• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

The Difference Between Gold And Bitcoin, As Explained By Elliott's Paul Singer

Tyler Durden's picture


Some perspective on the two "alternative currencies" - bullion and bitcoin -from the man who has run a hedge fund for 37 years and currently manages $23.3 billion, Elliott's Paul Singer.



After 37 years in the investment-management business, we are not easily shocked. However, two things about bitcoin have shocked us recently. One is that bitcoin and some of its fellow alternative currencies are finding such favor among investors while gold (the only real alternative currency) is languishing. The second is that the most heated investment-related conversation we have had in many years was with a young person who, when told of our mild dubiousness toward bitcoin, basically lost it and started yelling in its defense. Bitcoin comes with passion and belief – at least at the moment.


There is no more reason to believe that bitcoin, a computer-generated, algorithm-driven currency of supposed limited supply, will stand the test of time than that governments will protect the value of government-created fiat money. One difference: Bitcoin is newer and we always look at babies with hope.


If you are looking for an alternative currency, look into gold. It has stood the test of thousands of years as a medium of exchange and a store of value. Better yet, it is not just a computer entry out in the ether somewhere, and it was last seen available at a good price.


Bitcoin and its relatives speak to understandable impulses (against big government, in favor of freedom and modernity), but we do not see this particular experiment lasting. At least you have to work really hard to dig gold out of the ground.

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Wed, 01/29/2014 - 16:53 | 4381487 sixsigma cygnus...
sixsigma cygnusatratus's picture

Well said.  Fonestar, was he talking aboot you?

Wed, 01/29/2014 - 16:57 | 4381513 Troll Magnet
Troll Magnet's picture

Bitcoin = cashless society = central planners' wet dream

Wed, 01/29/2014 - 17:01 | 4381525 Levadiakos
Levadiakos's picture

Bitcoin is way cool. Gold is a pain to carry around.

Wed, 01/29/2014 - 17:03 | 4381541 Skateboarder
Skateboarder's picture

You know what else is cool? When your wealth doesn't vanish when the power goes out.

Wed, 01/29/2014 - 17:12 | 4381592 zaphod
zaphod's picture

You'd have to take the power out worldwide, good luck, but I get your point. However gold is hard to transport across boarders, with bitcoin however is infinately easy to take any amount with you anywhere while hiding how much you have (multiple addresses).

BTW this article should have been titled: "The Difference Between Gold And Bitcoin, As Explained By someone who sells Gold for a living"

Wed, 01/29/2014 - 17:14 | 4381611 vie
vie's picture

Never sure why it's either/or with everyone.  I use cash, and I use credit cards.... ITS AMAZING.

So, thought experiment, perhaps we can use Gold AND Bitcoins!

Wed, 01/29/2014 - 17:58 | 4381836 GetZeeGold
GetZeeGold's picture



Gold is anonymous.

Wed, 01/29/2014 - 18:11 | 4381896 Prisoners_dilemna
Prisoners_dilemna's picture

"At least you have to work really hard to dig gold out of the ground."


The author of this piece doesn't understand the work required to bring a bitcoin "out of the ground".

Combine this with the fact that he was in charge of a hedge fund for 37 years means he's probably older than the internet itself.


Ignore bitcoin at your own peril.

I love Gold!

Wed, 01/29/2014 - 18:30 | 4381965 fonestar
fonestar's picture

I don't care how many billions AUM this Singer guy is worth.  If he would have so much questioned Bitcoin in my presence I would have ripped his head off.

Wed, 01/29/2014 - 19:00 | 4381991 MillionDollarBogus_
MillionDollarBogus_'s picture

Ah, it was you, then...

fonestar, your down vote VS up vote ratio seems to be increasing.

does it increase when you post more often, or does it go up when btc price goes up..??

am curious... 

Wed, 01/29/2014 - 18:36 | 4381994 Harbanger
Harbanger's picture

Down boy!  You ain't rippin the head off nothin xcept maybe yer johnson.

Wed, 01/29/2014 - 23:03 | 4382942 DoChenRollingBearing
DoChenRollingBearing's picture

Plus 1 (foreign machine here)

Personally I like fonestar, and respect his grit.  But your comment was precious beyond belief.  LOL.

Thu, 01/30/2014 - 02:54 | 4383330 zhandax
zhandax's picture

"The author of this piece doesn't understand the work required to bring a bitcoin "out of the ground"."

But apparently he does understand that gold doesn't get easier to 'bring out of the ground' just because not as much is mined.

Wed, 01/29/2014 - 18:37 | 4382003 balanced
balanced's picture

Comparing Bitcoin to Gold is the act of an ignorant and short-sighted person. They are not in competition...

