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Bitcoin Volume Surpasses OTC Gold Market

Financial researcher Nic Carter has run the numbers and found that Bitcoin volume has surpassed the over the counter (OTC) gold market so far in 2018. The OTC gold market is on track to settle USD 446 billion of transactions in 2018 while the Bitcoin market is on track to have a volume of USD 1.38 trillion in 2018, using simple extrapolation.

So, not only has Bitcoin’s volume surpassed the global OTC gold market, it has surpassed it by about 200%. This is a good indicator that Bitcoin has become a major asset class.

Conservatively, (adjusted estimates), Bitcoin has settled $848b this year, and is on track to settle $1.38T. Bitcoin, it appears, has quietly surpassed the OTC gold market in settlement volumes.

— nic carter (@nic__carter) August 12, 2018

Carter used gold clearing statistics from the London Bullion Market (LBMA) which includes HSBC, ICBC Standard Bank, JP Morgan, Scotiabank, and UBS to arrive at the USD 446 billion OTC volume projection for 2018. In general, gold OTC volume is less than USD 30 billion per month, and silver OTC volume is less than USD 5 billion per month. According to CoinMarketCap, Bitcoin has a volume of USD 136 billion in the past month, and this does not include derivatives exchanges like BitMEX which actually have nearly as much volume as all the Bitcoin spot markets combined.

There is a caveat to this since total gold volume might be far higher than OTC markets due to paper gold. On markets like COMEX, paper gold is issued, which can be redeemed for the actual precious metal stored in a vault. However, there is only a tiny fraction of actual reserves in the vault backing the paper gold. There are many different estimates for the ratio of paper to metal stored in the vault, ranging from a 100 to 1 ratio all the way up to 1,000 to 1. Regardless of the exact number, the point here is most gold trading is done with derivatives that aren’t truly gold. This has saturated its market price and forced it to be far lower than it should be.

When it comes down to it, OTC gold market volume represents the true volume of physical trading, and Bitcoin has far surpassed it. This means there are more demand and activity associated with Bitcoin than physical gold.

As written in a previous article on Bitcoin News, Bitcoin is better than gold as a currency since it is far more liquid and far more secure. This makes Bitcoin much better for international commerce and finance than gold. It appears the market agrees with this, based on the global data.

 

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Bitcoin Is Better Than Gold

With the increasingly frequent comparisons of Bitcoin to gold, both as a store of value and a means of transferring value as a form of payment, traditional investors are now weighing in on the advantages of the world’s most popular cryptocurrency.

Is Bitcoin superior to gold for use as a currency?

The standard

Gold is perhaps the first decentralized currency, defined as a thing that has value but not under the centralized control of any governing body. It has been a sign of wealth and one of the most popular currencies for thousands of years. Physical gold holds its value since it can only be slowly mined over time, rather than printed rapidly like fiat.

Scarcity

Both assets are similar in that they are mined. However, Bitcoin has a limit on how much it can be mined – there will only be a maximum supply of 21 million Bitcoins. While gold has been determined to be finite, its total supply is unknown and only estimated. Should new, large deposits be suddenly discovered one day, its price would be significantly affected. Even a large unknown deposit on Earth can cause a big price crash.

Ease of transfer and security

Although physical gold is globally recognized as a currency, it is arduous to use for international commerce and finance. The metal is highly valued by the ounce, currently USD 1,200, but when dealing with large amounts of money, it can be very heavy. To send USD 1 billion to another country would require 52,000 pounds (approximately 0.25 tons) of gold. This would require a tremendous amount of effort and costs for customs, shipping and security. Additionally, it would take many days for gold to cross international borders, with multiple points of risk at en route.

Compare this to Bitcoin, where USD 1 billion can be digitally transferred anywhere in the world instantaneously, at a fee of only a few cents, with no additional costs. This digital transaction isn’t exposed to compliance with any jurisdiction’s regulations wither and cannot be intercepted nor hijacked once broadcast to the network.

Additionally, Bitcoin is cryptographically secure and has yet to be hacked despite years of attempts. Gold can be physically secured, but at great cost. Bitcoin’s cryptographic security can’t be compromised by even the most powerful supercomputer. Bitcoin transactions can be done instantly and leave no trace besides a note in the blockchain ledger that they occurred, while a gold transaction is very visible since it has to be moved physically, and a tremendous amount of traceable activity occurs when being moved.

Liquidity

Finally, gold has a huge paper market on COMEX, where its paper issuances can supposedly be redeemed for physical equivalents in a vault. However, COMEX’s vault contains less than 1% of the amount needed for all the paper gold issued. More is being printed too, saturating the market and keeping the price of the precious metal far lower than it should be. There is no equivalent situation for Bitcoin, since Bitcoins are highly liquid and there is no need for paper Bitcoin. The only reason paper gold exists is because its physical counterpart is difficult to transact.

