Staff Insights

Understanding Bitcoin: Beyond the Myth of New Money

Cryptocurrencies, especially Bitcoin, have ignited intense discussions about the future of financial transactions and money itself. Amid this fervor, there’s a common misconception that Bitcoin represents a novel form of money. However, a closer examination reveals that Bitcoin’s true novelty isn’t in the money it represents but in the way it’s exchanged. Distinguishing between “money” and the “exchange mechanism” illuminates the fact that while types of money akin to Bitcoin have been around for ages, the capacity to conduct electronic exchanges without an intermediary is profoundly innovative. This exploration uncovers that Bitcoin isn’t introducing a new category of money; instead, it’s pioneering a new method of transaction that could accommodate various money forms and other asset types.

Clarifying the Role of Bitcoin in Modern Finance

A common misunderstanding surrounding Bitcoin is its classification as a revolutionary form of currency. However, the true innovation of Bitcoin lies not in its function as money but in the way it facilitates transactions. Traditionally, the concept of money — the physical or digital asset that is exchanged — is distinct from the method by which it is exchanged, known as the exchange mechanism. While physical currency like the coins and notes in your pocket represent traditional forms of money, the mechanisms for exchanging these assets, from direct hand-to-hand transactions to digital transfers, have evolved.

In contemporary financial discourse, exemplified by reports from major financial institutions such as the Federal Reserve, the debate often centers on cryptocurrencies’ classification within the monetary system. This discourse invites a reevaluation of Bitcoin’s contribution to financial technology. Is the essence of Bitcoin’s innovation its status as a novel monetary form, or does its significance lie in its unique approach to facilitating exchanges without traditional intermediaries?

By reexamining Bitcoin’s place in the financial ecosystem, it becomes clear that its hallmark is not as a new type of currency but as a pioneering exchange technology. This distinction is crucial for understanding Bitcoin’s impact and potential legacy in reshaping how value is transferred in the digital age.

Clarifying Money Types:

Fiat Money: This type of currency, which includes well-known examples like the US dollar and the EURO, derives its worth not from any physical value but from a collective belief in its utility for transactions. Essentially, fiat money is backed by nothing more than the paper it’s printed on and the designs made by ink, a concept that extends to digital forms like Bitcoin.

Asset-Backed Money: Here, the currency’s value is directly tied to a tangible asset. The classic example is gold coins, which hold intrinsic value due to the precious metal they contain. This category represents a direct link between the currency’s worth and an underlying physical good.

Claim-Backed Money: The value of this money type hinges on the issuing institution’s promise to redeem it for something of value, such as goods or services. Bank deposits and checks fall into this category, with their worth based on a bank’s guarantee to convert these instruments into cash or their equivalent.

Clarifying Exchange Mechanism Types:

Physical Transfers: This involves the direct, hand-to-hand exchange of money in its tangible forms, such as paper currency or metal coins. An instance of this is purchasing a coffee by physically handing over cash to the cashier. Checks, representing a promise of payment, can also be considered under this category as they require physical exchange to initiate the transfer of funds.

Electronic Transfers with a Trusted Third Party: This type of transfer is exemplified by digital payment systems like Zelle. Zelle allows individuals to send and receive money directly from their bank account to another individual’s account within minutes, using only an email address or a mobile phone number. Here, the banks involved act as trusted intermediaries, validating and processing the transactions. Zelle showcases how modern technology facilitates immediate financial transactions while still relying on traditional banking institutions to ensure the security and authenticity of these exchanges.

Electronic Transfers without a Trusted Third Party: This innovative mechanism is epitomized by cryptocurrencies, such as Bitcoin, which eliminate the need for an intermediary. Transactions are verified and recorded on a decentralized blockchain network, enabling direct digital exchanges of assets between parties. This method revolutionizes the traditional transaction process by offering a decentralized system for validating exchanges, thus providing a novel way to conduct electronic transfers without central oversight.


Bitcoin: Not Money; Rather a Revolutionary Exchange Mechanism 

Positioning Bitcoin within these frameworks reveals that cryptocurrencies do not constitute a new form of money. History is filled with examples of fiat currencies, as well as asset-backed and claim-backed monies. Like traditional fiat currencies, Bitcoin is not backed by anything of intrinsic value. What sets cryptocurrencies apart, however, is their exchange mechanism—decentralized transactions without the need for a trusted intermediary, a concept that was brought to life with the advent of Bitcoin in 2009.

