PRESS RELEASE: George Gilder:” If Bitcoin doesn’t Act like Gold, then it isn’t Digital Gold”

Not long time ago Gilder was betting on Bitcoin and telling that Bitcoin would, over time, converge with gold in price dynamics and become more and more correlated with gold. Now it seems he changed his mind.

George Gilder is an American investor, writer, economist, techno-utopian advocate, and co-founder of the Discovery Institute . His 1981 international bestseller Wealth and Poverty  advanced a practical and moral case for supply-side economics and capitalism during the early months of the Reagan administration and made him Ronald Reagan’s most quoted living author .

“After all, we can’t understand whether Bitcoin is money if we don’t know what money is”

Gilder’s new book Life After Google  explains his reasons for rejecting the Bitcoin.

After all, we can’t understand whether Bitcoin is money if we don’t know what money is. Gold is money because it is limited in supply, and in supply growth, and also because it is in high demand. But why is it in high demand? One reason is that it has been used as money for several thousand years. It was legally money. Bitcoin is not legally money. It might become legal currency, but so far it has not. Interestingly, our analysis at Bowyer Research is that the price movements of Bitcoin are not related to shifts in supply. Supply increases do not correlate with price increases.

Read also: Slovakian Cryptcurrency Activists Lit up Local Banks with Bitcoin (VIDEO)

Long-term problems

Bitcoin has different supply dynamics than gold. When gold prices soar, goldminers can respond accordingly, whereas Bitcoin has de facto ceilings on supply increases. This makes Bitcoin deflationary relative to gold. This is a problem because it is a form of volatility, which you don’t want in your money.

2. The deflationary tendencies of Bitcoin bring a second problem: if Bitcoin is not legal currency, then price increases are taxable . A bitcoin the supply of which does not increase as quickly as gold is a Bitcoin the prices of which rise faster than gold. Rises in nominal prices are taxed as capital gains.

“Bitcoin confuses the unit of value (like gold) with the medium of payment (like bank accounts)”

Gold is a unit of value, a gold-backed dollar is a claim on gold. Bank balances are claims on dollars. You can have more dollars than you have gold, in fact even under gold standard regimes, there are almost always more units of the currency than there are equivalent units of gold.

Conclusion

Bitcoin is strong on security, but weak on currency characteristics, which means that at best it’s going to tend to be money only in situations which are big on cash-only, high security and anonymity, and which aren’t too picky about paying taxes.

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Please note:  This article was originally written by Jerry Bowyer on Townhall and partly edited by Cryptovibes.com.

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