Bitcoin Is Worth More Than Gold – for Now

Crypto-currencies could go mainstream, or they could remain shadowy.

The Motley Fool

Crypto currency Bitcoin is hitting the headlines for the wrong reasons again, as the payment vehicle of choice for the crooks behind the world’s biggest ever ransomware attack.

WannaCry’s global cyber onslaught infected more than 200,000 computers in around 150 countries, with stricken users told to pay between $300 and $600 in the anonymised currency for access to their encrypted data.Bitcoin has always been controversial, having first come to public attention as the de facto currency of the Dark Web, the hidden internet, via notorious cyber-underworld sites such as the Silk Road.Yet since launch in January 2009 its value has spiralled to $1,698 at time of writing, netting billions for those who got in early.Today it is worth more than gold, which currently trades at $1,233 an ounce, but can that last?

Coining it in

Bitcoin was on a roll before the cyber attack but its price has dipped since, possibly in consequence.

It has always been highly volatile, its price regularly crashing after hackers stole coins from Bitcoin exchanges, but it has always come back stronger.

Bitcoin was the world’s best performing currency in 2015 and 2016, and is on course to repeat the feat this year. It ended last year trading at $959, and is up 77% since then.

That is despite a dip to $952 in March, amid fears that the Chinese authorities were set to crack down on Bitcoin exchanges because investors were using it for money-laundering.

Bits and pieces

In the spirit of disclosure, I should say that I have an itty-bitty holding in Bitcoin, although sadly, I bought too recently to have made serious money.

I found it a bit of a faff setting up my digital wallet but then I’m no techie, and I was shocked at the trading fees on some sites, which swallowed up more than 10% of my coinage.

I bought it as a kind of mental insurance: if Bitcoin continues to go ballistic I don’t want to kick myself for failing to take a punt on it.

Digital death

A lot could go wrong, as the monetary authorities are highly suspicious about Bitcoin, a paperless, bankless, stateless currency wholly beyond their reach.

In some respects it has more integrity: unlike Fiat currencies, it cannot be devalued by central banks printing money.

The danger is that it gets too big for its boots, persuading the regulators to clamp down, say, by going after the major exchanges. The cyber attack will only add to their charge sheet.

Good as gold

Bitcoin is no more to blame for the cyber attack than the US dollar is to blame for bank robberies, drug dealing or muggings.

It isn’t even completely anonymous, every transaction is recorded on a public ledger known as the blockchain, which can lead criminal investigators to crooks who fail to cover their tracks. The FBI cracked Silk Road in the end.

Crypto-currencies could go mainstream, or they could remain shadowy. Bitcoin could one day be worth $1 million, or nothing at all.  I treat mine like a lottery ticket.

Gold, by contrast, has been a store of value for more than 4,000 years, and probably will be for the next 4,000 years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Motley Fool Staff has no position in any stocks mentioned.

More on Investing

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Wednesday, February 21

The Federal Open Market Committee’s meeting minutes and more corporate results are likely to keep TSX stocks volatile today.

Read more »


Got $5,000? Buy and Hold These 3 Value Stocks for Years

Given their solid underlying businesses, healthy growth prospects, and attractive valuation, I am bullish on these three value stocks.

Read more »

money cash dividends
Stocks for Beginners

Got $1,000 to Invest in Stocks? Put It in This Index Fund

This low-cost beginner-friendly ETF is a great way to invest $1,000.

Read more »

Overhead shot of young adults using technology at a table
Tech Stocks

3 Cheap Tech Stocks to Buy Right Now

Given their long-term growth prospects and discounted stock prices, I am bullish on these tech stocks.

Read more »

money cash dividends
Dividend Stocks

Have $500? 2 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

Want some absurdly cheap stocks for your portfolio? Here are two options trading at a huge discount right now.

Read more »

Gas pipelines
Dividend Stocks

TFSA Passive Income: Is Enbridge Stock a Buy, Sell, or Hold?

Enbridge now offers a yield near 8%. Is the dividend safe?

Read more »

A worker uses the cloud for paperless work. tech
Tech Stocks

Wanna Beat the Market? Try These 2 Tech Stocks That Look Undervalued Today

Here's why undervalued TSX stocks such as Vitalhub can help you generate outsized gains in the next 12 months.

Read more »

Redwood trees stretch up to the sunlight.
Tech Stocks

These 3 Magnificent Stocks Keep Driving Higher

Constellation Software, Dollarama and another TSX stock have consistently generated positive investment returns. Here’s why they belong in your retirement…

Read more »