Precious metal investments: news, consultancy, trends, reports & more!
HomeMarket WatchHard AssetsInvestor's GuideDownloads
 

Could the Cryptocurrencies Signal
the Coming of a New Financial System?




As paper assets are losing ground, people are turning to precious metals, and alternative currencies.
The latter can include (but are not limited to-) regional currencies and even digital currencies like the Bitcoin.

People are running away from just about anything that poses risk. But what doesn't pose risks?

Bitcoin is a digital currency that functions without the intermediation of any central authority.
It was introduced in 2008 and has seen a tremendous rise in value since. But, price fluctuations, price drops have occurred as well.

Transactions costs are extremely low in case of this currency.

Bitcoin is the new trend, probably the most notorious and most popular alternative currency. Certainly the leading digital currency in the World. But, could be simply another fiat money prone to devaluation?

After all, Bitcoin has seen tremendous price drops during the years since its creation - has been in a bubble in 2011, that has popped the same year. In 2013, the Bitcoin gained tremendous value. Are we seeing another bubble inflating?

Bitcoin wasn't free of scam-related scandals and its real creator is unknown (a person who bears the name of "Satoshi Nakamoto").

The alternative currencies are generally privately-created. These tend to create a parallel economy (therefore, transactions in many of them aren't taxed), bypassing the banking system, escaping from government control.
Reason why several countries have instituted bans or, have restrained the use of Bitcoins and similar digital currencies (Thailand and China, for instance).

In late autumn 2013 (particularly in November), the value of Bitcoin, Litecoin and currencies like Primecoin, Namecoin, Novacoin and Terracoin have surged. Many became millionaires almost overnight!

Although, digital currencies have no intrinsic value and are only good until someone else accepts them as a means of payment. And, currently the fiat currencies have a far higher degree of acceptance.

Fiat money (although widely criticized) is far more stable than cryptocurrencies. The latter are highly volatile and have absolutely no other force behind them - except pure direct demand.

Whereas, conventional fiat currencies have national economies and systems like the petrodollar pushing them ahead. Bitcoin and other digital currencies are merely speculative assets.

It remains to be seen how much success these currencies will have on the long run. Towards the end of 2013, we've witnessed a tremendous downturn - a correction followed rather quickly after the November spike.

Nevertheless, the price rise was impressive.

If Bitcoin surpassed gold's price and Litecoin climbed above an ounce of silver, then why couldn't the metals register a tremendous price spike in the future?

After all, gold has intrinsic value, it's valued even by national banks and the IMF and, we're consuming silver at an alarming rate! Signs are pointing out to much higher gold and silver prices on the longer term.

Regardless whether cryptocurrencies will overcome the currently used currencies or something newer will follow - the sign is pointing out to the demise of the current financial system. The cryptocurrencies function outside of the current financial system and the more people will use them, the more will avoid fiat money - thus, leading to the weakening of fiat currencies.





comments powered by Disqus

 
Prime Values on FacebookPrime Values on Twitter

about us    terms of use    privacy policy    disclaimer    partners    advertising    contact us