- Physical Gold vs. Bitcoin a Comparison!
- Chinese Government takes the Initiative in terms of Blockchain!
- Swisscom starts its own Blockchain Company!
- Australia: Regulation with the Help of Blockchain!
How does Bitcoin stand out as a digital gold compared to physical gold?
Bitcoin is regarded by many as less than a currency rather than an asset. The term "digital gold" is often used as a synonym for Bitcoin and also the many people who keep Bitcoin and other crypto currencies in the long term. But how does Bitcoin compare with gold? The team behind gold.de has already compared Bitcoin and Gold.
The comparison was very fair and one notices that the people behind gold.de have dealt with the matter, so as to come to a sensible comparison as possible. Without ruining the article, it is said that, according to gold.de, Gold is slightly ahead of Bitcoin.
I think that viewing this comparison from a crypto-affine viewpoint would be helpful for both communities, so I would like to accept this comparison as well. The basis for this comparison is the individual criteria that gold.de has created.
Asset protection
In both cases, one has to do with a value system, which is not easily seized and can not be reproduced as desired by central organs.
Bitcoin and Gold have this in common - even though gold.de does not go into the topic doubling of coins by a hard fork at this point. In principle, not a few people in the crypto scene are worried about the fact that such hard-forks can lead to a loss of value in the original blockchain and thus to indirect inflation. In fact it could again come to a Hard Fork in November. The experience of the recent Hard Forks - Ethereum Classic and Bitcoin Cash - shows, however, that this is more a stock split and not a breakdown of the total value. This just to address a concern about inflation in the crypto system.
But what about the chance of a total loss? If the Internet is switched off, even if it is only locally, Bitcoin can not be traded. It is different in gold, which is independent of technologies such as the Internet and electricity. Who ever wanted to pay with Bitcoin, but currently had no mobile phone reception or an empty battery, will be able to share these concerns.
Here, however, I see a categorization error in my opinion: the absence of Internet or electricity stands in the way of a transaction possibility of Bitcoin and no use as value system in the way. If you really wanted to choose this comparison, you would also have to ask whether you could have paid a beer with gold (absurd heights of tipping money excluded). This point has more to do with the daily risk of payment than with the asset.
Bitcoin, as well as gold, will continue to be owned by the owner even if there is currently no electricity or internet available - if the owner is in possession of the private key. In principle, he could even hand over the private key, which would no longer be very different from the transfer of the gold.
Another concern raised by gold.de is that the systems can be hacked. It is said that this hacking can lead to a total loss. This raises the question of how such a hack might look. A simple finding of the relationship between public key and private key alone will not help. The code would get an update. Moreover, gold is not free from such attacks; the counterfeiting of gold is as old as the use of gold as an investment.
In all cases of asset protection, investors need to keep track of asset news and reflect on the fundamental value of the investment. This applies to both gold and bitcoin. The central arguments are based on the investment in an asset class that is safe and not directly inflationary before government manipulation, can be transferred to both possibilities of value creation.
I see it in terms of this question as a draw.
Risk of theft
Gold is in physical form. This gold will be safely stored in a locker or a safe. For a fair comparison, I consider only solutions with which the gold has been real at home, i. no bank lockers are considered.
Safes are, of course, extremely secure storage options, which have also been cracked frequently. gold.de shows in comparison that MtGox was hacked. As described above, however, only wallets that give the user the private key are considered in this comparison, which is why the risk of a hacked exchange or fraud is ignored on the other hand.
Wallets can certainly also be hacked, if I currently only the case of the Brain Wallets is known. One strength, however, is that Bitcoin is a transparent system, you can analyze the addresses associated with a wallet from the road and observe if there were unexpected transactions. Likewise, one can react much more agile to news about possible weaknesses of a wallets.
