Staff Insights

Inelastic Supply & Price Instability: Why Bitcoin Isn’t Money

Throughout history, the essence of money has evolved from tangible objects like cowrie shells and gold coins to the digital currencies that spark debates today. Despite these changes, the core functions of money—serving as a universally accepted medium of exchange, a unit of account, and a reliable store of value—have remained constant. These critical attributes define the traditional concept of money, facilitating economic transactions across eras and emphasizing the necessity of a flexible money supply that can respond to fluctuations in monetary demand to ensure price stability.

Central banks, such as the U.S. Federal Reserve, prioritize currency stability and low inflation, underlining the importance of maintaining money’s purchasing power—how much goods and services a given amount can buy. This stability is crucial for money to effectively serve as a financial instrument.

The advent of cryptocurrencies, notably Bitcoin, has sparked debates on their viability as money, challenging the central bank-controlled fiat system, including the global reserve currency, the U.S. dollar. Bitcoin’s decentralized cash system and novel exchange mechanism allow transactions without intermediaries. Yet, its inelastic supply contributes to price volatility, casting doubts on its currency utility.

Bitcoin’s total supply is scarcity-capped at 21 million units, with 19,675,493.75 already in circulation, leaving only 1,324,506 Bitcoins to be mined. However, this scarcity has not led to stability in Bitcoin’s value; instead, it has exacerbated its price volatility—which is fine if you’re a speculative trader but not if you’re seeking a reliable and stable store of wealth, contrary to the “finite supply is good” argument trotted out by many crypto pundits.

Economists and financial experts highlight the inability of cryptocurrencies like Bitcoin to adjust their supply in response to shifts in demand, a fundamental reason they cannot serve as genuine currencies. The dramatic price fluctuations of Bitcoin, characterized by significant changes in short periods, exemplify its instability as a store of value and challenge its functionality as money.

The erratic pricing history of Bitcoin underscores its unpredictability, with daily fluctuations varying from minor to major. This volatility was starkly evident in Bitcoin’s recent market performance, all within less than a month. It soared to an all-time high of $73,135 on March 13th but then encountered a swift 15.35% drop to $61,906 by March 19th. The pattern of abrupt increases and decreases persisted, with Bitcoin rebounding to $71,800 by March 28th, then dropping again to $65,456 by April 2nd, and astonishingly climbing back to $71,800 by April 8th.

This inherent volatility of Bitcoin and similar elasticity-challenged cryptocurrencies—evidenced by dramatic price swings within short periods—challenges their viability as stable money. These fluctuations disrupt Bitcoin’s potential as a predictable store of value, complicating long-term financial planning and its utility in pricing goods and services.

Physical gold faces similar limitations due to its supply inelasticity. Increasing mine production or developing new mines to tap into previously uneconomic gold deposits is a time-consuming and capital-intensive process. This becomes particularly problematic during periods of increased monetary demand. The rigid supply of gold, akin to the constraints faced by Bitcoin, was notably problematic during the 1930s’ Great Depression. This period underscored gold’s elasticity limitations in monetary policy, leading policymakers to seek more flexible monetary systems and complete control over the fiat money system, thus extricating gold from its 6,000-year natural role in monetary policy.

There Is a Better Way

NatGold™ introduces a revolutionary use of gold as a monetary asset, digitally mining a vast supply of existing and potential new deposits of NI 43-101 certified gold resources. This digital mining, capable of adapting elastically to market demands in real-time, overcomes traditional gold’s inelasticity, addressing why gold was previously sidelined in monetary policy.

Key to NatGold’s innovation is its real-time supply management, similar to strategic Wall Street IPOs launched based on market demand. This elasticity allows for responsive adjustments to the tokenization gateway, ensuring a supply finely tuned to market needs, offering stability in contrast to Bitcoin’s volatility.

NatGold stands out as a sustainable, ESG-friendly alternative in the digital currency landscape, addressing the constraints of both cryptocurrencies and traditional gold. Merging tangible intrinsic value with contemporary technology, NatGold heralds a new monetary era, offering a stable, dependable, and ethically sourced digital currency solution. This inventive amalgamation of digital efficiency and solid asset backing, enriched with managed elasticity, positions NatGold as an appealing choice for the future’s monetary systems. It reinvigorates gold’s role in the economy in a more elastic form, providing a currency underpinned by genuine intrinsic value, unlike both crypto and fiat currencies.

