​The rise of cryptocurrencies, Bitcoin in particular, is making waves in the precious metals markets. People see it as another form of honest money and there is plenty of excitement over the huge price gains. Some are wondering what the rise of Bitcoin might mean for precious metals over the longer term.

Will Bitcoin somehow supplant gold as the premier store of value? There are some hardcore cryptocurrency enthusiasts who think it will. But that’s an extraordinary notion given that Bitcoin has existed for less than a decade and operates in the realm of technology where the best product today can, and often is, replaced by a better “mousetrap” next year.

Our take is that Bitcoin offers some hope as one of several honest money alternatives to fiat money. We appreciate Bitcoin as an innovation which helps circumvent the central planners at the Fed and in Washington.

The decentralized nature of Bitcoin means officials have no one in particular they can target in an attempt to stop, regulate, or control.

Controlling cryptocurrencies is akin to controlling the internet itself, practically impossible. (Unless someone flips an internet kill switch, that is.)

Bitcoin promises to be an excellent medium of exchange. Developers working in the space are making progress on solutions that will enable hundreds of thousands of transactions per second – scale that will be needed in order to compete with established systems for paying with fiat currencies such as the dollar. If those efforts are successful and transaction fees can be kept low, new merchants will continue to add Bitcoin as a payment option.

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