Bitcoin can also be easily converted to local currency via peer-to-peer exchanges. Localbitcoins, for example, lists traders willing to buy or sell Bitcoin online at any one time in over 248 countries. It would be significantly more difficult to liquidate gold as it is likelier to find a buyer for Bitcoin than it is for the precious metal.

Ultimately, if fiat currency collapses it is clear that Bitcoin is in a much better position to become the top global currency, due to Bitcoin’s advantageous characteristics. This makes Bitcoin much more ideal for international commerce and finance than gold.

 

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Kim Dotcom Warns to Invest in Bitcoin Before US Debt Bomb Explodes

Internet legend Kim Dotcom, who became infamous for his website Megaupload that became a global hub for internet piracy, is warning the people of the world to invest in Bitcoin and gold before the United States debt situation hits the fan.

1 TRILLION DOLLARS in additional US Govt debt PER YEAR!

US spending is funded by lenders who will never get paid. US Empire will collapse followed by a world wide economic collapse. https://t.co/kdtB0GnewP

Shift your USD into Gold & Bitcoin asap before USD becomes toilet paper. https://t.co/a5UIuhJvUT

— Kim Dotcom (@KimDotcom) August 9, 2018

Currently, the United States debt, provided by Treasury Direct, sits at a mind-boggling USD 21.342 trillion. This is a new all-time record.

To put this in perspective, Bitcoin’s market cap is USD 109 billion and the total cryptocurrency market cap is USD 214 billion, 0.5% and 1% the size of the United States national debt respectively. The cryptocurrency markets are a massive economic zone, it certainly does not make sense that the United States has a hundred times more debt than the total crypto market cap.

Essentially, the United States has been spending far more money than it actually has and prints money to compensate for the constant budget deficit. This is primarily done by issuing debt via selling USD bonds on the global market, which are considered the gold standard of the bond world, so they are bought up quickly despite the United States issuing tremendous amounts of bonds all the time. It’s getting even worse according to Kim Dotcom, the budget deficit is now over USD 1 trillion per year.

At some point in the future, if this is not resolved, the US will reach a point where it cannot afford to pay the interest on all of this debt. At that point, USD bonds will go from being the gold standard to being in default. These bonds are being held by numerous nations, corporations, and individuals worldwide, and if they were to default, it would cause an economic catastrophe. This would lead to massive money printing as a last attempt to save the economy, resulting in hyperinflation that will destroy the USD.

To be fair, it is possible that before this happens a government will arise in the United States that will take the hard steps necessary to balance the budget. It might truly be too late, however, as the economy is being propped up by the issuance of debt, and it’s quite possible that if the budget were balanced the economy would spiral into a deep recession from the lack of government stimulus, leading to further debt issuance and money printing.

This is where Bitcoin comes in. Bitcoin is a decentralized cryptographically secure cryptocurrency that can’t be printed at will. There is a fixed total of 21 million Bitcoins after mining is complete and Bitcoin is easy to use as a currency worldwide. If the USD collapses, Bitcoin will be in a position to become a top global currency. At that point, each Bitcoin would be immensely valuable and the current Bitcoin price just over USD 6,000 could be an excellent opportunity to buy.

Based on this simple economic logic pertaining to the United States debt situation, it seems Kim Dotcom has a point with his warning. People who buy and save some Bitcoin now could be the wealthiest ones in the future.

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Jeffrey Tucker – Bitcoin's Brilliant Combination

Jeffrey Tucker – Bitcoin’s Brilliant Combination:

Jeffrey Tucker (@JeffreyATucker) writes of meeting Bernard von NotHaus why Mr. NotHaus is relevant to digital currency.  Excerpts:

“Economist F.A. Hayek wrote that it was entirely possible that a high-quality private money could compete with a government money.”

“But who would step out and make the attempt? What entrepreneur would dare come forward and offer up an alternative as a product in the consumer market?  Bernard von NotHaus was the man”

“The notion that government was trying to protect a marvelous system against domestic terrorism is mind-boggling, since the truth is rather obvious: The government was trying to protect a terrible system from being overthrown by competition.”

“Bitcoin is a brilliant combination of the Liberty Dollar’s soundness and Napster’s distribution methods, with a few extra features thrown in to protect it against shutdowns.”

“The revolution will not occur with guns and battles, but through enterprise, entrepreneurship, and a billion tiny acts of peaceful consumer choice.”

 – http://lfb.org/today/the-domestic-terrorist-you-can-call-a-hero
 – http://bitcointalk.org/index.php?topic=292237.0 (Further discussion of this article)

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Matthew Lynn – Gold Isn't Only Alternative To Paper Money

Matthew Lynn – Gold Isn’t Only Alternative To Paper Money:

In an article on Marketwartch, writer Matthew Lynn (@MattLynnWriter) describes how gold’s role as a store of value alternative to paper money will be seeing competition from digital currencies.  Excerpts:

“As the American [dollar] grows in strength — as seems likely given its relative performance compared with the rest of the world — then gold will be less valuable as an alternative.”

