If you’ve been reading my posts over the last few months, you know I’ve invested some money in Bitcoin.
Fans of Bitcoin often say it democratizes money. It’s “money for the people”. No banks required. No other intermediaries required. No permission required. Anyone can receive or send Bitcoin through the blockchain, unregulated.
That’s all true. But I don’t think that Bitcoin is necessarily any more democratic than other forms of money.
In fact, it’s actually pretty inaccessible to most people.
The world of cryptocurrencies used to be dominated just by tech-minded early adopters. You could buy several Bitcoins for a dollar. And then one Bitcoin for a few dollars. The cost of a pizza.
But that’s not true today.
As I write this, Bitcoin is hovering at about US$21,000.
Sure, you can buy small fractions of a Bitcoin. But mostly this space has become a playground for wealthy individuals, investors and companies who can afford to lose some money.
My own investment in Bitcoin has gone up about 100% since I bought it.
A pretty nice return! Not complaining!
But I’m also aware that it could go down to almost zero in the blink of an eye. Unlikely, but possible.
Bitcoin and every other cryptocurrency are extremely volatile. They have barely any history. It’s all about the future. And the future is always unknowable.
Which is why this is a place for the rich or the brave. It’s for people who can afford to lose tens of thousands of dollars, or more.
And it’s why I’m still buying gold.
Gold is money for anyone and everyone.
Gold is hovering at about $1,750 a Troy ounce.
If I save up a little, I can buy a one-ounce gold coin and tuck it away somewhere safe.
If that’s too much money, most people can at least save up to buy a gold wedding band for that special day.
Most of us have a little gold in our lives, even if it’s only in the form of a ring, chain or other piece of jewelry.
But gold is also for the wealthy, the super-wealthy and nation state levels of wealth.
High net worth individuals buy gold in 400 oz bars. Governments do the same. Every country holds parts of its reserves in gold.
It doesn’t matter whether you are a regular person with a regular job, a billionaire, a king, a prince, or a nation state… you own some gold.
This is what it means for a form of money to be truly democratic.
And for money to be both democratic and stable, it needs some history.
Bitcoin is wildly volatile because it has no history.
Gold is incredibly stable, because it has a long history… from before the days of King Midas to the present day.
We know what happens to the price of gold when wars break out, markets crash, or governments intervene and change the rules… like abandoning the Gold Standard or confiscating privately owned gold.
We know what happens, because we’ve been there and done that.
This is why I keep on buying gold.
It may not give me a 100% return, but it does give me stability, safety… and a sense of owning a slice of history.
Further reading on buying gold and Bitcoin…
Bitcoin… It’s like gold, but digital. There’s plenty to love about it.