Since bitcoin became ubiquitous in libertarian circles over the past year or two, the question has now become: what is the best alternative to government-issued fiat money? Gold and silver or bitcoin and litecoin? The answer depends on who one speaks with. One libertarian will say gold is true money and has been around for 6,000 years, while another libertarian will opt for bitcoin because of its technological innovation.
Last year, it was no secret that the yellow metal experienced its worst year in more than a decade. Bitcoin, meanwhile, experienced its best year in its brief history: jumping from a few dollars to as high as $1,200. This was evidence to many bitcoiners that the digital currency was the superior hedge to inflation rather than gold.
Fast forward to this year and the narrative has been revised. Gold has started off the year strong and has increased at least 10 percent and is now trading at close to $1,350. Bitcoin, continuing its volatile ways, felt $400 in February, but is making considerable stride as it’s trading again at nearly $700.
One of the fantastic attractions that gold and bitcoin share is the anti-inflationary aspect. Gold used to be able to prevent governments and central banks from expanding the money supply, while there is a limit on how much bitcoin can be created or mined.
In an article published Tuesday on Gold Made Simple News, one author by the name of Detlev Schlichter stated that gold and bitcoin share many other elements that are superior to the current monetary standard of trusting former Federal Reserve Chair Ben Bernanke or his successor Janet Yellen.
“Under a gold standard you have to trust Mother Nature and the spontaneous market order that employs gold as money. Under Bitcoin you have to trust the algorithm and the spontaneous market order that employs bitcoins as money (if the public so chooses). Under the fiat money system you have to trust Ben Bernanke, Janet Yellen, and their hordes of economics PhDs and statisticians.”
Slate.com, a left-leaning news publication, claimed that “bitcoin is as good as gold. For a monetary standard, that is not very good.” It cited the Gold Standard as being the primary culprit behind the Great Depression – of course, the article omitted the accounts of officials partaking in the expansion of the money supply, artificially low interest rates, government intervention into the economy by the Hoover and Roosevelt administrations (President Calvin Coolidge can also take some of the blame) and World War I.
Goldbugs will regularly state that if you can’t hold it you don’t own it – this argument has been made by former Texas Republican Congressman Ron Paul as well. Goldbugs will also point to the various virtual robberies, insolvencies and hackings as proof that the cryptocurrency is inferior to the yellow and silver metals.
So, what is the better option: gold or bitcoin? Perhaps investors could accomplish what many bitcoiners did early last year: buy bitcoin when it’s low and when it’s higher sell it in order to buy gold., or vice versa.
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