Depending on the wallet used, there are, of course, different weaknesses: With a paper wallet, the private key is placed on a piece of paper, which must be stored securely, would then also ask for a safe or locker. The generation of this wallet may cause further difficulties, depending on how uncertain your PC is. Nevertheless, one can say here that these are rather difficulties of the respective wallet type and not of Bitcoin itself.
All in all, this point goes to Bitcoin.
Anonymity
In error, bitcoin anonymity is assumed by gold.de. This is no reproach; many people think that Bitcoin is an anonymous system.
Bitcoin is not anonymous, but a pseudonym payment system. This difference is extremely important because each transaction is visible on the blockchain. If someone finds the connection between a public key and the real person / institution behind it, the anonymity has happened. In times when Bitcoin exchanges mostly pursue a know-your-customer policy, this is even possible in principle.
With Coin mixers and other tools, the degree of anonymity can be increased, but whoever wants to be anonymous should rely on other systems like DASH or Monero.
The situation in gold is, strictly speaking, better. While anonymity often does not exist at the moment of the gold purchase, the gold can, in principle, be passed on anonymously.
Nevertheless, the larger the quantities are, the gold is often hedged and there is no fungibility: a stolen gold bar would therefore attract any potential buyer. Although gold can be molten, this could also lead to a certain difficulty of passing on.
In both cases, the anonymity is not 100% guaranteed. In the case of gold, however, there is no decentralized network with a high degree of transparency, which is why this point goes to gold.
Security against criminal use
gold.de, issues the topic of criminality only on anonymity. From this perspective, gold would be more appropriate for criminal purposes.
However, one should consider the characteristics of an asset that is appropriate for criminal purposes:
- Anonymity: As above, there is a slight bonus for gold.
- Speed: A criminal wants to get to the goods as quickly as possible. This is via Bitcoin much faster, especially because most of the wallets have not activated replace by fee (otherwise it would be amusing to see the poor thief sitting on glowing coals because the transaction ended up in the mempool).
- Flexibilty: While Gold is only stolen or available through extortion, Bitcoin models have become realizable at all, such as Ransomware.
Overall, therefore, gold is more suitable as an investment.
Daily payment
Bitcoin is more suitable for day-to-day transactions for all difficulties associated with Mempools, increased fees, etc.. A lot of stores have been reported which accept Bitcoin. What is also quite interesting is the possibility to sell or buy the smallest parts of a Bitcoin. This is not possible with gold.
Whether this criterion should decide on the pros and cons of an asset is a currency, strictly speaking, a different application. This view also makes it clear that Bitcoin is a more appropriate investment for every purse. If someone always wants to convert the exact amount, which he has at the end of a month, into Bitcoin, nothing is against it. This is not possible with real gold.
Therefore, the point goes to Bitcoin.
Potential returns
Bitcoin is currently entering the mainstream. The market is still very large, which is why there is still an increase in value. Correspondingly, this point is to be assigned to Bitcoin.
Volatility
gold.de points out in the context of yield chances that here the chances are to be considered and no guaranteed yield. This is perfectly true: the high yield chances are accompanied by high volatility.
The last two weeks have led to a certain nervousness for newcomers. If you do not want to have a volatile system, but one you can rely on, you will certainly have a better course with gold.
You should, of course, also take this point into account when you think about the availability of the value: a price drop of 20%, as it can happen at Bitcoin, will give Bitcoin a bitter note.
For people who simply want to have a secure investment, where they know that the amount invested is taking into account the rate of inflation, gold will be better.
Overall, this point goes to gold.
Use value
Here one must give the point fair to the gold. The special value of gold is certainly justified by a broad, intercultural consensus ("gold is rare and beautiful"). There are rare and / or more useful raw materials, which, however, do not have this social acceptance and are accordingly less valuable.
However, such a counter-value still exists: gold can in principle be melted into jewelry or other objects. Bitcoin, on the other hand, knows only one use case, which can not be used without the Internet as mentioned above.
