GoldbitsCoin Crypto currencies have taken the world by storm. Especially Bitcoin, which saw a rapid increase in its valuation since the last few months and has got hooked several major industrial players as well as governments to it. Besides, others such as Litecoin, Ethereum and others are following its lead. This has created a crypto currency boom where people are seeing a positive feedback being given to major cryptocurrencies as they keep getting further acceptance by the global commercial fraternity. Japan even passed a law earlier this year to legalize the Bitcoin.
However, with all that being said, there remains a significant chink in the cryptocurrency armor that has solemnly not been addressed by anyone — the lack of a trustworthy backing. The problem here is that cryptocurrencies are backed by a process that has its own value. However, there is no guarantee that this value will be able to stand the test of time and financial upheavals.
Cryptocurrencies are backed by the ‘mining’ process where crypto ‘miners’ invest time in solving mathematical, algorithmic problems that eat up a lot of power, hardware that runs 24x7 and other costs that go into helping create an individual coin. However, there are some issues with this process.
First, what if a team of sophisticated hackers infiltrates malware into the Blockchain system that infects all the computers that are a part of the system. This can damage the value of the Blockchain on several levels. It can deflate or inflate the value of that cryptocurrency, or it may even destroy all the records.
While it the data on who wields how many coins may be recovered, such a threat may create discrepancies about the value of the said cryptocurrency.
Although we would do appreciate that all the cryptocurrencies have a robust science and tech to back them up, having something like gold to back up a currency is being on the safe side. Let us take the example of fiat currencies. Currencies that were valued by the US dollar were subject to its ups and downs. This emphasizes the need for having a robust system to back up for any monetary system.
Gold is that wall of trust that helps a currency to build up its value and keeps it stable, sometimes even in volatile market conditions. So let us take a look how does gold accomplish that.
As said earlier, dependable currencies are backed up by gold, which is the one and only system of backing up currencies today. However, there is a good reason why we trust gold so much. And that’s where the answer lies, TRUST.
Let us delve into the history of gold. Throughout the ages, gold has always been considered as a precious metal that was never used generously like iron or copper in the making of tools and implements. The form and rarity of gold rendered it as a metal of the elites, a metal of luxury that is used in ornaments and jewelry.
This rare characteristic rendered to gold not just in one region, but spanning across continents, civilizations, and epochs of time created an intrinsic value that couldn’t be negotiatedwith. Thisessentially shows us that gold’s intrinsic value which is itself backed by thousands of years of trust by humanity as a whole.
When you back up a cryptocurrency with gold, it creates a monetary system that combines the best of the archaic and hi-tech. Therefore, it is always better to have a cryptocurrency that is backed by gold, which will keep you notches above other cryptocurrencies that are not backed by gold.