State Sponsored Money – Under Pressure?

The Bank of International Settlements (BIS) is now throwing their weight behind Central Bank Digital Currencies for household use (“Retail CBDCs”). For clarity, this doesn’t necessarily mean recording fiat currency as tokens on blockchains: regular account-based technology can also be used. But it means that households could store and spend fiat money digitally outside of a bank or other private sector company.

Continue reading “State Sponsored Money – Under Pressure?”

Bitcoin Price, Gold, and Nonsense – How Not to Value Bitcoins

Important note: If you own more than $1,000 worth of cryptocurrency then you should definitely be using a hardware wallet instead of keeping coins on exchanges.  I recommend a Ledger Nano (S or Z) which you should buy directly from their website and never second hand.


Every few days I hear the argument “If x% of the money in gold (or other asset class) moved into bitcoin, a single bitcoin should be worth $y”.  This article explains why this argument is utter nonsense.

The (flawed) reasoning is as follows: the total value of gold in circulation is estimated at US$8 trillion.  If some small fraction of the people holding gold (say, 5%) sold their gold for US Dollars (releasing $400 bn), and the USD proceeds were used to buy bitcoins, the total value of bitcoins (commonly referred to as “market capitalisation”) would increase by that amount of dollars ($400bn), and because we know the total number of bitcoins in circulation, we can derive a price per bitcoin.

Continue reading “Bitcoin Price, Gold, and Nonsense – How Not to Value Bitcoins”