Gold as a store of wealth

Bitcoin as a means of exchange

Why is this so hard to understand?

Wed, 01/29/2014 - 18:49 | 4382057 fonestar
fonestar's picture

fonestar greened you even though you are balanced.

Wed, 01/29/2014 - 21:37 | 4382730 disabledvet
disabledvet's picture

and i have greened you. a second time actually.

"behavior can be more than observed. it can be manipulated."

this is why "bitcoin" (and apparently the "Mt Gox" variant) in THEORY can hold such tremendous value.

Within the "datum" there is enormous information flow.
Within the "flow" patterns or "predictive elements" can arise (we are merely human after all) and as a consequence something of far great value than the truly limited amounts of gold (which is only available to the very few...and do they thing anything of it really?) can be "created" through analysis and analysis of variance.

in short not only does "modeled behavior" exist...but behavior itself can be "modeled."

this is why "securing the data" is so important.
we all "reveal things" about our "selves" that simply cannot be denied as factually true.

With that advent of the "i-phone" and the "facebook" this is done almost PURELY on a voluntary basis.

These data sets...done down to the MOLECULAR level can produce HIGHLY sophisticated and accurate algorythms that in theory can be surprisingly well timed in their prediction of actual behavior.

bitcoin is a perfect "test bed" to see this played out...as who doesn't engage in some type of commercial transaction on a regular basis?

God forbid if you work for the Government.

Thu, 01/30/2014 - 10:01 | 4383769 IPA
IPA's picture

Honest question, why is btc worth significantly more at mt gox exchange than say the bit stamp exchange? ?

Thu, 01/30/2014 - 10:18 | 4383833 TheHound73
TheHound73's picture

MtGox is all but cut off from sending USD to the states. They have been tagged as operating without a money transmitter 's license by the feds. Sending wires to Europe is little better. Japan is alright.

Wed, 01/29/2014 - 18:51 | 4382062 Pool Shark
Wed, 01/29/2014 - 19:14 | 4382176 Bindar Dundat
Bindar Dundat's picture

Fonestar: Sometime it's not worth arguing with idiots who have no money anyway.


Bitcoin is here to stay boys and girls -- get over yourselves.

Wed, 01/29/2014 - 19:16 | 4382191 fonestar
fonestar's picture

It's still nice to laugh along with the bell and not for whom it tolls.

Wed, 01/29/2014 - 19:18 | 4382192 Millivanilli
Millivanilli's picture

phonystar?  You would have ripped his head off?   Perhaps you are undersexed.  A simple little stroke will work magic.

Wed, 01/29/2014 - 21:18 | 4382666 logicalman
logicalman's picture

You need computer power to 'mine' BitCoins.

A question - can you name the group(s) with the most computer power, on planet earth?

I doubt many rural Africans are fans of BitCoin.

Hardly a level playing field, just setting up an elite..... AGAIN!


Wed, 01/29/2014 - 21:34 | 4382716 Spanky
Spanky's picture


For... an interesting way of looking at it.

Wed, 01/29/2014 - 22:11 | 4382826 fonestar
fonestar's picture

fonestar can confirm everyone in Africa is a fan of Bitcoin.

Thu, 01/30/2014 - 02:36 | 4383315 bitcoinbear
bitcoinbear's picture

What Africa doesn't need more of is crocodile tears from ignorent people. What Africa needs is a currency that is owned by the people and for the people and not a currency controlled by a corrupt-pro-Western-IMF-bad-loan-borrowing-dictator.

Wed, 01/29/2014 - 18:15 | 4381910 aphlaque_duck
aphlaque_duck's picture

cryptocurrecy will be anonymous in the near future. http://spar.isi.jhu.edu/~mgreen/ZerocoinOakland.pdf

Wed, 01/29/2014 - 21:31 | 4382669 Jack Napier
Jack Napier's picture

No chance. TOR isn't even anonymous. All traffic is logged at the ISP and router level. You can protect yourself from the sniffers, but not from the gatekeepers unless you choose to turn off your Internet. Your only hope is that they are too inept to query the right data. A legitimate hope, but even if you manage to encrypt your transactions before sending over the wire consider that they've had photonic microprocessing for at least 5 years, and the CPU on those processes 35 DVDs of data per heartbeat as of 5 years ago according to Intel documents. Considering Moore's Law, it's probably a lot higher than that today, and considering that we don't hear about technology until 20 or 30 years after the fact it's probably way more advanced than even this. They will brute force any 128-bit encryption faster than you can blink, but only if they decide to look your way. It is for this reason that Snowden is a plant. They would have him if they wanted him.

Wed, 01/29/2014 - 18:24 | 4381952 fonestar
fonestar's picture

Gold is anonymous.


