-IGNORANT short and simple.
          Please to be stupid somewhere else you worthless troll.

    • Never jumped ship… making profits. You must hold PMs, we’ll keep holding and purchase until THAT time. Andy made profits from cryptos and purchased FREE PMs from proceeds of crypto sale? Anyone gave you a free silver?

      • Steve, Your reasoning makes a great case for Gold as a hedge against internet failure. Full Disclosure — I own and like both metals & crypto (why not own both?)

        Though much subtlety exists with these points — both gold & crypto are more or less equal on these points, imo at least: great stores of value, requires lot of electricity to produce, are scare/finite, and prized by their respective generations.

        Gold is slightly better on these points: is physical and shinny, has much longer history, nothing can go wrong with it technically. And Bitcoin is slightly better on these points: easier to store (takes no space, can memorize recovery password, has no fees for vaulting). And it is very fun if you’ve ever used it. It is more freely traded / not as manipulated.

        But, the overwhelming factor, at least imo, is that Bitcoin is much easier to transact with (bitcoin can be divided to eight decimals). So Crypto will lead (assuming the power stays on, which is where gold as a hedge for Bitcoin comes in). Take a look around you, anywhere you go, from the 5 year old to the 65 year old, we’re all glued to our electronic devices (for better or worse). There is no way we’re going back to lugging around coins or metals in our pockets, for better or worse, that’s just the way the world is going.

        So why not own both?

        • Matthew,

          Actually, I agree with you. Yes… why not own both. However, I would rather own a much larger percentage of precious metals than cryptos.

          That being said, when the markets finally cracks and systems start to break down, physical gold and silver will be used for trade in various locations in the U.S. and world.


          • The medias disire to push people into cryptocurrencys is a very simple and understandable strategy to prolong the gold and silver bears until everything is ready to flip the market and rule the world via fear and violence.

            There was a time when money was stored in vaults .. now you only need a computer and skill (backdoors) to steal cryptocurrencys.
            You will see that more and more people put their money into bitcoins so CIA-Mafia-Scum can steal it. Of course in the meantime they act like they really really dislike the cryptocurrencys, but their media is pushing the sheep into the crypto-slaughter-house to eliminate money.

            PLEASE REMEMBER:
            Bitcoin was invented by an unknown programmer! And who knows if there isn’t a huge deepweb-backdoor to suck all bitcoins in one day?

          • OutLookingIn | October 4, 2017 at 10:45 am |

            Steve –
            One error by omission in the “traits” chart;
            ‘Stable store of value’. Physical gold wins hands down.
            After considering ‘cryptos’ my conclusion is they are nothing more nor less, than de facto digital currencies and thus yet another fictitious form of wealth, with a computer system as it’s counterparty. Relying on leverage to give their debt based value validity.

          • My personal feeling….The market has already begun to crack in many places and that is what is driving bitcoin higher…..Argentinians, Venezuelans, Chinese, South Africans, among many others, are protecting their wealth made in their own unstable currencies by switching to bitcoin….in the early stages of collapse bitcoin may be the best option….once collapse is everywhere, gold, together with a safe place to hide with natural food and water supply…..add a generous helping of Hope because things will be pretty hopeless by then

          • Cryptos are the now, silver later.
            I would only own silver because how under valued it is compared to gold. Also in 2020+ the hypertech will be eating through silver like mad which will greatly up the price.

            What people FAIL to understand is the profits they can make now in the cryptos to buy even more silver. Instead they FUD the heck out of cryptos spewing non stop lies and showing ignorance instead of doing research.

  2. “However, if the Dow Jones Index suffered just a 20% correction, it would gut the U.S. Retirement Market and Pension system.” – Hi Steve. I don’t know if you’ve written an article on this yet. Where did you get these figures? I’m dying to know.

    Keep up the good work.

    • Not necessarly if bonds increase in value at the same time.

      • If they keep 70% in stocks, then hardly will any increase in bond value offset the decrease in equities. Also imagine, what 20% means in bond prices. If there is a 10Y duration, you need to have a 2% decline in yield, which is hardly possible with the current yields.

        • If such number as 70% is valid, they could have an issue. Here in Europe pension funds have less stocks and more bonds.
          I would not be surprised to see negative rates in USD in the next few years.

