NEW YORK (TheStreet) -- There is a certain group of people, and you know who you are, predicting and even rooting for an economic apocalypse.
In politics these people are called losers. In economics they're called goldbugs.
Absolutely certain that, since their policies aren't in fashion, the doomsday predictions of their candidates must certainly come true, the goldbugs have been all over the TV, hawking gold as the last hedge against disaster.
I know. The TV guys are selling gold, not buying it. The best hint that an asset class is about to fall apart is when it's hawked on TV. I knew the housing bubble was real when I started seeing commercials in the last decade about "fortunes to be made in real estate."
When everyone is getting in, it's time to get out.
Now I hold shares in a gold-backed mutual fund myself. I consider it a form of insurance for my portfolio. If the value of stocks turns decisively down, commodity values are likely to rise, and at that point my insurance becomes worthwhile.
But it's not something I'm hoping for. I like to see the value of my gold shares fall. It demonstrates to me that markets are working. Chances are my stocks are going up when that happens.
Still, despite the fact that gold has now fallen decisively to less than $1,300 an ounce, and the goldbugs are being laughed off the screen, there remains a valid fear trade out there, a place for those of a goldbuggy nature to hang out and say, "I told you so."
That place is Bitcoin.
Bitcoin is digital currency, digitally created, housed on servers and spent through electronic wallets. Since their introduction in 2009, they have become the investment of choice for those who choose not to believe in investment.
Never mind that dodgy Bitcoin exchanges can disappear in a nanosecond, taking peoples' Bitcoins with them. Never mind that the government can seize Bitcoins when they bust illegal marketplaces such as Silk Road, that Bitcoins can be stolen just like anything else or that some exchanges seem to exist primarily to "sell schmucks to wolves," as Felix Salmon of Reuters puts it.
There's always another such exchange coming, right around the corner.
The value of Bitcoin rises and falls, but the rush of gold bugs into the virtual currency has it going up right now, with the last trade at Bitcoin exchange Mt.Gox in Japan being more than $385. It's been as low as $141 in the last 30 days, and the exchange has traded nearly 900,000 Bitcoin in that time.
The action isn't all on the Bitcoin. It's also on the exchanges themselves. Regulators aren't fond of having an imitation, digital currency competing with theirs, and Mt.Gox has had trouble redeeming customers' dollars. Other exchanges, such as Bitstamp, show less volatility.
Bitcoin, like gold, is what I call an "oh no" trade. It's a belief that something has intrinsic value that will exist even if governments don't. It attracts the fearful.
In my view, it also attracts people who don't know what money is. These people think of money as a store of value. In fact, it's a medium of exchange. These are different things.
A store of value is always going to hold that value. A medium of exchange has value only as it's used.
I explain it in terms of Aladdin's Cave. If Aladdin tried to spend that gold and those jewels all at once, on his return to Baghdad, kids would be playing with diamonds in place of marbles. It's the goods and services in that market, exchanged for each other, that define the market, and that define market value.
In other words, you can't hide from the marketplace. Gold, or Bitcoin, tells you that you can.
If the atomic exchange does come, and if you and your friends are up in the mountains with your gold when it happens, you'll come back to town one day and find that the world has converted to a bread standard, and that all your gold is worthless.
At the time of publication, Blankenhorn owned shares of Vanguard Global Equity Fund Investor Share (VGPMX).
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.