Only after it is melted.  fonestar's mother being a jeweller for years can tell you of many people arrested at the jewellers trying to sell stolen nuggets.

Wed, 01/29/2014 - 18:50 | 4382058 Harbanger
Harbanger's picture

Mom was a jewelller, therefore I'm a jeweller.

Wed, 01/29/2014 - 18:54 | 4382086 Oracle of Kypseli
Oracle of Kypseli's picture

They were criminals. They should get caught.

BTW: It's not against the law to take gold accross borders. Same with cash. As long as you reported.

So far several Bitcoin criminals were busted already as well.

Wed, 01/29/2014 - 19:06 | 4382136 fonestar
fonestar's picture

No Bitcoiners have been busted at any border crossing to the best of my 0xC0000000 - 0xFFFFFFFF but many gold smugglers have.  fonestar has had the thought of getting cocky with "what's on your USB stick son?" game but fonestar is just luck that they will even permit him into the country.

Wed, 01/29/2014 - 19:25 | 4382244 Harbanger
Harbanger's picture

Everything you've ever done online is belong to the gov now.  Whether encrypted or not, every single buy/sell transaction you've ever made has been recorded for future reference.  Bitcoin is ok with the establishment as long as you pay taxes on any profits.   Our problem is not financial.

Wed, 01/29/2014 - 19:29 | 4382266 fonestar
fonestar's picture

fonestar is virtually shaking in his boots.

Wed, 01/29/2014 - 19:38 | 4382299 Harbanger
Harbanger's picture

The battle for our liberty is much bigger than our personal gain.

Wed, 01/29/2014 - 19:45 | 4382338 fonestar
fonestar's picture

fonestar achieved liberty when he accepted Satoshi into his life, his mind and his heart.

Wed, 01/29/2014 - 19:57 | 4382398 Harbanger
Harbanger's picture

Fonestar, you're sounding like some religious freak.  If you believe in something, defend it with your logic, I'm OK with that,  don't give me this newagey mind and heart crap when you have neither mind to understand nor heart to make it happen.

Wed, 01/29/2014 - 20:23 | 4382514 fonestar
fonestar's picture

Have you learned nothing from the .torrent?  Those in the know are lauging at your expense.  

Blessed are those of Reddit and blessed are those of The Pirate Bay!

Wed, 01/29/2014 - 21:32 | 4382683 Jack Napier
Jack Napier's picture

What you don't seem to grasp is that people don't want gold to smuggle over the border. Nobody who wants to be off the grid would go near a border. They want it so they can transact without being tracked. Anyone with half a brain would know to melt it down. Tell me, how are you going to hide your blockchain history from the watchers? Everyone who has ever transacted with BTC will forever be part of the log. There is no escape from it.

Wed, 01/29/2014 - 21:54 | 4382775 Croesus
Croesus's picture

"It rubs the Bitcoin on its skin, or else it gets the hose again"...

Wed, 01/29/2014 - 18:13 | 4381904 aphlaque_duck
aphlaque_duck's picture

Correct. Each enhances the value of the other. One for stability, one for portability. Between the two of them we have no need for banks any more, and capital controls are impossible.

Wed, 01/29/2014 - 18:27 | 4381962 fonestar
fonestar's picture

Bitcoin is the most disruptive technology in the past several centuries.  If you realize that before the other ducks, you are a smart duck.

Wed, 01/29/2014 - 19:08 | 4382149 Harbanger
Harbanger's picture

Bitcoin is not disruptive to the old establishment, in fact it's embraced and almost promoted.

Wed, 01/29/2014 - 19:19 | 4382213 fonestar
fonestar's picture

If you really believe that you're a complete idiot.

Wed, 01/29/2014 - 19:49 | 4382364 Harbanger
Harbanger's picture

I thank you for labeling me.  I never felt any guilt about judging.  Do you want me to challenge your judgement?

Wed, 01/29/2014 - 19:52 | 4382379 fonestar
fonestar's picture

Do not worry of fonestar's judgement.  Worry of Satoshi's judgement.

Wed, 01/29/2014 - 19:54 | 4382396 Spanky
Spanky's picture

Oh pleease... Can I watch?

Wed, 01/29/2014 - 20:08 | 4382454 Harbanger
Harbanger's picture

I wish.  Don't expect a logical response, I'll have to chase him around the barn and wear him out like a rat.

Wed, 01/29/2014 - 20:21 | 4382505 fonestar
fonestar's picture

fonestar does not get worn out.  fonestar wears worn out.

Wed, 01/29/2014 - 20:25 | 4382515 Harbanger
Harbanger's picture

Fonestar places hope in nonsense rather than truth and righteousness.

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