  3. “Also, many precious metals analysts have jumped ship and are now only supporting the cryptocurrencies as the next best thing since sliced bread.”

    Sorry but this isn’t accurate. What is actually happening is that some metals guys ( I am one ) have dumped their Precious metals Stocks and bought Crypto currencies instead. Digital for Digital. Since the metals are being manipulated ( heavily since 2013 ) why on earth would someone keep investing in the paper/digital derivative of a manipulated market that will not be allowed to rise? It is funny how I, a layman, figured this out but the “experts” didn’t and kept their subscribers in underperforming assets while the logical alternative was right in front of their noses. I think you will find that the most antagonistic against the cryptos currencies are PM stock newsletter writers who have something to sell.
    I have kept my physical metals and in fact have used my profits in the cryptos to buy more. I could have just stayed in the PM stocks and continued to have that part of my portfolio be obliterated but I decided to get smart and not let the pied piper “experts” lead me down the ruinous path. Sorry PM stock guys, your arrogance blinded you to a better option; keep the physical; buy the cryptos.

    • PM stocks will have their day only in a major rise in PMs, otherwise they will do nothing at best.

  4. Every single cryptocurrency should be tested with neodymium magnet just like we can test silver or gold with this wonderful thing. So if you own crypto, store it in a cold wallet and put neodymium magnet close to it. Very close to it. It will last if it’s genuine 🙂 .

    • Dear Jan

      My cold wallet is a key carved into plastic (3d printing makes that easy) stored in a safe. I’m sure it will survive a magnet. Its also stored in my brain for easy access – plenty of memory tricks to help you do so reliably.

      Thanks to Bitcoin being a programmable currency even having that key does not give you access to my money as you need to present 2 of 3 keys for access. The others are stored elsewhere in a similar way.

      Every hardware and software wallet out there also generates recovery phrases that you can use to get your key back in ANY other wallet.

  5. The block chain technology has lots of promis but Bitcoin is a phenomenon too new to fully understand and make accurate predictions on how or if it will survive the next big economic crisis. I seriously doubt sovereign governments and mega banks will allow completion in their monopoly creating money. The western central banks barely tolerate precious metals. At some point in the next few years I expect leading OECD counties to step in and somehow take over the biggest crypto currencies. Don’t fool yourself into thinking you can make a fortune on crypts and undermine the big players, they are too powerful. Good luck with your speculative investments but I’m sitting this one out.

    • I suspect crytos are risk on assets on steroids. Cryptos are a huge specualtive bet could be very rewarding but risky.

  6. I like the idea of block chain. I like the idea of decentralization and anonymity. I like the idea of crypto-currency and I’m not even talking about the potential growth of, say, Bitcoin, from $2500 to $10,000. It is convenient to be a Bitcoin billionaire and carry your entire bank account with you on a flash drive, so to speak.

    The problem I have is that the government will not sit idly by as the population buys, sells and trades goods and services via Bitcoin and the government at all levels gets none of the action. No taxes. No fees. No windfall profits tax. No state or county tax. No school taxes. No nothing. THIS WILL NOT STAND. The government will get their extortion one way or the other. And if the crypto transactions in the economy become nothing more than a version of Sweden’s cashless society or a simple everyday debit card, then why hassle with crypto? There is massive benefit when the government and the feds are out of the loop. They have no money? Gee, that’s a damn shame. But if the government is in your Bitcoin wallet, does that same benefit exist?

    • Good comment ScottL

      I like the “Block Chain” concept; TPTB have no control over it except to denigrate and disparage it! We forget; prior to 1913 and the “Federal Reserve” ACT money was very Laissez-faire!!

      Having said that; I think the current price of “Bitcoin” is a joke.


      Laissez-faire is an economic system in which transactions between private parties are free from government intervention such as regulation, privileges, tariffs, and subsidies.

      I am a believer in a world trade digitised currency administered by selected countries (Not the IMF) and supported by PM’s. This could be implemented anytime the US is prepared to relinquish its hold over the reserve dollar. That is where the problem lies….. That ain’t gonna happen over-night!

      Sovereign currencies could be many and very “Laissez-faire” which would put the power back to the people.

      A brief article…

      Laissez Faire and Economic Growth
      By Lawrence W. Reed, published on June 12, 2001

      What is “laissez-faire” and why is it considered to be best for economic growth?


