Of the various monikers that have been applied
to Bitcoin, “digital gold” is among the most well known, if one of the most
misleading. Like gold, Bitcoin’s value is based on supply and demand. There’s
only so much gold in the world, and Bitcoin’s supply is just as finite. Both
assets are added to the circulating supply. And though that has always been a
questionable metaphor, it’s also where the similarities end.
Cryptocurrency, in many ways, needs a digital gold. Gold is known for
its price stability, at least relative to many other assets. It’s also thought
to be a place where value can always be found, no matter how many incarnations
human society goes through. Bitcoin and the altcoins, meanwhile, are
notoriously volatile in value.
This has led the industry to develop numerous
“stablecoins”. Most famous among the bunch is Tether, in hot water today after
the New York Attorney General sued Tether (and
Bitfinex) over fraudulent activities and lost funds. Tether may tumble. But
even if it doesn’t, the…