NatGold™: Real Intrinsic Monetary Value 

While Bitcoin marked a leap in transaction technology, its foundation on fiat principles—lacking intrinsic asset backing—limits its potential as a stable monetary system. This is where NatGold steps in, offering a digital currency backed by real-world assets: certified in-ground gold resources. Unlike Bitcoin, NatGold leverages the innovation of blockchain for transactions while ensuring each digital token is supported by tangible value, validated through National Instrument 43-101 (NI 43-101) certification. This ESG-friendly approach not only guarantees the asset’s existence but also provides a sustainable, ethical investment option that transcends the limitations of both traditional fiat currencies and cryptocurrencies like Bitcoin.

NatGold: Leveraging the Exchange Medium Revolution

In essence, while Bitcoin revolutionized the method of exchange, it falls short of introducing a new form of money. The real evolution lies in combining innovative transaction mechanisms with asset-backed currencies like NatGold. By uniting the decentralization benefits of cryptocurrencies with the tangible monetary value of digitally mined gold, NatGold presents a compelling case for the future of money. It’s not just about creating an alternative currency but about redefining the value exchange in our global economy, making NatGold a viable contender in the quest for a stable, value-driven digital currency.

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FAQs

What is NatGold?2024-05-03T15:18:49+00:00

NatGold, sometimes referred to as “green gold,” represents the concept of monetizing natural gold—gold that is left unextracted and remains in the ground. The distinctiveness of NatGold lies in the method of capturing its value, making it a superior choice for monetary purposes compared to its above-ground counterpart, which serves better for industrial, jewelry, and luxury uses.

The value of NatGold is realized through the tokenization of NI 43-101 certified gold resources, which are fundamental to all investment decisions related to gold mine financing for extraction purposes. By being digitally mined and kept in its natural state, NatGold provides a plentiful supply to meet flexible monetary demands without the need for the security, storage, transportation, and insurance required for physical gold.

Moreover, NatGold is ESG-friendly (Environmental, Social, and Governance), positioning NatGold as a positive force for sustainable finance, in stark contrast to the significant environmental and social impacts associated with above-ground gold extraction and processing.

Why is international transferability of NatGold mining titles important?2024-04-20T23:29:58+00:00

For the global expansion of the NatGold marketplace, ensuring NatGold mining titles can be transferred internationally to a designated NatGold tokenizer is crucial. This capability facilitates the conversion of titles into NatGold coins, significantly contributing to the growth of the NatGold ecosystem worldwide. It enables the seamless integration of gold resources from various jurisdictions into the NatGold economy, enhancing the diversity and liquidity of NatGold coins as a digital asset. International transferability supports the broader adoption and utility of NatGold, making it a truly global digital gold currency.

How is the baseline intrinsic value of NatGold calculated?2024-05-18T12:55:00+00:00

How is the baseline intrinsic value of NatGold calculated?

The baseline intrinsic value of NatGold is calculated using a global per ounce average profit comparative methodology developed by the International NatGold Council. This method assesses the profit potential of NatGold by comparing the global average cost of gold production, as indicated by the All-In Sustaining Cost (AISC), against the current market price of gold. This approach provides a robust framework for establishing the minimum intrinsic value of NatGold coins, emphasizing their potential profitability in the global market.

Calculating Production Costs: The All-In Sustaining Cost (AISC) is used as a key metric in this comparison. AISC is a global weighted average calculated quarterly by the World Gold Council, based on the reported costs of each publicly reporting mining company for that period. This figure reflects the comprehensive cost faced by publicly reporting gold mining companies to mine, refine, and market one Troy ounce of gold.

Above Ground Market Price Reference: The market price used in this calculation is derived from the latest daily average price for a Troy ounce of gold, as reported by authoritative sources like the London Bullion Market Association and the NYMEX spot gold price.

Intrinsic Price Value Baseline: For example, employing a 90-day AISC of US$1,342 for Q4, 2023, and a hypothetical market price of US$2,200 per ounce, the intrinsic profitability is calculated by subtracting the most recent quarterly global weighted average AISC from the market price. In this instance, the average global profit would be $858 per ounce. This serves as the baseline intrinsic value of gold before the expenditure of US$1,342 to physically extract the gold via traditional mining methods.

