8 December 2021
Bitcoin has been in the cryptocurrency space for over 10 years now and it has been compared to many aspects - one such aspect is Gold! In the earlier time, people in general used to invest in gold and properties, the time has changed since there are so many ways in the industry to invest in - one such is bitcoin!
Bitcoin and its underlying blockchain technology have been hyped ever since its launch, but if compared to gold, it has its own credentials. One of the popular quotes from William Shakespeare says - All that glitters is not gold! However, the end line question that follows is could all that bitcoin be gold someday?
In this blog, we are going to discuss the aspects of Bitcoin replacing gold:
The only probable similarity between bitcoin and gold is its use-case. A person could benefit during the overall economic downturns, otherwise, all that the two of them shows are the differences:
- Bitcoin when compared to gold is extremely volatile in nature, while the volatility of gold has been much steady.
- When bitcoin and gold are compared in terms of security on the basis of corruption and fraudulent activities, gold is much safer, for instance, Mt. Gox case of crypto space.
- Gold has been in the space on the terms of being called a historical asset, also its use-cases and applications in the industry still hold the base-line while that is not the case with bitcoin as it is a crypto-” currency” and ultimately it affects the use-cases.
- Gold when compared with bitcoin consists of much liquidity. According to LBMA - London Bullion Market Association, an approximate of £13.8 billion or $18 billion of physical gold is traded in London.
- The trades related to gold are a part of an established regulatory framework.
Also Read, Will Bitcoin Ever Replace Fiat?
Vikram Rangala, the Chief Marketing Officer of ZebPay had stated,
“2020 has seen the story go from bitcoin as a speculative asset to long term, inflation-proof investment, and store of value. It’s also moving more like gold, as investors start treating it as a safe haven.”
While an attorney and the CEO of LegalAdvice,com, stated,
“Bitcoin is not digital gold but is merely an digital ledger entry that tracks the transfer of the ‘digital entry’ on the block-chain ledger. There is no actual gold backing for any bitcoin. Gold trades at $1300 an ounce based on supply demand of the underlying commodity. Bitcoin trades based merely on speculators that attempt to guess whether the demand for a single Bitcoin will increase or decrease”.
Many crypto enthusiasts also believe that since the supply of bitcoin is limited unlike gold, bitcoin acts as a better store value. Also, one can never be truly sure about the purity of gold which apparently is not the case with bitcoin since every transaction on the platform is verified. Crypto enthusiasts have even called bitcoin as digital gold.
At present, it cannot truly be stated that bitcoin could replace in the coming years since everyone knows gold and its market trend while bitcoin is still very new to many people. Bitcoin is a viable haven, while gold is considered as a safe haven, only time could tell whether bitcoin could ever replace gold.