There is no doubt that the financial world is fascinated by Bitcoin. Every week it seems to pass a new record and make headlines.
One of the special things about Bitcoin is that there is truly no government part to the cryptocurrency. Every other currency is of course issued by a government from a country like the US or Australia. In this regard Bitcoin is fairly similar to gold.
Gold has been a bastion of wealth storage for thousands of years, yet Bitcoin has the potential to replace it as the main alternative harbour of wealth.
It's much quicker to transfer Bitcoin to a new owner. There is a clear chain of ownership (with blockchain technology), therefore you know it's 'real' whereas gold needs to be certified as being real.
As far as I'm aware there aren't any coffee shops or house vendors offering to take gold as payment. Bitcoin has real world uses as a form of payment, the US stopped backing its currency with gold completely by 1971.
Gold has always been seen as a hedge against economic downturn. Supposedly, when stock markets and housing prices go down gold goes up. At the moment, it seems that all financial assets are going up around the world. Gold has gone up by around US$20 per ounce over the last month.
If Bitcoin is truly going to replace gold as a haven for wealth, then it's what happens in a crash that will be telling.
Assets that don't earn anything are only as valuable as how much someone will pay for it. If all the buyers disappear then the value of Bitcoin could rapidly diminish.
That concept has always been applicable to gold except gold hasn't had the meteoric rise that Bitcoin has. Newcrest Mining Limited (ASX: NCM) should still be able to sell its gold for a while.
Foolish takeaway
I don't think Bitcoin is going to replace gold any time soon. Perhaps Bitcoin will just keep rising and rising, but I don't think it's worth punting on at this stage, after already rising so much.
