Cryptocurrency: Determining the correlation between Bitcoin cryptocurrency and gold prices

Throughout history, gold was used in the place of money to become one of the primary instruments for payments. It was always included in the financial system and accepted in the world, thus it was used as a reserve and investment tool. With time, payment instruments became much more varied, with the developments in technology that affected financial markets. The driving force for the growth and development of the financial markets is the information technology. One of the most important inventions of the information technology is cryptocurrency. The most important cryptocurrency is bitcoin, which has an everlasting growth of trading volume and also is the ancestor of crypto/digital currencies. Bitcoin is a product of the blockchain technology and can be traded without any intermediaries. Bitcoin dates back to ten years and is a very popular investment tool in today's markets. In this study, the price relations between bitcoin and gold are determined. The dataset of this study is composed of monthly data during the years of 2010-2018. The aim of this study is to determine the existence of the relationship between bitcoin and gold prices, as well as its direction and volume. This determination is accomplished by a time-series analysis. As a result of this study, causality relations between the variables are determined, meaning that which variable affects which other, and in what direction.