The price of Gold is countercyclical to the well being of an
economy. During the Great Recession, the price of Gold rose. Over the last four
years as the economy has improved, the price declined. During times of crisis,
there is always a debate about owning Gold or having the U.S. go back to the
Gold standard.
With the emergence of new technology, BitGold, which is
unrelated to Bitcoin, was created. BitGold
is a company that offers international savings and payments services which
allow people and businesses to send payments and hold savings with physical
gold.
Read the article below to get an understanding of how
BitGold works.
What do you think? Is this just a PayPal competitor that
allows people to redeem Gold? Is this just pure speculation? Would this type of
service be beneficial during a recession?
Interesting article, though I'm still not sure how I feel about the benefits to this system. I suppose that during a recession, it would give people the ability to redeem their gold for cash, but isn't that what "cash 4 gold" stores already do? To me, this resembles one of those stores, but instead of getting actual cash, individuals would get internet money.
ReplyDeleteIt this system is well-integrated to our society, it could be convenient for users. But, like the article says, one of the companies for the digital currency went bankrupt because of cyberthieves in the early years. This kind of crimes will be more likely to happen to BitGold.
ReplyDeleteI think this idea of bringing the gold standard back in context of modern technology is very interesting. Even if it's controversial whether Nixon's abolition of gold standard stimulated the US economy or exacerbated, I think there can be a consensus that it definitely strengthened the power of the Fed for monetary policies to work more effectively, while making the USD stay as a center of currency even during the financial crises. If the founders of BitGold start to implement their systems in the US and it gets commercialized nationally, I think it will reduce the power of Fed and may unstabilize the US economy, just like how Greece got stuck with the euro. But the positive side could be that BitGold may open up new horizons of reliable currency. I think it will be a matter of how plausible it is for BitGold to be adopted in global markets.
ReplyDeleteThis sure does seem to be a speculative process that would allow people to bet on the economy. If they predict a recession, they could profit from the downturn. Could it be similar to the speculation often associated with currency?
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