In cases like money or currencies, you might have the advantage and may freely use it, however it doesn’t have value because of a systemic matter. There may be too many components of this money for example using them would not purchase very much (hyperinflation). There’s also devaluation – where a currency is devalued because of some economic or institution dilemma. Most of these issues come from too much debt and not enough assets to pay for them. A currency devaluation is similar to a partial or slow motion bankruptcy to get a government or issuer. In a foreclosure scenario, the creditors (or consumers of this currency) would be receiving a fraction of what the asset (or money ) was originally worth.
1 key facet for both bitcoin and gold would be that in creating both of them, there is absolutely no accountability involved. National currencies are issued with interest attached, so there’s a responsibility to the issuer of the money. The currencies because of being leveraged can also be”delisted” or have their own worth changed, devalued or employed for other currencies. With Bitcoin, there might have to be consensus among the players in order for this to happen.
Gold is nature’s money, and since it had been discovered, there is no one really in charge of how it functions. Gold has the history of being used as cash for tens of thousands of years in almost every society and culture. Bitcoin does not have this reputation. The world wide web, technology and electricity grid are necessary for Bitcoin to function, whereas golden is. The value of gold is based on exactly what it’s being exchanged for. The value of Bitcoin is very similar to buying a stock or a good: It is determined by what the seller and buyer agree it’s worth.
Are there any regulatory, institutional or systemic dangers with Bitcoin? The solution is yes. What if a bunch of central banks or governments took over the Bitcoin issuance? Would this not lead to control problems that could either discontinue the Bitcoin transactions or impair them? Imagine if the justification was to prevent terrorism or illegal activities? There are also technology issues such as who controls the internet, the electric energy involved with mining Bitcoins, or additional difficulties in infrastructure (the electrical grid, the nuclear grid, the net servers, the telecom companies etc.)
Regulatory risks may run the gamut from restricting bitcoin evolution review who buys Bitcoins, the number of could trade daily or maybe issuing trillions of units of fiat currency and buying and selling Bitcoins together that would cause convulsions in the costs of the unit, leading to mistrust and lack of usage? Gold does not have these shortcomings. Once it is mined, it cannot get destroyed. It isn’t reliant on technology, infrastructure or any institution to make it legitimate. Since it’s small and portable, it can be taken everywhere and still be useful with no additional mechanism required. The prevailing institutions may be changed many times and gold will continue to be valuable.