The point is therefore for gold, even if one has to ask whether someone who considers gold as a value proposition would consider a possible use for the production of jewelery.
Transparency
gold.de has shared control and transparency. From my point of view this is two different points, which is why they are also considered separately.
With regard to transparency, Bitcoin is clearly ahead: With Gold, I can only look at the validity of the current transaction with regard to the current peer-to-peer trade. In the case of Bitcoin I can analyze the entire network at any time.
So I have not only in view, whether the payment of my payment partner has arrived. I can also observe how the whole network behaves. I can look more closely at my payment partner with regard to the transactions that have been made, look at what my payment partner pays on average for charges, and whether he is currently not liquid, but some transactions are currently in the mempool.
All this is not possible with gold, so this point goes to Bitcoin.
Control
Supporters of Gold and Bitcoin see it as a strength that there is no central governance. A shadow page is that there is no authority to turn to when a transaction has been sent incorrectly.
There is no state that would secure the value of Bitcoin. If one thinks that different countries have stored gold, the situation with gold is somewhat different. gold.de consider the point "control" strongly from the point of view of the lack of transparency.
Gold is said to be the source of gold, which is often unclear. This is somewhat different in the case of Bitcoin, since at least it is always apparent which miner has received the current reward.
Still, this point is to be given to gold, just the risk of a wrongly sent Bitcoin sum is extremely frustrating.
Regular income
In principle, ownership of Bitcoin and gold does not result in regular income. With regard to the crypto currencies in general, however, we could point to proof of stake systems in which the consensus regarding the new block is dependent on the stake, ie the sum in the wallet.
Here, however, the focus is on Bitcoin. Those who simply have Bitcoin will not get any more money, but miner should be pointed out. Solo mining of Bitcoin is no longer lucrative, but the classic Bitcoin user did not just have his wallet at bread, but was often an active miner. There can be a certain correlation in this respect.
However, I consider the classic users, which is why it is a draw.
Future
The future is always uncertain. A task of an investor is always the pursuit of the markets. In this case, it is uncertain whether Bitcoin can really get through to all competitors. However, the future also remains uncertain for gold. What happens if the state pays gold stocks when the perception of gold changes or large gold deposits are found?
As the future is uncertain and every investor should keep track of their own investment, I will give a draw here.
Independence
The recent events in China and the statements by JPMorgan show that Bitcoin is observed by various powerful sides with big eyes.
Institutionen, welche Bitcoin verbieten wollten, gab es schon zuvor, der aktuelle Angriff Chinas auf den Krypto Sektor ist jedoch etwas härter. Soweit klingt Bitcoin wie eine riskante Wertanlage, sodass gold.de den Punkt Gold geben wollte.
239/5000
Institutions, which Bitcoin wanted to ban, already existed, the current attack of China on the crypto sector is however somewhat harder. As far as Bitcoin sounds like a risky investment so gold.de wanted to give the point to gold.
Of course, regulatory measures can make the use and trade of Bitcoin in a country more difficult. Crises have, however, repeatedly led to the temptation to attack the gold stocks of the population. The larger the gold reserves that are spoken of, the easier it will be for the state to access them.
Bitcoin, on the other hand, can be significantly more flexible on different wallets - even on different copies. These wallets can always be stored just as easily, regardless of the amount of Bitcoins stored.
So I give Bitcoin the point regarding to independence.
Simplicity
There are two dimensions, one of which gold.de has correctly illuminated: To understand what gold is, is easier to explain as Bitcoin.
"Simplicity", however, has another dimension: How can I invest money into gold or bitcoins? And here Bitcoin scores, because you can get very fast to Bitcoin thanks to different wallets and different Exchanges.
Overall, therefore, this I see as a draw.
Energy and the environment
Some time ago, I wrote an article about the cost of resourcing that Bitcoin needed. The global payment system Bitcoin needs about as much electricity as Cuba!
