Commodity Blog

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Bitcoin vs. Gold

November 29, 2013 at 16:56 by Vladimir Vyun

Peter Schiff compares in this video properties of bitcoin and gold, arguing that gold is better a investment. He mentions various merits of bitcoin, including simplicity of trading and owning. Peter points out a major drawback in bitcoin: it has value just because traders believe it has value, unlike gold, which is valued for its actual properties, like beauty and usefulness for technology. He concludes that the bitcoin market is just a bubble that will burst somewhere in the future. Of course, there are strong counterarguments against such view. The most obvious one is that bubble forecasts are rather useless without describing actual time and level at which a bubble will burst (and Peter admits that does not know it). To qualify as a bubble an asset has to be valued at much higher price compared to its “fair” value and Peter does not mention what he considers to be fair value for bitcoin. As of usefulness of bitcoin, limited supply makes it a very valuable anti-inflationary tool. It is true, though, that many unprofessional investors were attracted to the market recently and they might have drove prices too far too fast. If this is the case, prices may fall a bit, but this does not necessary means a bubble. Nevertheless, the video can be useful for traders who want to know pros and cons of investing in bitcoin and gold.

Video by Peter Schiff.

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