Fed’s Crypto Plans May Turn Bitcoin Bulls Into Gold Bugs

There is no actual product of Bitcoin mining other than computer code.

Likewise, there is nothing behind Federal Reserve Notes other than digits (and a little government force).

Both fiat currencies and privately “mined” digital currencies are competing in the same space for preeminence. By contrast, physical precious metals are an entirely separate asset class.

Gold and silver bullion coins, bars, and rounds aren’t tokens meant to represent claims on wealth; they are actual wealth. They aren't reliant on electricity, the Internet, or government force... they are payment unto themselves and carry no counterparty risk.

Apart from serving as money, they could be melted down and directly repurposed into jewelry, industrial components, or other valuable goods.

Both fiat dollars and cryptocurrencies are useless apart from their ability to be exchanged for real things. And that ability depends entirely on confidence that can erode or disappear over time.

The Fed wants to retain a monopoly on this con game while also expanding its reach in the digital age. Digital currencies aren’t going away, so rather than try to stop them, central bankers are looking to co-opt them.

Powell and his colleagues at the Bank for International Settlements are telegraphing a Great Reset of the global monetary system.

The last major reset occurred in 1971, when the U.S. fully severed the link between the dollar and gold redeemability. The transformation that’s underway will usher in a digital dollar ("Fedcoin"), perhaps in coordination with an International Monetary Fund currency issuance, and phase out physical cash.

Central bankers aim to get out in front of privately issued “stable coins” that aim to solve the problem of Bitcoin volatility. As Powell put it, “Private stable coins are not going to be an appropriate substitute for a sound monetary system based in central bank money.”

Of course, it’s not sound money Powell is shooting for. He has no intention of introducing a gold-backed or inflation-resistant digital currency.

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