Bitcoin is Now Worth Nearly Three Times the Price of Gold

Gold is often seen as an investment “safe-haven” due to the long term stability of the commodity. It is also often used as a standard by which to compare cryptocurrency, especially Bitcoin. Many of the leading cryptocurrency’s major milestones have been viewed in terms of their comparison to gold.

The latest numbers are truly staggering. The price of Bitcoin reached a high today of over $3,400 (at the time of writing it stands at a similarly impressive $3,390.66), while the price of an ounce of gold is $1,260.40. This leaves Bitcoin at nearly triple the price of gold, renewing speculations about the ability of Bitcoin to become a substitute for gold.

This is great news considering the tumultuous recent history of Bitcoin that resulted in a much-dreaded splitting point for the currency. Still, Bitcoin has never been stronger in spite of (or perhaps thanks to) the upheaval.

Bitcoin also enjoyed some significant gains this weekend, crossing $3,200 for the first time in history.

Bitcoin, and cryptocurrencies in general, are enjoying an uptick in public visibility, which is undoubtedly fortifying the impressive gains being made. It will be interesting to see how meteoric the rise of Bitcoin will continue to be.

Bitcoin Is Now More Valuable Than Gold

Could Bitcoin become the new gold standard for currencies? It would seem within the realm of possibility as the popular cryptocurrency is now more valuable than gold for the very first time. Following a crash in 2015 that resulted in a low of just $200 USD, a single unit of Bitcoin is now worth $1,238.11 USD, thus surpassing gold’s value of $1,237.73 per ounce. As Engadget points out, gold has long been considered to be one of the most secure bets in the investment world since it’s less volatile than the likes of real estate, so it’s plausible that Bitcoin could ultimately supplant gold as the go-to currency backer.

Bitcoin would ultimately need to sustain its value over a longer period of time to truly be considered an alternative to gold — the potential of another drastic decline in valuation still makes it exponentially more volatile than gold — but its price is undoubtedly a sign of hope for cryptocurrency believers.

Bitcoin Was The Best-Performing Currency of 2016

The world’s most high-profile digital currency, bitcoin, hit a three-year high this week, rising above US$1,000 on Monday in a strong surge that saw it stand out as the best-performing currency of 2016.

Bitcoin, which shot up 125 percent in value last year alone, is now fast approaching its all-time high of $1,163 in late 2013, and stands at $1,027.53 at time of writing per price index CoinDesk.

While the extreme gains – which many expect to continue – make bitcoin look like an attractive bet, some investors are wary of the currency’s history of extreme volatility.

In 2013, the cryptocurrency – which relies on encrypted peer-to-peer transactions between users – saw a rapid ten-fold increase in its value in the space of two months, and then lost much of it in a series of crashes, reaching as low as $200–300 during early 2015, before making its way back up again.

In more recent times, bitcoin has been much more stable, and commentators say its 2016 gains could be a result of a weakening Chinese yuan – which fell 7 percent in value last year, its weakest performance in more than two decades.

Unlike traditional currencies such as the US dollar that are sponsored by a nation’s central bank, bitcoin is completely decentralized – and its anonymity means it’s easier to move it between countries than conventional, regulated currencies.

This also means it’s popular for making payments on the dark web, where it helps make transactions possible for all kinds of illicit products and services – including illegal drugs, weaponry, and much more.

But despite this infamy by association – and bitcoin’s historic ups and downs – the digital currency’s strong gains in 2016 show that there’s huge demand for it and its flexibility in the mainstream too.

You might not be able to walk into a supermarket and pay for your groceries with bitcoin just yet, but you can buy online games, major airline flights, and even Starbucks coffee using the currency.

Especially in an uncertain world, the fact that bitcoin isn’t tied to a particular government or country might make it more lucrative.

Events in 2016 showed that international markets were extremely sensitive to political happenings – such as Brexit and the Trump victory, both of which were unexpected by many investors (and pollsters).

And then there’s direct restrictions on cash – like Indian prime minister Narendra Modi’s controversial move to remove high-denomination banknotes from circulation in November – which is estimated to have impacted some $183 billion worth of rupees.

In light of developments such as these, bitcoin could be seen by some as a kind of virtual safe haven, like gold, when markets are uncertain, AFP suggests.

“The growing war on cash, and capital controls, is making bitcoin look like a viable, if high risk, alternative,” Paul Gordon, a board member of the UK Digital Currency Association, told Jemima Kelly at Reuters.

While some analysts are bullish that bitcoin will rise further in value in 2017, cryptocurrencies are still a new thing, and not many people actually understand how they work, leading to fears that too much speculation over the prospects of bitcoin could create a bubble.

But as people become more familiar, it may well be that digital currencies like bitcoin will become increasingly less volatile, while continuing to offer advantages over central-bank-issued currencies.

“[B]itcoin is a healthy reminder that we don’t have to hold on to dollars or [yuan], which is subject to capital controls and loss of purchasing power. Rather, it’s a new asset class,” Bobby Lee, CEO of bitcoin exchange BTC China told Arjun Kharpal at CNBC.

“The value of Uber in any city is directly dependent on the number of drivers and number of users, it’s not linear it’s exponential. The same is true of the value of bitcoin.”

