What is used in Bitcoin is referred to as “paper money.” This is the easiest way for a dealer to issue new money. For example, in the case of the Federal Reserve’s inflation in the early years of the 20th century, the central bank printed lots of dollars and made them available to all traders. The monetary system of the late 19th century relied on paper money, just like bitcoin today. The paper money didn’t have any real value. The amount in circulation didn’t amount to anything.
Currency traders also need currency of more stable value.
Gold traders need gold.
Trading in Commodities
Many commodities traders exchange oil and gold for other commodities.
Trading oil for other commodities is the traditional way in which commodities trade. These traders are now selling products in Bitcoin instead.
Gold traders usually trade gold for cash. The gold belongs to their customers and doesn’t have any real value. In this example, the gold trading takes place in gold. The cash comes from the cash traders in the futures market.
Gold is already traded with the Bitcoin blockchain.
Bitcoin Gold Coins Available
Gold traders are in a spot when trading bitcoin. The gold coins in which they can buy bitcoin are already available. In this way, they can buy Bitcoin directly.
Currency traders still need to obtain fiat currency to trade gold.
There are more currencies available to currency traders now.
Traders in commodities still trade bitcoin, just not in the gold market.
Both commodity traders and currency traders need Bitcoin to trade gold and other commodities.
Bitcoin is Used in Commodities
Because Bitcoin is such a disruptive technology, it changes how the economy functions. As it becomes more widely used, currencies will also change.
Maybe currency traders will use it instead of gold?
The prices are already in Bitcoin.
What does this mean for gold trading?
The markets and prices in commodities already involve some form of bitcoin trading.
The exchange rate of gold to bitcoin is already in the futures market.
The exchange rate in the futures market is based on the supply and demand of commodities.
The actual supply and demand for gold won’t change at all. The price will change.
When the supply of gold drops, the price of gold will fall.
It doesn’t matter that the supply and demand for gold is not the same.
The price is still influenced by supply and demand.
Comparing Bitcoin to Commodities
Gold is already traded with bitcoin.
Oil is also traded with bitcoin.
What does this mean for the gold market?
Maybe gold will follow the pattern of oil in the future.
Bitcoin trading is growing fast.
Bitcoin is used in commodity trading.
Bitcoin might replace gold.
The ability to trade gold for bitcoin creates opportunities for trading in commodities.
The bitcoin value is growing.
The gold market has started to monitor the market value.
Gold is already traded with bitcoin.
Conclusion
The market for trading gold and other commodities is already in flux. The possibility of bitcoin replacing gold is changing the face of commodities trading. So next time you consider the added value contained in something like a PayPal casino, think about how lucky you are not to have to drill down to the bare bones of the technicalities of how different securities and commodities actually work.