Precious Metals Vs. Cryptos – Which Is Money?

Recently there’s been a lot of debate as to what’s more likely to take the role of money once the fiat paper currencies really begin to fracture. Will it be precious metals or cryptocurrencies?

With the dollar and other paper currencies growing shakier by the day, debate about the next step has become intense within the alternative investment community.

Long-time gold and silver bulls remain passionate and convinced about the case for precious metals. And largely I agree.

At the same time, many in the Bitcoin community feel just as strongly that Bitcoin (and perhaps some of the other cryptocurrencies) are more suited to take on the role of money.

So who’s right?

Personally I wonder if it’s possible that the new system will include some mixture of both.

As a long time gold and silver bull I still strongly believe in the reasons for owning precious metals. And while it’s a somewhat foreign concept to many in today’s culture, gold and silver do have a track record as money that goes back thousands of years.

With that said, as I’ve learned more about the cryptos in past years I do see ways in which they seem more logistically feasible for facilitating everyday transactions.

Imagine we’re a few years into the future and the dollar is no longer being used as the primary currency. If you want to go buy a cup of coffee with some gold, how exactly do you do that?

If you have silver and you have to pay for a slice of pizza, how do you actually execute that transaction? Especially if prices are substantially higher and you need a specific fraction of an ounce?

The idea of a gold or silver backed debit card has been around for a while. Although unless you and the merchant both have an account at the same depository, there would still need to be another step involved.

Which is exactly the type of infrastructure solution the cryptos offer. The means to actually facilitate the transaction. Also keep in mind that in Venezuela where the Bolivar has crashed this year, there are reports that people have been turning to Bitcoin. So there is some current day precedent.

There’s a group called Bullioncoin that’s in the process of launching a precious metals backed coin, and the model actually seems like it could be the perfect marriage of the two worlds.

The asset security of physical metal with a payment mechanism to actually access that value. That can be easily converted into something that can be used for transactions. It’s actually the closest thing to some form of digital gold that I’ve yet heard about.

So there’s a good chance that both precious metals and cryptos will play primary roles as currency going forward.

Although perhaps more important than what eventually is defined as currency, is just having some of these assets in your portfolio.

There’s room for both, and regardless of what takes the official role as money, both metals and cryptos can’t be printed, while dollars can.


-Chris Marcus

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