Is Bitcoin A Worthy Contender Against Gold? How Can BTC Outduel the Leading Precious Metal?
Gold has been the reigning asset for years, but Bitcoin has been consistently addressed as its digital counterpart. As the #DropGold campaign spreads, which asset will ultimately reign as victorious?
- The #DropGold campaign has launched a wide debate between gold and Bitcoin.
- Adam Perlaky, Peter Schiff, Eric Voorhees, and John Carvalho voice their opinions.
Bitcoin has been consistently trying to push the boundaries of the traditional world of finance. The coin originated in response to the crisis that the economy was experiencing at the time, but it has continued to make progress for the last ten years. One of the most significant assets to be challenged in this progress has been gold. Bitcoin has repeatedly been called digital gold and has proven itself to be helpful for hedge funds and retail investors.
The reason that Bitcoin has been compared to gold has not been just about the shimmering aura it holds, but because two assets are strikingly similar. Apart from the uses that gold has as a precious metal, gold has always been seen as a safe bet for investors. With Bitcoin’s milestone at the $100 billion market cap now, many crypto investors are seeing it in a similar light.
In a report to the SEC by Bitwise Asset Management, the company stated that Bitcoin has become ”the first digital commodity” that the world has ever seen, preceded by nothing else. The report added that there are three main attributes that set Bitcoin apart from other commodities in the world, saying that it is:
- Transportable to anywhere
- Can be traded with exchange and no other intermediaries
The Bitcoin versus gold conversation has taken a new turn this week, as Grayscale Investment Group launched the #DropGold campaign with a major commercial that calls out gold as an asset of yesterday. The commercial added that gold has no “utility” at this point. The campaign has picked up a lot of traction, especially considering the performance that both assets have had lately. While gold has seen a drop of about 6% since February, Bitcoin has seen 40% growth since March. Analysts have said that these two assets have performed inversely, though the last 90 days have been the lowest correlation in months.
Right after social media got ahold of the campaign, a report from Adam Perlaky at the World Gold Council appeared to fight back, stating that cryptocurrencies are far from the “safe haven” that was advertised. Perlaky spoke on the volatility of the market, lack of regulation, the demand based on speculation, the limited Bitcoin supply, and more. However, he noted that there is nothing that could prevent “an enhanced cryptocurrency” from coming into the market, which would reduce the overall value of the ones currently in existence.
Ever since the campaign happened, there have been voices on both sides of the argument. Peter Schiff, the founder and chairman of SchiffGold, had something of his own to say, commenting that gold has many utilities and Bitcoin proponents ignore. Furthermore, he said that Bitcoin is the asset without utility, saying that there is no way to “mine Bitcoin without using #gold.”
The ultimate irony in the #DropGold campaign, is that you can't mine Bitcoin without using #gold. This is just one of the many utilities of gold that Bitcoin promoters deny exist. But while they overlook gold's obvious utility, they ascribe utility to Bitcoin where none exists!
— Peter Schiff (@PeterSchiff) May 3, 2019
Schiff took his statements a step further, adding that the investors in the crypto market have no experience and are rather young. He said that there is no actual value to Bitcoin and that using it as a “store of value” is useless.
Eric Voorhees of Shapeshift and John Carvalho of Bitrefill have both replied to the criticism from Schiff, as Carvalho stated that that Bitcoin’s power will end up,
“eat[ing] away gold’s value over time.”
He added that this purpose completely justifies the #DropGold campaign.
As many proponents believe that Bitcoin will be seeing a positive performance in the next few months, and the idea that a bull run is coming, the idea that gold will prevail is becoming weaker. Bitcoin has seen some instability at times and has lost investor confidence over the years as scams and other damaging events have happened.
Still, the question remains – can Bitcoin overtake gold, or will gold remain the reigning asset?