Forget The FOMO Bitcoin Will Last
For as long as human records go back in time gold has been a constant form of wealth in the majority of world cultures. As other precious materials and forms of currency have come and gone gold has remained a trusted asset. Its value is derived from its scarcity and as a form of wealth, it can be taken to any country and converted into fiat or traded as is for goods and services.
In many ways, gold and Bitcoin are similar except that gold has passed the test of time while Bitcoin is in its infancy as a universal currency. Some experts though are examining the possibility that Bitcoin could surpass gold as the most trusted fall back commodity.
Last year when Bitcoin rose from $1,000 to $19,000 in value and gold remained stagnate at about $12,000 an ounce the market was alive with talk of Bitcoin usurping golds place as a hedge to currency.
That price rise and its subsequent market correction can be chalked up to FOMO (Fear of Missing Out). The same kind of inflated values that gold once saw during mining booms and busts and is not really part of the question of whether Bitcoin will ever take or match the yellow metal’s place as a store of value.
Pete Thomas President of Zaner precious metals and a physical market broker spoke to CNBC about his experience with gold buyers getting into the cryptocurrency market saying,
“People were going to a gold broker and swapping crypto out or swapping gold to buy crypto.”
Bitcoin and Gold Benefit From The Same Economic Conditions
The one characteristic that gold and Bitcoin share is there scarcity which is what gives any commodity its value in a supply and demand market. As time goes on though Bitcoin becomes scarcer while gold will continue to be mined at the same rate.
There will only ever be 21 million Bitcoin of which at least 75% has already been mined. When all 21 million become available Bitcoin becomes finite and this, experts say, is when the market will find it’s true pace.
Gold on the other hand is and will be continually mined at the rate of about 32,000 metric tons adding 1.7 % to the total stock of gold ever mined per anum which ensures the price of gold will continue to rise and fall along with other commodities.
The World Gold Council wrote in its annual report that
“Bitcoin’s future diminishing growth rate and ultimate finite quantity are clearly attractive attributes, as is gold’s scarcity and marginal annual growth,”
Naysayers talk of gold’s history of being a safe hedge against crashing currency markets in times of trouble because it is a decentralized commodity that is universally recognized as having value. Yay-sayers agree, just as Bitcoin is.