Of course, one could also argue that gold mining is environmentally polluting and resource-conserving, but there is a difference: while Bitcoin requires the mining process to verify the transactions regardless of the mined bitcoins, peer-to-peer transactions of gold are completely devoid of such resources possible.
That's why this point goes gold.
Investment costs and storage
Here I fully agree with gold.de's assessment: While the cost of storing gold with the purchased gold quantity scale (larger vault, more space consumption), a wallet can be used in principle for any quantity of Bitcoins.
Thus this point goes to Bitcoin.
Tax
Currently, Gold is here a little bit in front: First, the Bitcoin is still in a finding phase. Secondly, capturing the actual profits with Bitcoin, which in different wallets or under different addresses, all of which are related to a private key, can turn out to be much more complex than capturing gold.
Finally, the stimulus of the speculative system in bitcoin, i. the trade of Bitcoin in other crypto currencies can be realized significantly larger and significantly faster than in the case of the purchase of real gold so that the tax becomes more complicated by these sales transactions.
Therefore, this point is given to gold.
Currency risk
gold.de argues that the gold price is linked to the US dollar, whereas such links do not exist with Bitcoin. Correspondingly, this point goes to Bitcoin. Only you should have in the backside that this missing coupling is bought with a high degree of volatility.
Availability and mobility
Everyone can buy Bitcoin quickly through various crypto exchanges on the Internet. Similarly, wallets of different shapes are often free and quick to set up. Bitcoins can be sent worldwide from these wallets.
Despite all the scaling problems, these transactions are still significantly faster and cheaper than corresponding gold deliveries. After all, even a well-secured hardware wallet is much faster to transport than your own gold values.
Overall, this point clearly goes to Bitcoin.
Fungibility
Perhaps there is a misunderstanding here. From my point of view, the possibility of interchangeability is equivalent to the fact that all individual units of an investment are equivalent.
Since there is also a traceability of larger investments in gold, and because Bitcoin is neither a truly anonymous nor a truly fungiblesystem like the attachment of coins related to Silkroad transactions, one could speak of a tie here.
However, since the transaction history of each individual coin is completely transparent, one can even speak of a slight advantage in the gold, so that this point is given to the gold.
Trust and acceptance
I think that this classification is clear. Gold is the classic value proposition, Bitcoin a system for techfreaks, gamblers and criminals - so the public perception. Correspondingly, trust and acceptance in the broad masses are significantly greater in gold than in bitcoin.
This point goes to gold.
Emotional safety
If the argument is not covered by "trust and acceptance", it is an extremely subjective argument. Some people like Bitcoin the simple purchase and sale, which is not possible with real gold.
Numbers and technology nerds are delighted that the value of their own bitcoins can be viewed in one scale via simple APIs. That gold glitters and you can touch it, this division leaves people rather cold. You see, this is a very personal point, which is why there is a draw.
Asset correlation
gold.de states here that Bitcoin has significantly lower asset correlations compared to gold, so gold.de assigns this point to Bitcoin. I agree with this assessment.
Technical possibilities
Another point which should be addressed is the technological flexibility of Bitcoin. Wallets, which can only be opened by several users, payment channels with which over a certain amount of instantaneous transactions can be realized, generally the possibilities of automated payments all these are things that are possible with Bitcoin, for which there is no equivalent in pure gold gives.
Therefore this point goes to Bitcoin.
Conclusion
A simple summation of the points for Bitcoin or for gold would show that Bitcoin is slightly in the lead with 15 to 14 points. However, such an assessment implies a homogeneous weighting of the individual points. Now different people have a different focus. Therefore, every potential investor should not simply look at the sum, but what value proposition corresponds to one's own preferences. On this basis, each individual can determine his own evaluation according to his or her own focus.
The Chinese government is setting up a research facility to deal with the use of blockchain. Thus, the state is now trying to take control of the development of the technology.
