The Magazine for Asian Investors
Since its introduction, bitcoin has been repeatedly compared to gold as an asset that can preserve wealth. Moreover, Bitcoin arouses the potential to replace gold in the future.
This inevitably leads to the question, “Can bitcoin replace gold?”
Can bitcoin replace gold?
Comparison of Bitcoin and gold
Both are assets that people recognize, as assets that secure their value and add value as inflation increases.
Gold has proven for more than 5,000 years that it is a store of value that people accept. Moreover, it has always been accepted as a medium of trade. Gold is highly liquid and can be exchanged in any country of the world. Its limited supply is a characteristic that makes it real money.
In order to simplify the exchange of gold, gold futures and ETFs were created. With them, investors can easily trade gold without buying it physically and worrying about its storage. The disadvantage, however, is that paper gold makes the gold market easy to manipulate. This in turn has lowered the confidence of younger investors in gold.
Nowadays, online finance has developed rapidly. As a result, gold no longer matches the attractiveness of younger investors and today’s trading media.
Thus, Bitcoin was born to compensate for the weakness of gold and developed to better adapt to today’s digital age. The first thought, however, was that Bitcoin should be an alternative to fiat currencies, with the advantage that Bitcoin is decentralized. However, the volatility and the initially low acceptance have made Bitcoin more of an investment than a currency. In addition, governments do not like competition to their monopoly position.
However, Bitcoin was quickly adopted by young people. The feature of limited supply has attracted many to compare with gold. In addition, Bitcoin is appreciated for the factor that it is not subject to manipulation, as it is not manipulated by paper Bitcoin from large financial institutions. Bitcoin is decentralized in the Blockchain ecosystem. This makes it an ideal investment for young investors who want to escape the financial system.
Moreover, Bitcoin is compatible with various online systems and accepted by some entities as a means of payment, which is a significant advantage over gold.
In terms of market capitalization, however, Bitcoin still has some catching up to do. Here, gold, with over $11 trillion, is far superior to Bitcoin with just over $1.2 trillion. Furthermore, gold has survived every crisis so far. This is exactly where Bitcoin still has to prove how far it can survive crises and increase its value at the same time.
With these factors in mind, we must continue to monitor the further development of Bitcoin. Many people, especially young people, believe in the value of Bitcoin, which is already one of the most important factors.