Amid the emergence of new currencies, gold has long been a benchmark for international measures of value. The precious metal backed the U.S. dollar for decades, marking a peg for global currencies. But in 1971, President Richard Nixon suspended the ability for the dollar to be converted into the precious metal. <\/p>\n
Cryptocurrencies arose during the financial crisis and have demonstrated \"a few advantages\" over major world currencies, such as the ability to cheaply and instantaneously transfer money around the world, and record all transactions through a digital accounting system known as a blockchain, Blanch said. <\/p>\n
In expectation of this potential, many have called bitcoin \"digital gold\" despite the lack of businesses that accept bitcoin and the often high transaction fees. <\/p>\n
Gold itself has stagnated in the last several years. The precious metal leaped from several hundred dollars in the early 2000s to near $2,000 in 2011, and has traded between $1,000 and $1,400 in the last two years. <\/p>\n
Fundstrat's Tom Lee said in a report on bitcoin in early July that buyers' shift from gold into cryptocurrencies is a reason why the digital currency's price could rise into the tens of thousands. <\/p>\n
Due to higher bitcoin mining costs and a surge of interest, the digital currency's price has climbed in \"a pattern similar to gold\" and \"over a much more compressed time period,\" Blanch said. <\/p>\n
Bitcoin (years in parentheses) vs. gold <\/p>\n<\/p>\n
Source: Bank of America Merrill Lynch Global Research <\/p>\n
To be sure, short-term appearances of similarities among bitcoin, gold and the development of historical currencies don't imply that bitcoin is here to stay. <\/p>\n
\"There is no certainty that that [similarity to gold] will continue and, most certainly, no way to predict it,\" Blanch said. \"In our view, cryptocurrency returns will mostly depend on the faith placed by individuals, corporations, and financial institutions on this emerging technology.\" <\/p>\n
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See the rest here: <\/p>\n
Major Wall Street analyst: Here's what needs to happen for the bitcoin boom to keep going - CNBC<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Amid the emergence of new currencies, gold has long been a benchmark for international measures of value. The precious metal backed the U.S Continue reading