Quote from: nobbynobbynoob on March 30, 2013, 01:44:54 PM

Quote from: DigitalDroid on March 30, 2013, 01:10:24 PM

The reason for the sudden spike: Cyprus. The events there took almost everyone by surprise. There's plenty of people who understand the problems with our "manipulated economy", but even a lot of those had become "complacent". Now that government paper is failing at a faster pace than anyone imagined would have happened in the past year or so, a "sense of urgency" seems to have taken hold of some and they are rushing into bitcoin.

Sounds plausible, but in these types of "financial Armageddon" scenarios, one might expect the gold price to skyrocket, which has not happened at all. Yet.

The "Cyprus effect" may have had some bearing on bitcoin, but simple increased general demand and small-scale venture capital might explain the bulk of the price hike, assuming it's not just another good old bubble like June 2011.

I think there's a few different factors to consider here:
- liquidity, divisibility, portability,... Bitcoins are easier to store, carry around, split up and "put back together" than gold. This could explain why some people see bitcoin as an alternative to buying gold, or as an additional way to protect themselves.
- bitcoin app downloads went up in Spain right after a Spanish minister said a Cypriot type of levy would be possible in Spain (but at a much lower rate).
- Anonymity. Governments have been known to confiscate physical gold (and force people who said they had already sold their gold to pay the equivalent of the physical gold) when the SHTF. for example: FDR did it in 1933. Add the fact that in some eurozone countries the government has started to crack down on the use of cash and forbids its use to make large purchases (such as a few ounces of gold). Worried citizen could see bitcoin as a safer way to quickly store their savings outside of the government run monetary system.
- The manipulation of the gold price. The last few years, there's been a lot of speculation about governments and central banks using their gold reserves to keep the price of gold down (as a way to hide the problems associated with their own paper).

DigitalDroid

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