  7. Awesome article!!!!! Thanks for all of your work. I so appreciate it as I’m sure your other readers do…!

    Mike Maloney mentioned Puerto Rico today in a video, saying the same thing you did basically………

  8. I like the “Traits of Money” chart. So bitcoin is durable? How about when the electricity or internet no longer works? Durable my foot!

    It’s secure? Wasn’t there an incident proving otherwise a year or so ago?

    And the biggest joke: that it’s scarce! Only as long as the current rules apply and only when it exists in a vacuum with no competing crypto currencies! I could poke more holes in the prospect of bitcoin being “money.” Sorry..it’s CURRENCY. So use bitcoin as a proper tool and you’ll be fine. It’s a great short term instrument…just ask the people in Venezuela!

  9. In theory,PM’s are and would be a great bartering asset in times of crisis
    Show me more than 1% of the population that actually HAVE/HOLD PM’s in their possession.
    Offshore storage does you no good in a crisis
    If you want to get to extremes, PM’s do you no good
    As food/water are more valuable, good luck bartering for food in those extremes
    You can’t eat metal
    Seed/shovel way before PM’s.
    moving forward millennials only know digital and have no clue about PM’s. The herd moves markets
    Never go against the herd.
    All we need is 2-3% from all other assets to leak into cyrpto’s and metals to see massive gains.
    I was strictly a PM guy ,but I’ve seen the light trying to fight the herd.
    I’m tired of all the PM cry babies, that got sucked in by all the gold gurus.
    And for the crypto crowd, if you think the govt isn’t behind blockchain, ur getting sucked in by all the crypto gurus free markets/ not centralized bs
    Crypto bubble?? Lol
    Ask the 10 people you see first what Bitcoin is??
    9.9 people have no clue.

    And trying to compare bitcoin to metal is just stupid
    Metal is a store of value
    Bitcoin is a medium of exchange.

    Metal as a medium of exchange doesn’t exist in today’s world.

    Let’s talk apples to apples

  10. According to Art Berman, WTI is not the price that producers get. Discount is $5 to $15/barrel. I didn’t realize this.He is referring to US shale oil. It is in the first link for Art Berman that you have on this page.

  11. If the power grid goes down the only financial entities left standing will be the metals, cash, and bartering. If the war on gold is then restarted and the war on cash is initiated, bartering will be the only thing left. Welcome to the global Puerto Rico.

  12. Digitizing Silver? will be very interesting to see if that breaks the bankers stranglehold?

  13. Thanks steve, regards

  14. Wrong! Wrong! Wrong!
    It’s the Market stupid, can make any arguments but always fall to what market wants. Manipulation or not, energy is nothing to do with anything, let market decide, if silver producing cost is higher than spot price, no one is forcing to produce. Simply for average Joe does not pay to company to go to work. Soon, market will do what it does best, meantime make as much profits as you can either in crypto or PMs. If you happen to be the one that waits for 5 thousand years of history, keep waiting. Bitcoin is not only token in blockchain, there are hundreds so make wise decision. We are in this to make profits not here to witness a history that might not repeat. Wake up!

  15. I looked at these photos and understood the blood, sweat, tears, failed existences, lost time, hunger, sufferings, hopes, dreams etc and all this value is inside the PM I own.


  16. In the long run, we are all dead.
    I’m liquidating gold (not all at once, mind you) but basically I’m done accumulating.
    I won’t touch bitcoin.

    I’m just waiting for this rotten, collapse structure to collapse in the coming decades.

  17. BRUCE BARRETT | October 4, 2017 at 7:35 am |

    if precious metals gold and silver were not controlled …manipulated by the fed and the treasury using the excuse of the ”exchange stablization fund”, authorized in law in 1934…..gold and silver would be much higher. gold at least ten times higher…at a minimum and silver much much more, as it is held down much much more than is gold. if free markets existed we would see bitcoin passed up in a ny minute.

    • I just bought $500 in US 90% silver dimes at a local dealer and according to Conflation.com calculator, I paid only $5 in premium over the spot price. $495 in tiny silver coins (410 dimes) at a 1% premium is really cheap. Silver under $21 is cheap. Will I some day get 2 gallons of Diesel fuel for a silver dime? Case of broccoli or sack of potatoes? Okay. A sack of dime-sized coins assured long-term eating for a German working family of 1920, living in an apartment.

