Is bitcoin the gold of the future? Find out here
Bitcoin is becoming the new gold of the future. The dawn of technology has further propelled Bitcoin’s dominance as an alternative currency. Today, it’s even recognized as a legal currency in several countries. But with the increasing volatility, will it endure the test of time and become the new gold of the future?
The rise and fall of Bitcoin is now a common scenario. During its early emergence as digital currency, most people saw it as an alternative digital asset. The knowledgeable ones keyed into it, and right now, its value as an asset has skyrocketed.
The unpredictability of digital assets has raised global concerns. Comparing cryptocurrency investments with traditional gold has sparked diverse controversies. Some investors are optimistic about bitcoin as the new gold, while some are pessimistic with lots of facts to justify their attestation.
Gold is the standard asset that has birthed other currencies with time. But, according to Anthony Scaramucci of SkyBridge Capital, people have to embrace bitcoin’s trajectory and volatility as the popularity of this ‘new gold’ grows internationally.
Specifically, before we can generally accept bitcoin as the new future gold, let’s quickly run the statement through some fundamental ideologies that will standardize the asset stores.
The government’s regulation used gold to back the USD when the currency came into the limelight. That meant each dollar was worth a certain amount of gold, and you could take your dollar note to the mint and exchange it for its gold equivalent.
Prior to 1971, when President Nixon disintegrated the attachment between US currency and gold as a basis, the precious metal was linked to the dollar. Investors who want to play safely in the stock market have invested in gold since then. When there is a change in the stock market or a drop of only 10%, the metal can help cushion the impact.
Implementation of these currencies is dependent on government laws and legislation. For example, flat money used to be the only means of exchange, but gold became a scarce commodity with the discovery of its potency.
Now based on financial acceptance, let’s quickly run through convincing and widely accepted evidence of gold that made it standard and widely appreciated. Bitcoin, the most valuable cryptocurrency and the new gold in view by market capitalization, is sometimes compared to gold as a long-term store of value, according to CoinMarketCap. Bitcoin’s price, on the other hand, is currently exponentially more volatile than gold.
Gold is an excellent safe place asset due to many considerations:
3 outstanding main proof behind the wide acceptance of gold
- It is permanent, and it has been trusted and tested over time
- It obeys the law of economics based on demand and supply.
- Gold is not easy to forge.
- The acquisition of gold is not as easy as the issuance of new shares by a corporation, or the printing of money by a federal bank. A lot of processes have to be done, from the extraction of the mineral to refining.
Having considered the uniqueness of gold, we need to check our alternative new gold that has become the talk of all.
For millennia, people use gold as a store of value because of these factors. However, because of its high worth, it was impossible to use in everyday purchases. It was challenging to make a coin tiny enough to buy a minute product and even more difficult to carry large enough to buy a house.
Every currency in a free market economy must still follow the three rules that made gold valuable. And the US dollar follows these rules, likewise bitcoin.
In a few points, we will confirm if Bitcoin is becoming the new gold of the future.
1. The legality of bitcoin as a future gold
The set gold trade market, weighing, and tracking system are flawless. As a result, it’s pretty difficult to steal it, pass it off as fake gold, or otherwise taint it. Bitcoin as the new gold is also difficult to tamper with because of its encrypted, decentralized system and complex algorithms, but the infrastructure necessary to assure its security is still lacking.
When you take a dollar as payment from someone, you do it based on the government’s “guarantee” that it will be received by someone else if they keep their obligations to obey the laws.
Bitcoins fit into this pattern as well, but they don’t require any guarantees. Instead, the initial algorithm ensures that everyone involved is truthful. Then, the computer-based acceptance makes them operate as a store of value.
2. Scarcity of bitcoin
Gold, like bitcoin, is a scarce commodity. While we know, there are only 21 million bitcoins in existence. We have no idea if it’s possible to mine all the gold in the world. Because this is digital money that can only be operated based on cloud storage and accessibility, its availability is restricted and scarce. So, using bitcoin for business globally is still under review for general acceptance.
3. Volatility of bitcoin
Looking at how volatile bitcoin has always been based on record for the past decade, embracing it as a future new gold will be too risky. So can we make a case for Bitcoin as digital gold if it isn’t the future of money? Bitcoin supporters say that because the new gold’s quantity is limited to a maximum of 21 million units, it can serve as a reliable store of value. However, Bitcoin is not a viable alternative to traditional gold due to its short history and abstract character.
Aside from volatility, bitcoin has shown itself to be vulnerable to market fluctuations and events in the past. On the other hand, gold does not fluctuate as bitcoin does, making it a potentially safer asset. Even with the volatility, is bitcoin the new gold?
Gold has a long history as a means of exchange, and its physical qualities have prompted humanity to place a high value on it for thousands of years. It is still widely used for jewelry and ceremonial purposes in many countries today.
Computer-based access and longevity of gold and the new gold
The new future gold is essentially a lengthy number that the system recognizes as fitting into a formula about the future new gold and the ancient gold. So people will know you as long as you have this number in your wallet.
It doesn’t get old, decay, or disappear unless you lose access to your wallet, which is equivalent to tossing a gold coin overboard and losing it forever. Accessibility of bitcoin guarantees that it will last like gold has for centuries. Would you like to embrace bitcoin as the new gold to increase your investment opportunities?
Bitcoin’s value is still pretty thinly traded and highly volatile at the moment. However, the new golds are gaining validity and volume as they work their way into mainstream society. With time, we will justify if bitcoin is the new gold of the future or a brief success…