With a Strong Chance of an Economic Crisis, Will Countries with More Gold or Crypto Assets Fare Better?
Gold and Bitcoin (BTC) have been compared many times as a store of value. Gold has been used for thousands of years as a store of value globally, while Bitcoin has been created just ten years ago and it has already experienced many bubbly cycles. There are many experts analyzing whether gold or Bitcoin will be used as a store of value in the future and during an economic crisis.
Will Gold Outperform Bitcoin The Next Economic Recession?
Precious metals have been used many times as a store of value in times of economic downturn. However, virtual currencies and Bitcoin have never been operating during an economic crisis, thus, they still have to show whether they are reliable during these periods of time.
There are several countries that increased their stock of golf over the last years. According to some reports, the volume of gold purchases by central banks reached a new 50-year high in 2018. There are some countries in Asia and Europe that are starting to increase the gold reserves that they have. Meanwhile, the United States has a large portion of gold since the 1970s.
Although there are no countries purchasing Bitcoin, there are some proposals for central banks to start embracing digital currencies. Michael J. Casey, chairman of CoinDesk’s advisory board wrote an article in which he explains that Santigo Siri, a San Francisco-based blockchain developer, proposed the Argentine Central Bank to purchase Bitcoin as a way to hedge against future economic crisis or issues.
If the bank places a small percentage of funds in Bitcoin, in the future, if the price of the digital asset grows, the bank could benefit from it. This would add more diversity to the central bank’s reserves. Moreover, the government could also use nuclear power to engage in Bitcoin mining activities.
Nonetheless, the Central Bank cannot purchase Bitcoin, even if it would want to do so. The reality is that banks can only purchase some assets that behave in a specific way, and Bitcoin’s volatility is a large constraint for the central bank of Argentina to purchase it.
Users around the world are also starting to gather some Bitcoin and other digital assets and be prepared for the next economic crisis. Whether Bitcoin will increase in value remains to be seen.