      Bitcoin is a thing to sell to fools and suckers, if you have some. Direct purchase of PM’s with bitcoins is ideal. Oh yeah, collapse your lifestyle now to avoid the rush.

      Best wishes.

  18. Great article Steve. Your point of Bitcoin being Internet controlled is right on point. During any catastrophe or hacking, owners of crypto-currencies are in trouble. The average, 99.9% of the USA knows nil about them. With your research capabilities forecast when “Industry fabrication” of silver i.e. electronics, solar etc. which for 2017 was 562,000 ounces will be a factor as production for 2017 was 886,000. What is the growth for Telsa’s solar deal, cell phone worldwide etc. Is China really going to up its Solar panel manufacturing? Medical use is a big grower of demand. Then we will see demand having a real affect and quite possibly know when to buy more silver.

  19. Dick Carmack | October 4, 2017 at 10:35 am |

    When push comes to shove and the electricity goes off, Bitcoin will have to use backup generators, so will every trading partner. When the government moves to protect its currency monopoly, if necessary they will send in swat teams to take Bitcoin out and if that fails they will just bulldoze Bitcoin headquarters. The same goes for all digital currencies. The powers that be will tolerate it until they can control it, if not they will destroy it.

  20. Some things to think about regarding cryptos…
    1. A few years ago someone asked a congressman whether cryptos are a good idea – he said yes. Now why would he say that? (I forget who this congressman was).
    2. The origins of Bitcoin are vague and unknown – big red flashing light!
    3. The intelligence authorities have supercomputers – really good for mining cryptos. Do you think they would have thought of that?
    4. No one knows how many Bitcoins the government has. Remember, they love and need to control everything which kinda ties in with 1.
    5. USD fiat is on its last legs. Just like Facebook, the authorities will not force you into anything – it’s much better for you to adopt and want it for yourself.
    6. Authorities have plenty of money and know-how to get almost anything done.
    7. We don’t want to be left holding the bag!

  21. Block chain and bitcoin represents constant energy consumption, not just to mine, but to transact and verify. Gold and silvers are static and have a price floor set by the cost of production. Therfore in low energy environments metals will rise in price and never go to zero where as bitcoin may rise only as far as people are willing to pay into it to cover its costs to maintain it. But I guess if you have everything plus your name ridding on it you may be willing to go the distance to the point where…
    Hey Block, meet chain, meet ankle.

  22. Note that when the last Bitcoin is mined, the transaction costs start kicking in (people who currenntly “mine” = do the calculations on the blockchain, begin to get compensated with not new bitcoins since their amount is saturated to 21M, but the BTC held by people) i.e. you can’t store your BTC without losing your relative position. So it is rather a medium of exchange than a store of value like gold, since it has that intrisic “tax”.

    BTC could easily go up from now on a 5 year window, so feel free to speculate for profits (because the stock or any other market doesn’t have much value growing potential at the moment). But I don’t see a long term future since I hold the same view on energy and economy than the author of this article. For me this just makes clear how ridiculously small the silver market cap is.

    • Silver is microscopic compared to PuertoRican bonds about to default. I’d rather have silver, then trade for gold at 20:1.

  23. Crypto’s are expressions of greed. Physical gold and silver are expressions of preservation. In a net energy declining environment, the preservation of energy always wins. It’s not wise to store your wealth in something that needs continuous energy, because net energy is the problem. Not as savings, not as intermediate for exchange.

    The stuff already finished does the trick. The promise is what killed us. More promises won’t do the trick.

    Of course the ‘owners’ of BTC below $1000,- would like you to believe it will go up and save your ass.

    Well, it won’t save your ass. Neither will physical gold and silver.

    The mindset however, within the coming decade, will be without future promises.

  24. What if there was no bitcoin?
    Would people use silver and gold? NO!
    Silver and gold are stored wealth but what would be currency?
    In Kenya, which has little electricity, everyone has cellphones!
    What do they have? MPESA!

  25. Pm holders are just sick and tired of the elite strangle on silver and gold holding it in this 6 year sudeways pattern. We havent sold our pm’s just got something that they are not able to manipulate to the same degree. That sliver of light got us excited.
    Chill and buy some omg. Then when it goes up 300x buy back the $16 silver you spent.

