Gold and silver markets continue to gather upside momentum as inflation pressures spread throughout the economy.

Metals markets may be starting to reflect broader inflation trends that are manifesting in higher prices for almost everything. These price increases faced by businesses and consumers are showing no signs of letting up, despite the Federal Reserve line that they are “transitory.”

Billionaire hedge fund manager Paul Tudor Jones weighed in on the inflation threat during an appearance on CNBC this week.

Paul Tudor Jones: We have a Federal Reserve Board that are inflation creators, not inflation fighters. It's pretty clear to me that inflation's not transitory. It's here to stay. And it's probably the single biggest threat to certainly financial markets, and again, probably I think to society just in general. So, this 5.4% CPI is a real eye opener. It's the highest CPI we've had in 30 years. And of course, it's going to go higher here in the next few months as energy feeds through it. So, for an investor in particular, most to this audience, it's absolute death for a 60/40 portfolio for a long stock, long bond portfolio. So, the real question is how do you defend yourself against it?

According to Paul Tudor Jones, the best defense against inflation will be not gold but Bitcoin.  There’s certainly no arguing that Bitcoin has outperformed gold along with virtually every other asset in the investment universe over the past few years.

The cryptocurrency attained a market capitalization of over $1.2 trillion on its rally Thursday. After having risen tens of thousands of percent to attain that lofty height, Jones risks being late to the party.

It’s difficult to see how anything like Bitcoin’s past performance could be replicated from a current cost basis of over a trillion dollars. But it’s not difficult to see how it could suffer a massive selloff after the latest round of hype fades.

Bitcoin was bolstered this week by the launch of a Bitcoin futures exchange-traded fund. The ETF will hold futures contracts rather than actual Bitcoins. That makes it a derivative instrument of derivative instruments that track a highly speculative underlying digital asset.  In other words, it’s multiple layers of risk.

The history of commodity futures ETFs is instructive here. They have tended to diverge negatively, sometimes dramatically so, from the underlying indexes they are supposed to track. They have been plagued by price drags from contango and contract rollover – not to mention management fees and other costs.

Bitcoin itself can be owned directly on the blockchain, outside of the banking and brokerage systems and free of their fees and counterparty risks. Those advantages are completely lost by owning futures contracts or Wall Street vehicles that hold them.

Similarly, many of the key advantages of owning precious metals in physical form are lost by holding financial instruments that purport to be backed by metal. Even if they do a good job of tracking spot prices, which is no sure thing, gold and silver ownership is about more than that. People own gold and silver coins for the privacy, the security, and the convenience of possessing money in tangible form.

The debate over whether precious metals or cryptocurrencies are more valuable forms of money will ultimately be settled by the market. Which asset class serves as a better inflation hedge will also be proven out in the years ahead.

Gold and silver have a centuries long track record of retaining purchasing power over time and performing especially well during periods of rapidly rising inflation.

Cryptocurrencies have no such track record. They have been driven more by speculation on their widespread adoption and potential use cases than by inflation fears per se.

It’s true that the number of Bitcoins that will ever be mined is strictly limited. That gives Bitcoin an inherent scarcity in contrast to unbacked fiat currencies such as the U.S. dollar, which can be created in unlimited quantities.

But the number of cryptocurrencies that can be created out of nothing is also unlimited. Who’s to say whether Bitcoin will always be the top crypto? Or whether any of them will be worth anything in a new “beyond digital” internet and computing paradigm that may arrive in the future.

Gold and silver markets will inevitably go through booms and busts in the future. But the metals themselves will never cease to be valuable to various industries, to jewelers and artisans, and to investors who want to hold hard money outside of the financial system.