Panos Mourdoukoutas, chair of LIU Post’s Department of Economics in New York, has taken a bearish stance on Bitcoin in an article published on Forbes.com.
Mourdoukoutas notes that Bitcoins and gold followed a similar upward trajectory for four years, until this year, when gold lost a quarter of its value and Bitcoin kept hitting record highs.
(At the time of writing, gold sits at just above $1200 an ounce, and Bitcoin is trading at around $800.)
So he is curious to find out whether goldbugs are moving on to Bitcoin.
To be fair, the gold market is massive compared to Bitcoin’s, and there is no proof of causality between the ascent of Bitcoin and the descent of gold.
What he does say is that quantitative easing is responsible for the climb in both. QE differs from monetary easing in the respect that it causes neither demand nor commodity prices to rise, thus gold’s decrease in value.
So, he asks, should Bitcoin not do the same?
Well, not if it is replacing gold’s long-held protection against currency inflation. And as Bitcoin’s acceptance grows, so does its value. Everyone knows gold; the world is just now catching up to Bitcoin.
That means demand should increase, he suggests, boosting the value.
Still, Mourdoukoutas is having none of it. The Bitcoin market, he says, is “thinly traded and unregulated” and “at the whim of speculators.” For now, he’s staying put, and Forbes readers seem to be nodding in agreement, judging from the comments.
Commenter Josh Lin says:
“Bitcoin has no intrinsic value. Bitcoin has no usage in the real world. … Bitcoins can go poof into thin air, it [sic] exists in a computer. You can hold gold in your hand.”
Two quick points here.
First, Mourdoukoutas seems to be implying the Bitcoin is a commodity, though it seems he is leaving room for it to theoretically supersede a national currency.
Second, as the comments section on Forbes.com can attest, there is still a steep, steep learning curve before acceptance as a medium of exchange at the mainstream level can occur.