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How significantly has Canada’s NI 43-101 Technical Report influenced the design of CRIRSCO’s International Reporting Template (IRT)?2024-04-20T23:41:36+00:00

Canada’s National Instrument 43-101 (NI 43-101) has had a significant influence on the design of CRIRSCO’s International Reporting Template (IRT). Developed by the Canadian Securities Administrators, NI 43-101 sets stringent guidelines for the public disclosure of scientific and technical information related to mineral projects, which emphasize transparency, accountability, and detailed reporting. The comprehensive nature of NI 43-101, particularly its rigorous requirements for Qualified Persons and its structured approach to defining mineral resources and reserves, served as a model for many of the principles incorporated into the IRT.

This influence ensures that the IRT aligns with the high standards of reporting established by NI 43-101, facilitating consistency and comparability among international mining reports and aiding in the global harmonization of mineral resource and reserve reporting standards. This alignment is crucial for fostering trust and confidence among investors and regulators in the mining industry worldwide.

What is Tokenization?2024-04-20T23:35:52+00:00

Tokenization is the process of converting rights to an asset into a digital token on a blockchain. These digital tokens represent ownership or a claim on the asset, enabling it to be traded or managed on digital platforms. This innovative approach offers a secure and efficient means of handling assets, utilizing the transparency, immutability, and distributive nature of blockchain technology.

In the context of the NatGold model, tokenization involves creating digital tokens that represent ownership of a certain amount of gold resources, as certified by NI 43-101 reports. Each NatGold coin is a digital representation of gold resources, making the intrinsic value of gold easily transferable and accessible without the need for physical handling. This process democratizes access to gold as an investment, making it possible for individuals and institutions to invest in gold resources with ease and confidence.

Tokenization transforms traditional asset management and investment by breaking down barriers to entry, reducing costs associated with transactions and storage, and enhancing liquidity in the market. By leveraging blockchain technology, tokenization introduces a new era of asset utilization and investment, opening up opportunities for innovation and value creation.

What does ESG stand for?2024-04-21T15:19:38+00:00

ESG stands for Environmental, Social, and Governance. These three broad categories are used to evaluate the sustainability and ethical impact of an investment in a company or business. Here’s what each component generally focuses on:

Environmental criteria consider how a company performs as a steward of nature. This includes its energy use, waste, pollution, natural resource conservation, and treatment of animals. The criteria can also help evaluate any environmental risks a company might face and how the company is managing those risks.

Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. This can include labor practices, employee health and safety, and the company’s impact on the communities where it operates.

Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. This aspect looks into how a company is governed, particularly in terms of transparency, accountability, and business ethics.

These factors are increasingly important to investors, as they can affect a company’s profitability, risk profile, and overall sustainability.

What are U.S. Patented Land Claims?2024-04-21T13:06:18+00:00

U.S. Patented Land Claims are a unique type of property right established under the General Mining Act of 1872, designed to promote the exploration and extraction of mineral resources on public lands. These claims grant full ownership of both surface and subsurface rights to the claimant, allowing for comprehensive control over the mining and management of mineral resources. Originally issued by the General Land Office—now known as the Bureau of Land Management (BLM)—these claims provided a mechanism for individuals and companies to secure land for mining, playing a pivotal role in the development of the American West.

As privately held assets, U.S. Patented Land Claims include both the surface and subsurface mineral rights, distinguishing them from public lands where mining rights are typically leased or licensed. This ownership model facilitates complete autonomy in the exploration, development, and extraction processes, making these claims particularly valuable for the tokenization of physical gold resources into digital NatGold coins. Although the issuance of new mineral patents was significantly curtailed by a moratorium enacted in 1994, existing claims that met all the requirements before this enactment are still in effect, offering a vital pathway for the digital mining of gold through tokenization in the evolving landscape of the NatGold industry.

What is the NatGold Bilateral Bridge?2024-04-21T19:42:36+00:00

The NatGold Bilateral Bridge is a pivotal technological infrastructure within the NatGold ecosystem, designed by OroEx Corp. to connect the private ledger of the NatGold Digital Vault with the NatGold NatGold Multichain where NatGold coins are actively stored, distributed, and traded globally. This bridge plays a critical role by facilitating the seamless and secure transfer of NatGold coins from their post-tokenization crediting in the Digital Vault to their respective public blockchain addresses.

Essential to both operational oversight and regulatory compliance, the NatGold Bilateral Bridge utilizes advanced technologies such as smart contracts, APIs, and cryptographic security measures. These tools ensure that the transfers and tracking of NatGold coins are conducted securely and efficiently, thereby preserving the integrity and trustworthiness of the digital asset management system. This infrastructure not only supports the smooth functioning of the NatGold ecosystem but also enhances its capacity for strategic decision-making and regulatory adherence.