Gold and Bitcoin have been used interchangeably as safe havens and currencies. What is a Safe Haven? It is a place to park fortune or money when there is a high level of uncertainty around. It has to be something that everyone can believe in, even if the actual institutions, governments or players in the simulation game are not available. Assets must be kept safe in difficult times. What are the risks to a person’s assets? Theft by robbery occurs when it is a question of property. There is damage from fire, flood or other elements. There is the legal problem of not being able to determine whether the asset really belongs to you or not. There is an access risk as you may own the asset but not be able to get your hands on it. You may own the asset but cannot use it due to a restriction. best site to sell bitcoin in ghana Who else do you have to rely on to use your wealth – spend it, invest it or convert it into different units of measure (currencies)?
In cases like cash or currencies, you may have the asset and be free to use it, but it has no value due to a systemic issue. There may be too many units of the currency that not much could be bought using it (hyperinflation). There is also devaluation – when a currency is arbitrarily devalued due to an economic or institutional problem. Most of these problems stem from excessive debt and not enough assets to pay it. Currency depreciation is like partial or slow bankruptcy for a government or issuer. In a foreclosure scenario, creditors (or users of the currency) would receive a fraction of what the asset (or currency) was originally worth.
No liability
An important consideration for both bitcoin and gold is that there is no liability involved in the creation of either. National currencies are issued with interest, which means that there is an obligation to the issuer of the currency. The currencies to be centralized can also be “delisted” or their value changed, devalued or exchanged for other currencies. With Bitcoin, there would have to be a consensus among the players. Gold is nature’s money and since it was found there has been no one really responsible for how it works. Gold also has a history of being used as money in virtually every culture and society for thousands of years. Bitcoin does n’t have that reputation. The internet, technology and power grid are needed to make bitcoin work while gold just works. The value of gold depends on what it is traded for. Bitcoin’s value is similar to buying a stock or commodity: it is determined by what buyers and sellers agree it’s worth.
Bitcoin problems
Are there regulatory, institutional or systemic risks with Bitcoin? The answer is yes. What if a number of central banks or governments took over the issuance of Bitcoin? Wouldn’t this create control issues that could either halt or disrupt bitcoin transactions? What if the justification was to stop terrorism or illegal activity? There are also technological issues such as controlling who controls the internet, the electrical energy used in mining bitcoins, or other issues in the infrastructure (the power grid, the nuclear grid, the internet servers, the telecom companies, etc.). Regulatory risks can also run the gamut from restricting who buys bitcoins, how many can trade each day, or perhaps issuing trillions of units of fiat currency and using it to buy and sell bitcoins, which would cause the unit’s prices to contract, which would lead to distrust and underuse? Gold does not have these flaws. Once mined, it cannot be destroyed. It does not rely on technology, infrastructure, or any institution to make it valid. Being small and portable, it can be taken anywhere and still be useful without the need for any other mechanism. The ruling institutions can be changed many times and gold will still be valuable.
Gold is a classic safe haven asset because it doesn’t need any institutions to exist, is very difficult to counterfeit, cannot be destroyed by the elements, and has no access issues or restrictions. Physical theft and restrictions may be factors, but gold is doing better than currencies or digital currencies at this point.
You want to learn how the world of money really works without time-consuming or expensive studies ?
discuss what you want to achieve according to your horizon? Restructure your finances to achieve your goals?
Advice that does not belong to any institution or product – an independent opinion?
What Makes Bitcoin So Volatile?
Traders are always concerned about “Bitcoin” volatility. It is important to know what makes the value of this particular digital currency highly unstable. Like many other things, the value of “Bitcoin” depends on supply and demand. When the demand for “Bitcoin” increases, so does the price. On the other hand, the drop in demand for “Bitcoin” will result in lower demand. In simple terms we can say that the price is determined by the amount that the trading market agrees to pay. If a large number of people want to buy “Bitcoin”, the price will increase. If more people want to sell bitcoin, the price will go down.
It is important to realize that the value of “Bitcoin” can be volatile compared to more established commodities and currencies. This fact is due to the comparatively small market size, which means that a smaller amount of money can affect the price of “Bitcoin” more. This inconsistency will naturally diminish over time as the currency develops and the market size grows.
After “Bitcoin” was teased at the end of 2016, it reached a new record high in the first week of the current year. There could be several factors that cause “Bitcoin” to be volatile. Some of these are discussed here.
The bad press factor
‘Bitcoin’ users are particularly concerned about various news events, including statements by government officials and geopolitical events that ‘Bitcoin’ could potentially be regulated. This means that “Bitcoin” adoption rate is affected by negative or bad press coverage. Various bad news created fear among investors and prohibited them from investing in this digital currency. An example of bad headlines is the significant use of “bitcoin” in facilitating drug transactions across the Silk Road, which ended with the market being shut down by the FBI in October 2013. These kind of stories caused panic among people and caused the ‘Bitcoin’ value to drop sharply. On the other hand, trading industry veterans saw such negative incidents as evidence that the “Bitcoin” industry is maturing. Thus, “Bitcoin” began to gain its increased value shortly after the bad press effect wore off.
Fluctuations in perceived value
Another important reason that the value of “Bitcoin” becomes volatile is the fluctuation of the perceived value of “Bitcoin”. You may know that this digital currency has properties similar to gold. This is governed by a design decision by the core technology manufacturers to limit their production to a static amount of 21 million BTC. Because of this factor, investors can invest fewer or more assets in “Bitcoin”.
Security Breach News
Various news outlets and digital media play an important role in building a negative or positive public concept. If you see something being promoted in a positive way, you will probably go for it without paying much attention to the negative sides. There has been news of ‘Bitcoin’ security breaches and it has really made investors think twice before investing their hard-earned money in ‘Bitcoin’ trading. They become too vulnerable when it comes to choosing a specific “Bitcoin” investment platform. “Bitcoin” can become volatile as the “Bitcoin” community uncovers vulnerabilities to create a great open-source response in the form of security fixes. Such security concerns spawn several open-source software such as Linux . Hence, it is advisable that “Bitcoin” developers expose vulnerabilities to the public in order to develop strong solutions.
The latest “OpenSSL” vulnerabilities, attacked by the “Heartbleed” bug and reported by Neel Mehta (a member of the Google security team) on April 1, 2014, appear to be having a downward effect on the value of “Bitcoin”. . According to some reports, the “bitcoin” value has fallen by as much as 10% against the US dollar in the following month.
Small option value for large “Bitcoin” holders
The volatility of “Bitcoin” also depends on “Bitcoin” holders owning large shares of this digital currency. It is not clear to “Bitcoin” investors (with current holdings of over $10M USD) how they would exit a position that widens into a fiat position without moving the market much. So, “Bitcoin” has not touched mass market adoption rates, bitcoin in ghana cedis which would be important in giving option value to large “Bitcoin” holders.
Impact of Mt. Gox
The recent high-profile damage on “Mt Gox” is another major reason behind “Bitcoin’s” volatility. All these casualties and the resulting reports of heavy casualties had a double impact on instability. You may not know that this has reduced the overall float of “Bitcoin” by almost 5%. This also led to a potential increase in the residual value of “Bitcoin” due to increased scarcity. Still, overcoming this surge was the negative outcome of the following news series. In particular, many other “Bitcoin” gateways saw the major outage at Mt. Gox as optimistic about “Bitcoin”’s long-term prospects.
