There is a long going debate on whether Bitcoin is superior to Gold. And we have not come to any conclusion till now. Many people have their own views on the topic and their understanding to back their views. One such famous personality is Peter Schiff, a long bull on Gold and has often bashed people comparing Bitcoin with the metal. On the other hand, the Federal Reserve Chairman said, “Bitcoin is a substitute for Gold”. He also pointed out that Bitcoin is a speculative asset, and its volatility prevents it from being a replacement to the dollar.
Federal Reserve Chairman, "Bitcoin is a substitute for gold" pic.twitter.com/tiiduHVK2D
— Documenting Bitcoin 📄 (@DocumentingBTC) March 22, 2021
Just a few days back, I wrote an article when the price of Bitcoin was at $58,700. And at this price, it made 1 Bitcoin more valuable than 1 Kg of gold. Does that mean that the cryptocurreny is on the path of becoming a replacement to gold? Probably yes. Just like Bitcoin, Gold also has perceived value. Due to its limited nature and its properties to make jewelry, it is seen as a valuable metal but has no value.
Many would argue that Gold is a metal and has real value but to counter that, I would say that even that value is perceived. In the earlier days, Gold was considered inferior to silver, and that has changed now. So, in that way, Bitcoin could be considered inferior to Gold because of a lower market cap. But that might change in the future as its market cap grows.
Another important thing that makes Bitcoin a great replacement for gold is practicality. It is known that Bitcoin can be easily stored in wallets and very soon will also be used as a payment method. But for Gold, it doesn’t do much except for storage or being used to make jewelry. That is why in my opinion, Bitcoin is a substitute for Gold, and I completely agree with the Federal Reserve Chairman.
The volatility problem
Even though major companies are investing in Bitcoin and the world is slowly starting to accept cryptocurrency, the volatility of Bitcoin hasn’t dropped. One of the major reasons for this is illiquidity. Due to the nature of Bitcoin and its limited nature, even small transactions can result in huge price swings. And this volatility has also made it a non-combatant to the Dollar. With such kind of volatility, it will be impractical to use it as a transaction medium. And those who think this will change with time, it probably won’t, as said by Deutsche bank.
In fact, just like Gold, Bitcoin will be a store of value for investors and with time it could help them increase or at least preserve the value of their money.
Do you think that Bitcoin is a substitute for Gold? And is it smarter to invest in Bitcoin rather than Gold at this point 0f time? Let us know in the comments below. Also, if you found our content informative do like it and share it with your friends.
Also Read: Bitcoin drops below $54k: Tough times ahead!