NatGold’s approach diverges from traditional practices by focusing exclusively on digital mining certified gold resources in an ESG-friendly way. Essentially, the intrinsic baseline value of an ounce of NatGold is theoretically equal to the average per ounce profit realized by global gold producers, which is calculated by subtracting the average global cost of extraction from the prevailing market price of gold.

This positions NatGold as a sustainable crypto-commodity, capable of attracting a significant ESG premium, potentially even surpassing traditional gold’s market value as global sustainability awareness increases. This valuation transcends conventional production cost-profit analyses, advocating for NatGold’s price to be independently determined by its own merits as a sustainable and innovative financial asset.

What is the Fifth Pachakuti, and what does it have to do with evolving ESG-consciousness?2024-04-21T16:00:14+00:00

The Fifth Pachakuti, as foretold by the Inca civilization, represents a period of profound transformation that began in 1992, marking the end of an era and the emergence of a new one characterized by balance, harmony, and sustainability. This concept resonates today as we face global environmental crises and a deeper understanding of our interconnectedness with nature. In Incan prophecy, a Pachakuti is a 500-year cycle of renewal, and the Fifth Pachakuti symbolizes the time when the path of the Eagle—representing mind, science, and industrialization—reunites with the path of the Condor, which symbolizes heart, intuition, and a spiritual connection to nature. This era is envisioned as a convergence of these historically divergent paths, fostering a united consciousness that is essential for global sustainability.

This transformative period aligns with the current shift towards Environmental, Social, and Governance (ESG) principles, reflecting a global move towards more sustainable, equitable, and environmentally conscious practices. The reawakening to these values under the Fifth Pachakuti supports the transition from traditional, often destructive economic activities like physical gold mining to more sustainable approaches such as those advocated by the International NatGold Council. This council promotes the tokenization of gold, preserving natural resources and minimizing environmental impact, which embodies the ESG-conscious change envisioned in this new era. This alignment suggests that our contemporary environmental and social reforms are not just modern necessities but are part of a larger, cyclic transformation echoing ancient wisdom—a true manifestation of the Fifth Pachakuti.

What is the NatGold Multichain?2024-04-21T19:44:31+00:00

The NatGold Multichain is an advanced blockchain architecture within the NatGold ecosystem, designed by OroEx Corp. to enhance the functionality and scalability of NatGold coins. It comprises a primary public blockchain and several interconnected sidechains or Layer 2 solutions.

Primary Public Blockchain: This is the main blockchain where NatGold coins are initially issued and managed. It records all primary transactions, smart contracts, and operations related to NatGold coins, serving as the foundational layer of the system.

Sidechains and Layer 2 Solutions: These are secondary frameworks connected to the main blockchain. They are specifically designed to increase transaction capacity and speed by processing transactions separately from the main chain. This helps alleviate bottlenecks and reduces transaction costs, making them more economical, especially for frequent or smaller transactions. Additionally, these sidechains allow for the testing and implementation of new blockchain technologies and protocols that may not be feasible on the primary blockchain.

Interoperability and Flexibility: A key feature of the NatGold Multichain is its emphasis on interoperability, which allows different blockchain networks within the ecosystem to communicate and interact seamlessly. This interoperability is crucial for broadening the usability and functionality of NatGold coins across various platforms and applications. It also offers users a greater flexibility in wallet choices, enabling them to select a wallet based on their preferred blockchain, considering factors such as security features, transaction costs, and user interface.

Cross-Chain Technology: Utilizing blockchain bridges and similar technologies, the NatGold Multichain facilitates the transfer of NatGold coins between the primary blockchain and other blockchains within the ecosystem. This ensures that NatGold coins maintain their value and functionality across different blockchain environments.

Practical Implications: For users, the NatGold Multichain structure enhances the overall experience by offering faster transactions and lower costs. It allows users to interact with NatGold coins in diverse environments and seamlessly return to the main blockchain when necessary. From a broader perspective, this architecture significantly increases the market reach and adoption of NatGold coins, enabling users on various blockchains to engage with and utilize NatGold coins without needing to switch to a new blockchain system.