in gold we trust 2017
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Bitcoin’s Pluses:
• Fast clearance and settlement of transactions
Bitcoin offers immediate clearance because anyone can make an account at any time without any identification documents. Today, over 125,000 merchants worldwide accept bitcoin. In contrast, a Google search for merchants that accept gold as payment leads you to a few dusty goldbug forums
that discuss ways to make gold great again.

• Low shipping costs
Transaction fees for “shipping” bitcoin from one account holder to another ranges from free to forty cents regardless of the
amount of bitcoin being sent. What matters for a payment network and a medium of exchange is how quickly you can put the media to use. In this sense, gold is slow money. The physical aspect of gold is great, until you try to stuff it into your USB port in order to send it to someone across the globe.

• Low storage costs
Storing bitcoin amounts to storing a large string of numbers that represent digital data. Online, paper, and brain wallets are
completely free of charge. Hardware wallets can range from €15 to €240; however, this is often a fraction of the cost of storing physical gold.

Bitcoin’s Drawbacks:
• Risk of a 51 percent attack
This is when one miner, a group of miners, or a mining pool gains a majority of the power on the network. Volatility in the
price of bitcoin during the past few weeks has stemmed from this risk. A bitcoin miner is an individual or group of people that run a version of the Bitcoin software on a hardware device specifically designed for mining bitcoin called an application

specific integrated circuit (ASIC). Mining is the process of adding new transactions to the Bitcoin database of previous transactions. The debate between big blockers from the Bitcoin Unlimited (BU) camp and little blockers from the segregated witness (SegWit) camp amounts to what version of the Bitcoin software should be run on the hardware devices. The most
popular software being run by miners, Bitcoin Core, has a data cap of 1 MB per block of transactions. A new block of transactions is mined approximately every 10 minutes, which equates to a limit on the new data that the network can record of 1 MB every ten minutes. The BU miners want to raise this limit while the SegWit camps wants to decrease the data size of each transaction.
The president of the largest Bitcoin mining pool, who is a proponent of Bitcoin Unlimited, threatened that “...
[a 51%] attack it is always an option.”
• Risk of altcoins taking market share
Cryptocurrencies, like Bitcoin and Ethereum, embody the 20th century economist Friedrich von Hayek’s dream of privately competing currencies.

Over 1,000 new cryptocurrencies have been invented since Bitcoin’s inception. Each new coin promises to improve over
bitcoin in one way or another. However, none have been able to surpass bitcoin (yet). Computers advanced from ENIACs in the 1950s to laptops in the early 2000s to Raspberry Pi’s that cost $5 and fit in the palm of your hand. The Bitcoin blockchain is a slow energy hogging database, and entrepreneurs from around the world are vying to make a coin that can steal bitcoin’s market share.
The market will choose the winners and losers.

• Risk of changes in regulations
In Europe and in the US, the regulatory outlook is bleak. In spring, the SEC rejected the Winklevoss Bitcoin ETF, and the European Union’s 4th Anti-Money Laundering Directive (AMLD) argues for stricter monitoring of cryptocurrency users, miners, exchanges and wallet providers.

• Reliance on internet, electricity, and hardware devices
Without internet, the speed of broadcasting a transaction to all of the nodes across the network would decline steeply. The increased latency would result in more forks of the Bitcoin network because miners would build blocks with an
incomplete list of recent transactions. Similarly, Bitcoin’s proof-of-work mining is estimated to cost $400 million in electricity and hardware per year.