At various times Bitcoin is compared with gold. This time world-renowned financial magazine Bloomberg has recently released their data where it said that Bitcoin can soon attain gold-like value. The market has drastically fluctuated after the coronavirus outbreak and has induced a momentary stock market bull. As investors, they tend to compare all available new assets to all traditional ones.
Gold a most trusted asset
Although most of the gold is stored away, humans have been obsessed with it for centuries. Most of the discoveries made of gold were done near a stream of the river as it is an eye-catching beauty and lusting beauty. According to records, gold was first used in culture in modern-day Eastern Europe in 4000 BC. It was used to create decorative objects and was continued for almost a couple of centuries until 1500 BC when the ancient empire of Egypt used it as a medium of exchange. The obsession with gold is for almost 6000 years where it was mostly used in the form of trade.
The gold standard was upgraded when it was used in shaping the US economy. The value of each dollar was pegged against a certain amount of gold until President Nixon ended this practice in 1971. It said that gold is used as- an act to store value, act as a medium of exchange and it should be possessed as a unit of account.
In our modern life Gold is not used as a medium to exchange but rather it is used in form of jewelry and stored as a value -able product. Gold has received its value and itself as a superior power. The health of a country is measured by the amount of gold it has in the reverse section.
What about Bitcoin?
Bitcoin was created in 2008. It provided a digital currency to the population which is not controlled by any government officials. The idea behind this was to decentralize the currency and solve all problems faced by fiat currencies. The idea of creating a new decentralized currency seemed idealistic at first, later it was created and to greater success. Bitcoin was traded by very little initially but later interest was growing in a few people.
On February 9, 2011, the currency grew as rich as the Dollar. From 2011 to 2015 it went from $4.60 to $426. Bitcoin was seen with a growth of over 90000025 based on the price analysis. Another significant change was from 27 April 2015 to April 2020, it rose about 3300% more from $224 to $7,787. There is no other medium of exchange available in history with the same speed of growth.
With so many admirable goods comes some limitations. It comes with a high level of volatility. It results in a high-risk asset category as of components it is made of. It comes with a lot of double-digit variation which occurs daily. Still, people are keen to take profit from Bitcoin.
The Verdict: Gold Versus Bitcoin
For a long time, Bitcoin was known as “Digital Gold”, except for tangibility like gold all other attributes are similar. Both have their limitations. Both are considered as a medium of exchange and anyone can use them to trade. Both items can be divided into several divisions. The gold can be divided into ounces or quarter ounces whereas bitcoin can end up to 1/100,000,000 times and one unit is known as 1 satoshi.
However, store as a value, bitcoin cannot help in all types of a pandemic. As at times of crisis and lack of assets it cannot help and will lose its intrinsic value. It can have the same behavior as the stock market. We can say that it's zero intrinsic value is due to its intangibility.
Arguments and Assumptions
As more and more people are now investing in Bitcoin it was assumed that Bitcoin will mark its level to gold but it still has some time. A billionaire investor, a CEO at Galaxy Investment Partners, recently revealed Bitcoin’s considered its portfolio, the price can be as high as digital gold. Although according to him, people won’t accept it as a regular currency.
While in the coming up era, especially in times of the pandemic and the result can be seen in the coming up year or two. For gold to stay as its superiority bitcoin has to be a speculative investment. There is a lot of speculation made over the year but the result can be seen over some years. Along with the attached pandemic, speculation can be changed.
