Gold bugs are quick to list Bitcoin’s inefficiencies as a viable currency alternative, store of value, or hedge against traditional markets, but one revelation last week illustrated one key flaw in their ideology that gold trumps Bitcoin. Late last week, Reuters revealed that at least $50 million worth of fake gold has entered the system and been passed off as real, providing a nice source of income for “narcotics dealers and warlords” and making a mockery of the values that gold lovers place above those of Bitcoin.
Fake Gold “Ideal” for Narcotics Dealers and Warlords
The Reuters report states that the bars are created using real gold and stamped with ultra-realistic copies of refinery stamps before “being inserted into the global market to launder smuggled or illegal gold” according to the refining and banking executives Reuters spoke to. These fakes are hard to detect, making them “an ideal fund-runner for narcotics dealers or warlords”, which of course is one of the criticisms often levelled at Bitcoin. Unsurprisingly, when the tables are turned and gold is highlighted as a potential source of terrorist funding the media doesn’t cover it with quite as much gusto, perhaps because of the presence of big banks in the story – JPMorgan Chase & Co as the heart of the worldwide bullion trade and found fake bars in its vaults.
How Much Fake Bitcoin is Out There?
If we’re going to compare Bitcoin with gold, then the question we naturally have to ask at this point is very simple – how much fake Bitcoin is out there? The answer…
And how much fake Bitcoin could be produced in the future?
The genius of Bitcoin’s creation and the creation of blockchain technology itself ensures that the creation of fraudulent Bitcoin is impossible. This is because Bitcoin, and all cryptocurrencies, have blockchains specific to themselves, and it’s not possible for tokens to jump onto a different blockchain and pretend to be something else. Mining Bitcoin requires tapping into the existing ‘mine’ that Satoshi Nakamoto established – you can’t simply create your own Bitcoin mine and put the mined Bitcoin into circulation. You can create a Bitcoin fork, as many have done, and mine from that, but you’d have to call it something else. Even if you did call it Bitcoin, it wouldn’t operate on the same network as the original Bitcoin and it wouldn’t be long before you were rumbled.
Authenticity Illustrates Bitcoin’s Superiority
The fact that you can’t create fake Bitcoin and quietly slip it into the system is one of the key reasons Bitcoin is superior to gold. Gold bugs may think they have so many hundreds of grams of gold at their disposal, but if JPMorgan can be fooled into having fake gold in their vaults then anyone can fall victim. And yet while lying undetected, the fake gold still retains the same value as real gold, which raises the question of how we attribute value to something in the first place. Bitcoin may not be accepted everywhere (yet), but at least there’s not at least $50 million in fake Bitcoin sloshing around in vaults around the world. And they have the gall to say that Bitcoin is the scam…