Gold and Bitcoin Form Symbiotic Relationship

“I had to change my thought process to understand that bitcoin is no enemy of gold and silver,” says monetary expert Andy Hoffman, who writes for the precious metals website Miles Franklin. “When bitcoin hit price parity with gold in 2013, I was angry. I knew nothing about it. I assumed it was like the Federal Reserve. That, instead of 21 million coins, there could be 21 trillion coins at someone’s whim”. Today, Mr. Hoffman regularly covers bitcoin and calls gold and the digital currency “natural allies.”

A symbiotic relationship between precious metals and bitcoin has formed over the years. It started first with numerous gold dealers accepting the digital currency for metal. From there, the relationship blossomed.

Makes sense. Digital currency bitgold programmer, Nick Szabo, and the pseudonymous bitcoin creator, Satoshi Nakamoto, both understood gold as a commodity-based money, like gold.

 

 

Physical Gold Delivery for Bitcoins in Europe

“It had been our idea for quite some time,” explains BitStamp CEO Nejc Kodrič of the world’s second largest bitcoin exchange’s decision to add physical gold delivery as a withdrawal option.

In early 2015, Bitstamp announced that, in cooperation with central European MORO & Kunst d.o.o, the exchange would offer its European clientele gold products by Argor heraeus, Switzerland the Austrian Mint.

“Bitcoin is an evolutionary step of money and store of values,” Mr. Kodrič told Bitcoin.com. “I think it’s the last step in this evolution.” The bitcoin exchange founder believes that, in general, money is an abstraction.

“Even gold,” he says. “All it takes is for a critical mass of people to believe something has value. To hold this value, it needs certain properties. Gold is just a rock. It has value because it has the properties that bitcoin copies. A lot of goldbugs have a quasi-libertarian mindset, so they don’t trust government nor paper money, and more such people are becoming interested in bitcoin.”

 

The Future of Gold & Money, Inspired by Bitcoin

“The math, the proof of work, and all the technology behind bitcoin represents the greatest experiment in money of the last few hundred years,” says Josh Crumb, co-founder and Chief Strategy Officer of Bitgold, now operating as GoldMoney. “Digital currency was always designed to mimic gold equity-based money, instead of debt-based money.”

GoldMoney added a technical layer to traditional third-party gold storage. The company sought to make the ‘yellow metal’ interoperable with the banking system.

The company’s CTO was an early security consultant for Ripple and early bitcoin community member. He built a bitcoin wallet into the front end of an early version of the Bitgold website.

“We are a hybrid between bitcoin and currency,” Mr. Crumb explains. “We don’t pretend to be fully decentralized nor anonymous. We have an equity-based money that is also a very good store of value.” GoldMoney was inspired by bitcoin to make cross-border microtransactions over the internet.

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Author: Justin Connell