Sorry Techies, Florida Court Says BitCoin is Not Real Currency

A Miami judge has dismissed charges against a Florida-based bitcoin seller after he was indicted in 2014 on illegal money transmission and money laundering charges.

Judge Teresa Mary Pooler sided with the defense’s argument that bitcoin doesn’t constitute a form of money within the confines of Florida’s legal system, stating in a ruling issued today that Michell Espinoza doesn’t qualify as a money transmitter as argued by the prosecution. The case was tried in the Eleventh Judicial Circuit of Florida.

Observers say that the ruling exposes how state statutes don’t account for bitcoin and digital currencies – a gap that could ultimately lead to legislative action both in Florida and beyond.

The case dates back to late 2013, when a task force involving the Miami Police Department and the US Secret Service began investigating bitcoin trading activity in the area. Espinoza was contacted by Detective Ricardo Arias and Special Agent Gregory Ponzi via bitcoin marketplace LocalBitcoins, arranging several meetings between January and February 2014.

It was during those meetings that undercover agents indicated that they intended to purchase stolen credit card numbers with the digital currency. Espinoza was ultimately arrested during a planned sale of $30,000 in bitcoin, after selling $1,500 in bitcoin to the agents.

Yet in her ruling, Judge Pooler rejected the idea that Espinoza was engaged in any illegal activity as it related to both the money laundering and money transmission charges.

On the latter point, she said that the statute as it exists today accounts for financial intermediaries (citing Western Union in particular), whereas in her view, Espinoza was an individual selling his bitcoins directly.

Pooler wrote:

“This court is unwilling to punish a man for selling his property to another, when his actions fall under a statute so vaguely written that even legal professionals have difficulty finding a singular meaning.”

Elsewhere in the ruling, Pooler suggested that lawmakers in Florida may want to move to address how the statutes, as they exist today, do not account for bitcoin and digital currencies.

“The Florida Legislature may choose to adopt statutes regulating virtual currency in the future,” she wrote. “At this time, however, attempting to fit the sale of bitcoin into a statutory scheme regulating money services businesses is like fitting square peg in a round hole.”

Espinoza did not immediately respond to an emailed request for comment.

Bitcoin not money, judge rules

In her ruling, Pooler argued that, at present, it is difficult for the court to accurately define bitcoin.

“Nothing in our frame of reference allows us to accurately define or describe bitcoin,” she wrote.

She goes on to write that the digital currency “may have some attributes in common with what we commonly refer to as money” before going on to highlight its distributed nature, price volatility and adoption by merchants as characteristics that differentiate it from other kinds of currency.

“This court is not an expert in economics, however, it is very clear, even to someone with limited knowledge in the area, that bitcoin has a long way to go before it is the equivalent of money,” she wrote.

Pooler noted in her ruling that the state could move, via legislative action, to craft a specific legal definition for bitcoin – a move she indicated could prevent further cases like this from potentially impacting otherwise innocent people.

“There is unquestionably no evidence that the defendant did anything wrong, other than sell his bitcoin to an investigator who wanted to make a case,” she wrote, adding:

“Hopefully, the Florida legislature or an appellate court will define ‘promote’ so individuals who believe their conduct is legal are not arrested.”

Legal experts weigh in

Legal observers say that the case highlights apparent gaps in Florida’s legal system as it relates to bitcoin, and, perhaps, the US more broadly.

Pillsbury Winthrop Shaw attorney Marco Santori, who called the ruling “quite unexpected among the legal community”, believes that the Espinoza outcome will likely be cited in the future if the government brings future cases like it.

“It’s absolutely going to be used as precedent in other cases,” he said.

Santori went on to note that the ruling highlights a split between regulators in Florida and the court on the question of bitcoin regulation.

He told CoinDesk:

“Right now, we’re left with a real split in Florida. We’ve got a regulator that says, you need a license to do direct purchase and sale of bitcoin in Florida. But we’ve got a judicial system that refuses to convict anybody who does that.”

Baker Marquart attorney Brian Klein said he thinks the ruling could go as far as dissuade similar cases in the future as well.

“This decision will reverberate throughout the country and hopefully cause federal and state prosecutors to think twice before pursuing similar criminal charges,” he said.

Drew Hinkes, a lawyer for Berger Singerman LLP, said he sees the legislative actions focused on digital currencies advocated by Pooler taking place.

“The Court also correctly noted that while Florida’s money laundering statutes do not apply cleanly to bitcoin, the Florida Legislature has the ability to provide ‘a much needed update to the particularly language within [the money laundering] statute,'” he said, adding:

“I would not be surprised to see legislation addressing virtual currencies in the coming years.”

US Regulator Accepts Bitcoin as a Commodity

Virtual currencies like bitcoin just came one step closer to legitimacy in the US. As part of its first action against an unregistered bitcoin options trading outfit, the Commodity Futures Trading Commission has determined that digital currencies are commodities subject to its regulations. The move both puts cryptocurrency on the same level as conventional commodity derivatives (like futures contracts or swaps) and rejects the notion that they’re ‘just’ securities, like stocks. This isn’t a shocking move when the CFTC had already hinted that it would rule this way, but it could mean a lot if it both gets bitcoin exchanges off the ground and reduces the potential for abuse.