Analyst Reports Gold Will Never Be Replaced by Bitcoin and Digital Crypto Assets
Analyst Reports Bitcoin And Digital Assets Will Not Replace Gold
There are those in the cryptocurrency industry that believe that digital assets can serve as the ultimate store of value and that bitcoin itself is sounder than gold, which has long been treated as a safe-haven asset. Those who are pro bitcoin have discussed the scarcity of the asset, that it can be stored and divided more easily than gold, and that it can be secured in a way so that no entity can confiscate it.
On the other hand, there are those that believe that considering cryptocurrency as a store of value is not realistic. Many tend to respond that “how can something capable of making such dramatic price moves over a short period really be used as a safe-haven asset?”
One particular supporter of naysayers’ views is Kristoffer Inton and his colleagues from Morningstar investment firm. MarketWatch explains that the group has developed a system to allocate grades to certain asset classes. Further, gold outperforms Bitcoin and other cryptocurrencies. They stated:
“In order to assess the threat, we’ve created a framework to grade any asset class’s viability as a safe-haven by focusing on liquidity, functional purpose, scarcity of supply, future demand certainty, and permanence. Through this framework, we conclude that cryptocurrency does not and will not challenge gold as a safe-haven asset class.”
The news article that has appeared on MarketWatch discussed that bitcoin is worse than Mastercard and Visa for volume transactions. As a result, there has been no “functional purpose” for bitcoin and other digital assets.
Further, bitcoin’s ability to transmit any amount around the world overcomes gold’s usability. Scarcity also makes bitcoin a more desirable form of money as well. Such scarcity will also maintain because it is unlikely that someone will invent a state-of-the-art drill that will reach the great deposits of bitcoin. Also, bitcoin has a lack of historical precedent – at this point, we are at the beginning of bitcoin’s existence, which is extremely short compared to our time with gold.
Inton concluded by stating that if bitcoin does replace gold as a store of value, it will damage the price of gold. As he mentioned:
If cryptocurrency were to displace gold’s investment case, the implications for gold prices would be devastating. [Forty percent] of gold demand relates to investment, so a shift in investment from gold to cryptocurrency would be a seismic shock.