Digital Gold: Bitcoin Better at Being Gold than Gold Itself?
Apparently, Bitcoin (BTC) lost its value proposition as digital cash. As a result, investors all over the world have searched high and low for a way to determine this world-renowned cryptocurrency. However, this search hasn’t yet uncovered any definitive results or conclusions yet. Thus, a discussion has developed regarding Bitcoin’s status as either a second coming of gold stocks or a digital Store of Value. Is Bitcoin really the digital gold it’s coined as?
Bitcoin is More of A Tech Stock Than Gold?
According to the UK-based pro-gold market organization the World Gold Council, BTC has still got some work to do before it can truly be the digital Store of Value that many bitcoin maximalists paint it to be. In a report by MarketWatch on the matter, the World Gold Council stacked the performance of Gold, Nasdaq and Bitcoin.
By utilizing this limited data set, this council noted that; despite global stock markets experiencing their worst quarter since 2009, the cryptocurrency markets took an even harder dive than the stock market. As a result, the World Gold Council determined that in 2018;
Cryptocurrencies behaved like risky assets and fell while gold rallied
Following this, the self-proclaimed “market development organization for the crypto industry” stated that the price action Bitcoin displayed is why analysts deem Bitcoin a tech stock. Subsequently, they cited the 0.69 positive correlation between Bitcoin (BTC) and Nasdaq. The result of this led the firm to tout the opinion that all cryptocurrency investors should ‘reassess their reasons for investing in cryptocurrency assets.’
They even stated that the Bitcoin (BTC) price collapse in Q4 was “one of the few periods in which true market stress occurred since the financial crisis”, in an attempt to back their inflammatory claim. Essentially, they’re hinting that these “digital gold” arguments surrounding bitcoin are baseless.
Investor Interest Increases
In a poll conducted by Gabor Gurbacs of VanEck on Twitter as well as a post-mortem by Jan Van Eck; many Bitcoin (BTC) holders are turning to buy gold assets instead. In addition to this, he revealed his firm, CBOE and SolidX will be retracting their Bitcoin funding application. Van Eck states that the tides have changed in the cryptocurrency market. He claimed:
Interestingly, we just polled 4,000 crypto investors and their number one investment for 2019 is actually gold. So gold lost to bitcoin and now it’s going the other way
Tim Seymore, CNBC contributor and Chief Investment Officer at Seymour Asset Management (SAM), also echoed Van Eck’s viewpoint. All while noting that while gold is definitely a Store of Value, the lack of Liquidity in the bitcoin markets, as well as the price action, is what shows that it’s not as similar to the precious metal.
But of course, a vast number of prominent crypto pundits disagree with these viewpoints.
Recently, the Winklevoss twins (founders of the Gemini exchange) did an ‘Ask me anything’ on Reddit. During this AMA, they revealed their theory on cryptocurrency investments.
Tyler explained that both his and his brother’s “thesis on Bitcoin’s upside remains unchanged” despite the current bear market environment, ravaging all cryptocurrencies throughout 2018. For anyone that missed the memo, their thesis is basically that “Bitcoin is better at being gold than gold itself”
While you can’t melt bitcoin down into jewellery, you can definitely hold it as a store of value, much like gold.
The popular crypto proponent and anti-establishment commentator Max Keiser commented on this situation. In a tweet, he noted that Bitcoin is a “peer-2-peer electronic gold system” that also allows for online payments, far more than just an electronic cash ecosystem.
Satoshi’s true vision based on his writings and cypherpunk history.
Bitcoin: A Peer-to-Peer Electronic GOLD System
A peer-to-peer version of electronic GOLD would allow online payments to be sent directly from one party to another without going through a financial institution.
— Max Keiser, tweet poet. (@maxkeiser) January 29, 2019
At the end of the day, many people all over the world consider Bitcoin (BTC) the new gold. This topic is often controversial due to the differing perspectives used by both sides. With Bitcoin quickly maturing over the last decade, it has the same economic properties as gold. What makes it better, amongst other things, is the advantage of ease of transfer.
What do you think of Bitcoin in its current state? Do you think it’s a worthy rival to gold? Let us know your thoughts in the comments below!