“The UK’s debt is out of control. The pound has lost about 97% of its purchasing power since WW2. We are not alone. International trade imperatives will force gold to back the major trading currencies. The Russian and Chinese governments appreciate gold and are hoarding it. The BIS recognises only two Tier One Assets; US Treasury Bonds & Gold. US Bonds are failing these last 5 years due to debt. Some form of gold standard is inevitable; less pain now or more later. The BoE like other central banks, needs to restock gold. Cryptocurrencies function like tech stocks not money. See the gold price”. This is just a 600 word note as required by GBPAC.
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I do agree that it would be prudent for the United Kingdom to once again stockpile Gold. I also believe the United Kingdom should continue to stockpile Bitcoin, as it seems to have been doing with asset seizures.
I believe a return to the Gold Standard is extremely unlikely. A Bitcoin standard is probably more likely, if we were to have a total collapse of the money supply. Bitcoin (not crypto currencies) is a viable money system, and is being used as money in many places around the world today, including in some businesses and venues in the UK.
I believe removing the gold standard is essentially the root cause of much of our economic problems. However, unfortunately simply restoring it will not solve it.
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As long as we don’t get any twisted demons in suits trying to curve the conversation towards Centralisation. Bitcoin or bust.
I disagree with Bitcoin for three reasons.
Firstly, it seems apparent to me that the moment we get quantum computing, cybersecurity means nothing, and any stockpile we may have becomes at risk.
Secondly, Bitcoin may as well be a CBDC, given that the blockchain is necessarily public and any transaction you make is observable; the moment you buy a coffee from a cafe, they can scrape your transaction history and know everywhere you have ever spent money in your life. If we think that governments would not use this information, or employers might not see you paying membership to a political party and decide to fire you because of it, you are mistaken.
Thirdly, it isn’t a tangible asset. Philosophically, I believe in placing value into real things. I therefore agree that re-introducing the gold standard (or maybe a cart of gold, silver and platinum) is the better option. It would also force governments to behave more responsibly, not being able to just make money out of this air.
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Valid concerns with regards to Bitcoin. With no desire to turn this into a debate on Bitcoin, I believe I can address your 3 objections, as follows:
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The threat of “Quantum computers” seriously damaging cryptography (cybersecurity is a superset of people, processes and technology, of which cryptography is one element), is a valid concern however somewhat currently overstated. We appear to be quite some time away from having the number of persistently stable Qubits required to manifest such threat. Additionally there are Layer 2 technologies that have an effect of mitigating some quantum threats. What’s more, there is very active research into quantum resistant cryptography.
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The Bitcoin ledger is public, with transactions necessarily recorded against wallet addresses. However there are many, many ways to frustrate on chain analysis with not residing wallet addresses. Additionally Layer 2 technologies broadly address this. The risk of “mass surveillance” is somewhat mitigated by these factors.
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Bitcoin is not a tangible asset. Neither is the vast majority of the pounds in current circulation. For that matter the title deed to the house you may own is also not generally a tangible asset.
If I may offer a counter, specifically with regards to precious metals and the current money system (if we were to implement the gold standard again).
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Currently it is far more trivial to steal credentials to breach a bank account or even compromise a bank, or a third-party vendor of a bank to steal money, than it is to develop enough stability in quantum computing, and produce qubits at scale to threaten cryptographic algorithms. The same algorithms, by the way, used to secure your current money.
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All transactions are centrally recorded by credit card companies and banks, who all share data with the government. None of which is public. So only one side gets the transparency. At least with the Bitcoin ledger transparency is equal.
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If precious metals are the desired store of value, then there is a real risk from space enabled mining, which might be closer than we all think. Especially with regards to precious metals, which are often a multi-generational preservation of value. Only 21 million bitcoins can exist, totally resistant to the devaluing risks that precious metals intrinsically hold.
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Very fair points and valid points worth noting, and also, thank you Nubulous Jellyfish, your knowledge once again helps.
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I wanted to address this challenge because I think your other points are fair. On this however, I would say that I think that we all know that the vast majority of people are not tech savvy enough and don’t have the time to learn how to hide their crypto-activities. Certainly, Joe Public, if crypto became the de facto currency, wouldn’t be doing any of this.
This is one of the reasons we should introduce legal currency laws to force all businesses to accept cash. The moment that it becomes possible to remove cash from society, they will, and then they will start doing things like introducing negative interest rates and money which expires.
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Yes, absolutely fair point. It is unfortunate that there is a technical barrier to Bitcoin. I can only hope that the current entrepreneurs operating in the Bitcoin space succeed in producing services and platforms that make understanding and using Bitcoin far easier than it is currently. Until then, I believe you are correct in this assessment.
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