  26. I’m surprised to see a number of your anti-fiat readers putting their trust in cryptocurrencies. Their faith is based on some misperceptions. I’ve read a number of comments on cryptocurrencies that show jaw dropping naivite on several different aspects of cryptocurrencies.

    Let me use Bitcoin as an example. On the one hand, the blockchain technology that is used to transfer Bitcoins has real value and some version of the technology will likely still be in use 100 years from now. However, when you buy Bitcoins, you are NOT buying that technology as will be elaborated on below. What you are buying is a Bitcoin which will be the item accounted for and circulated by that technology. So what is this Bitcoin that you have bought? It is some digital bits in a computer network. What is its INHERENT/INTRINSIC value? Answer: zero. Remember that some programmers assigned a value of $0.30 to their virtual creation that is represented by a couple of digital bits. Yes, this currently differs markedly from what faith (or greed) values it at in the marketplace – hitting a high $5000.

    Why is Bitcoin valued by faith and greed at $5000 or well over 3 oz of gold? Answer: Because it’s inherently worthless. Let me explain. A recent article said that Bitcoin had increased in value since its inception by a factor of 647,000. Suppose a Bitcoin was initially pegged to 1/647,000th of an oz of gold so that the inherent/intrinsic value of Bitcoin was set at 1/647,000th of an oz of gold. What are chances that people would pay the price of 1 oz of gold to get 1/647,000th of an oz of gold???? I think the chances are zero, because even though in this example Bitcoin would have MORE inherent/intrinsic value than it does in its actual implementation, it would be crystal clear to all that they would be paying more than 647,000 times its inherent value. However, since it’s inherently worthless, its market value (i.e., its faith and greed value) may well increase by another order of magnitude.

    One may think that Bitcoin must inherit some of the value of blockchain technology by its association with blockchain technology. But this is no more true than if blockchain technology was being used to transfer monopoly money – $100 of monopoly money would not be selling for $64,700,000 in monopoly money much less $64,700,000 in USD. [Blockchain technology can be used to account for, circulate and transfer anything including gold, silver, dollars, leaves, dirt, sugar, monopoly money, etc.] Also, when one buys Bitcoin, one is NOT buying any interest whatsoever in blockchain technology. You are not buying shares of a company that owns that technology. In fact, that technology is proliferating rapidly with new and better rival versions coming out of the woodwork.

    So I think of Bitcoin as a fiat claim on a fiat currency – sort of fiat squared. One might say, “But but but, Bitcoin can’t be monitored by the government.” That’s true UNTIL the government wants to monitor it and passes the law that it will be outlawed or government monitored or you get fined or your Bitcoin will be confiscated or you will go to jail.

    • Cryptos are like a modern like fungible artwork. It is the world of capitalism : chaos and nonsense.

    • Bitcoin at 4800 USD and probably going to 8000/10000 by year end when I hope that gold bugs will go full cryptos because of the SRS Rocco article ! Not enough bullish on bitcoin so it rises, positive on gold, it is decreasing…

  27. Johny Comelately | October 8, 2017 at 9:07 am |

    This article brings up a valid reason why cryptos may not be better stores of wealth than precious metals. If we are in a thermodynamic energy collapse, it will take too much energy to run the mining and internet networks for blockchain. If we can’t afford to put this energy into running the blockchain networks, the value of crypto goes down.

    On the flip side, there are HUGE efficiency gains that can be realized using decentralized blockchain. By cutting out middlemen that skim huge profits (energy) out of the current system, P2P blockchain efficiency gains can more than make up for the energy costs that run the system. With this in mind, I wrestle with the argument that high energy costs will lower the value of cryptos. We will invest energy where it is useful in the future. Energy is money and cryptos are tokenized energy-money units tradable peer to peer.

  28. No doubt Bitcoin is a fantastic idea. However the saying ” we got what it takes to take what you have got!! ” will be raised to a new level! The NSA will see to that. The army will help with that. They have many many guns.
    And the army needs to get their salary. Poor Gadafi only wanted to trade oil for gold an see what happened to him! You know who said that: we came, we saw, he died, hi,hi,hi!,! !

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