“Gold is nothing if not a long-term investment [however] the most important threat is the rise of alternative digital currencies such as bitcoin.”

“As a rival to paper money, gold has had the market to itself. Now it will have competition, and that always drives down the price of any product.”

“Financial sophisticates might dismiss digital currencies as a craze. But plenty of other industries have been taken apart by the Internet — there is no reason why the money market should be any different.”

“In many ways, digital currencies may be a better alternative to paper money than gold.”

 – http://www.marketwatch.com/story/the-real-threat-to-gold-is-digital-2013-07-17
 – http://bitcointalk.org/index.php?topic=257880.0 (Further discussion of the article)

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Matthew Lynn – Gold Isn't Only Alternative To Paper Money

Matthew Lynn – Gold Isn’t Only Alternative To Paper Money:

In an article on Marketwartch, writer Matthew Lynn (@MattLynnWriter) describes how gold’s role as a store of value alternative to paper money will be seeing competition from digital currencies.  Excerpts:

“As the American [dollar] grows in strength — as seems likely given its relative performance compared with the rest of the world — then gold will be less valuable as an alternative.”

“Gold is nothing if not a long-term investment [however] the most important threat is the rise of alternative digital currencies such as bitcoin.”

“As a rival to paper money, gold has had the market to itself. Now it will have competition, and that always drives down the price of any product.”

“Financial sophisticates might dismiss digital currencies as a craze. But plenty of other industries have been taken apart by the Internet — there is no reason why the money market should be any different.”

“In many ways, digital currencies may be a better alternative to paper money than gold.”

 – http://www.marketwatch.com/story/the-real-threat-to-gold-is-digital-2013-07-17
 – http://bitcointalk.org/index.php?topic=257880.0 (Further discussion of the article)

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Matthew Lynn – Gold Isn't Only Alternative To Paper Money

Matthew Lynn – Gold Isn’t Only Alternative To Paper Money:

In an article on Marketwartch, writer Matthew Lynn (@MattLynnWriter) describes how gold’s role as a store of value alternative to paper money will be seeing competition from digital currencies.  Excerpts:

“As the American [dollar] grows in strength — as seems likely given its relative performance compared with the rest of the world — then gold will be less valuable as an alternative.”

“Gold is nothing if not a long-term investment [however] the most important threat is the rise of alternative digital currencies such as bitcoin.”

“As a rival to paper money, gold has had the market to itself. Now it will have competition, and that always drives down the price of any product.”

“Financial sophisticates might dismiss digital currencies as a craze. But plenty of other industries have been taken apart by the Internet — there is no reason why the money market should be any different.”

“In many ways, digital currencies may be a better alternative to paper money than gold.”

 – http://www.marketwatch.com/story/the-real-threat-to-gold-is-digital-2013-07-17
 – http://bitcointalk.org/index.php?topic=257880.0 (Further discussion of the article)

All News – Daily E-mail Subscription  – Twitter: @BitcoinNews

Matthew Lynn – Gold Isn't Only Alternative To Paper Money

Matthew Lynn – Gold Isn’t Only Alternative To Paper Money:

In an article on Marketwartch, writer Matthew Lynn (@MattLynnWriter) describes how gold’s role as a store of value alternative to paper money will be seeing competition from digital currencies.  Excerpts:

“As the American [dollar] grows in strength — as seems likely given its relative performance compared with the rest of the world — then gold will be less valuable as an alternative.”

“Gold is nothing if not a long-term investment [however] the most important threat is the rise of alternative digital currencies such as bitcoin.”

“As a rival to paper money, gold has had the market to itself. Now it will have competition, and that always drives down the price of any product.”

“Financial sophisticates might dismiss digital currencies as a craze. But plenty of other industries have been taken apart by the Internet — there is no reason why the money market should be any different.”

“In many ways, digital currencies may be a better alternative to paper money than gold.”

 – http://www.marketwatch.com/story/the-real-threat-to-gold-is-digital-2013-07-17
 – http://bitcointalk.org/index.php?topic=257880.0 (Further discussion of the article)

All News – Daily E-mail Subscription  – Twitter: @BitcoinNews

Phil Archer – Bitcoin Versus Fiat Versus Gold

Phil Archer – Bitcoin Versus Fiat Versus Gold:

In Phil Archer’s latest article on TheGenesisBlock.com (@TheGenesisBlock) he compares Bitcoin against fiat money and gold.  Excerpts:

“There are nine distinct characteristics of money: scarce, durable, portable, divisible, easy to recognize, easy to store, fungibile, hard to counterfeit, and widespread use. At first glance, bitcoin has a significant advantage over fiat currencies and gold in many of these.”

 – http://bit.ly/1401cUc

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