Over the past two weeks, the Chinese central bank has been whirling around the crypto world by issuing an ICO ban and shortly thereafter closing the Chinese crypto exchanges. Now the Chinese government in the blockchain and crypto area holds the reins themselves in the hand.
According to a recent Caixin report, the Chinese Ministry of Industry and Information Technology has launched a research facility to further advance the development of the Blockchain technology in China. Under the aegis of the China Academy of Information and Communications Technology (CAICT), the organization, known as Trusted Blockchain Open Lab, is to investigate the potential applications of blockchain technology and to provide a platform for blockchain experts who can share their knowledge among themselves and with the Blockchain Lab.
This step may come as a surprise, but the Director General of the Research Institute of the Chinese Central Bank had already emphasized in the course of the ICO ban that the ban was by no means directed against the blockchain itself. Thus, he would continue to encourage companies in the financial or technology sector to invest in the research of technology. Moreover, an ICO is just one of many applications of the blockchain, which it certifies to be a very good technology.
Thus, despite destructive action, China does not seem to have overlooked the potential of blockchain and its many possible applications. Therefore, the current initiative to promote blockchain in its own country and to take stock of knowledge about the new technology is not in contradiction with the previous regulation. Rather, the establishment of the Trusted Blockchain Open Lab fits into the inner logic of the events in China, which should not prevent the spread of the blockchain, but should be directed to state-controlled channels.
The state-owned telecommunications provider Swisscom has created its own business unit, which is to deal exclusively with the topic of blockchain technology.
As reported on inside-it.ch, the Swiss company is to set up "Swisscom Blockchain AG", which will be even more integrated into the field of blockchain consulting, ICO support and the integration of blockchain solutions in various industries.
Swisscom has already shown itself in the past as a member of the Hyperledger Blockchain project and the Swiss Blockchain Consortium as a major advocate of blockchain technology. With Daniel Haudenschild at the forefront, the business units will be further developed around the consulting and integration of blockchain technologies.
The customers of Swisscom Blockchain AG will also be able to take advantage of the professional preparation and implementation of Initial Coin Offerings (ICOs) in the future. Haudenschild already talked about the new possibilities of ICOs at the last Finance 2.0 event last Thursday in a panel with Marc Degen (modum.io), Daniel Diemers (PwC Strategy &) and Tone Vayslead.
Initial customer inquiries in the fields of the insurance and finance sector as well as in the field of supply chain management are already available.
Daniel Haudenschild previously worked as a partner with the auditing firm Ernst & Young Switzerland. Haudenschild brings experience from the banking and finance industry as well as from the field of distributed ledger technology. By the end of the year, the team, consisting of Ernst & Young employees, will be installed on 20 employees. In 2018 the team will already have 40 employees.
The Australian Securities and Investments Commission (ASIC) is working to regulate markets through the blockchain.
Recently, I reported on a bill issued by the Australian government, which repealed double taxation on the purchase of crypto currencies and thus lifted a hurdle in the trading of crypto currencies. In this context, the talk was also made of making Australia the global FinTech center. Now the country is taking another step towards fulfilling this promise.
In its Data Strategy 2017-20, which is titled "How we want capture, share and use data", the ASIC presents how the future acquisition and processing of data is presented. A blockchain based approach seems to play a central role. Thus, the paper mentions "regulatory nodes", which are intended to play a role in receiving and acquiring data. This is to be done with the use of Distributed Ledger Technology.
Even if this section does not deal with details of this kind of data acquisition, the potential of Blockchain and DLT is indirectly emphasized.
This meant that the blockchain as a decentralized network should be used to fill the databases of the regulator with material. With the optimal utilization of the network and absolute participation of the nodes, a complete and complete data register could thus be created in the theory from which the authority can draw.
The data strategy is part of the One ASIC initiative, which is designed to make the functioning of the regulatory authority more efficient. This is also explained in this paper.
I wish you all a lovely Thursday!!!
Best regards
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