2020 saw one of the sharpest declines and rebound of the money markets, more notably in the cryptocurrency platforms. With the pandemic in full force, it was not surprising at all given that governments and the bodies poured out enormous amounts in initiatives, stimulus and such.
An exact replacement for gold?
When an asset’s price changes and fluctuates the way BTC has been in the last 2 years, one could be forgiven to think that it could be the new gold. And for centuries now, gold has been the go-to asset for wealth storage. Properties, bonds and other investment engines meanwhile have had their days in the sun too but nothing has quite come close to the performance of cryptocurrencies and Bitcoin in particular. BTC’s price went up massively in 2020 alone which pushed the other cryptos in the process.
Why is BTC such a big deal now?
BTC has been a big deal for many years before this but it was during the COVID-19 pandemic that it began to take center stage. From outlawed to driving institutions to sit up and take notice, the reluctance has since been taken over by acceptance and this is mostly due to the huge price surge. Investors now range from large hedge fund managers to people from ordinary households. If such a pattern is to be followed, isn’t this following the same way that gold has been?
Is it wise to use BTC to store wealth?
The earliest transaction was a 10,000 BTC payment for pizza and if that person had kept them until today, he would have been a billionaire. Hence, the big question is whether to keep BTC as storage or to use it for transactions which have been growing in popularity these days. At the rate this is going, it won’t be long before BTC becomes more widely accepted as announced by Tesla that they will be accepting BTC. Besides that:
- Paypal and Square have reportedly looked into accepting crypto for payment and investment.
- Twitter was looking into whether it could hold BTC in its accounts.
Where does gold stand today?
Gold has been used for thousands of years now, withstanding the many events of history before the US Dollar became the global standard for currency with other currencies’ prices influenced by it. In the meantime, gold has been the basis of the value of US dollar when it was pegged at one point. To date, gold has always been the ultimate storage for wealth. This could possibly be due to the fact that it is rare and carries value.
How is crypto challenging gold?
To say the least, the nature of Bitcoin resembles very much gold.
- BTC is rare as it will only have a maximum of 21 million tokens although it would only be 2140 before the last coin is minted.
- BTC is virtual which is a big difference from gold. For those who owned BTC earlier, they would have become rich by now, similar to how gold was before.
- Gold price peaked in August 2021 and has since been declining. From the way things have been going on, it looks as if BTC could well replace gold in the future although it has yet to do so. It is, after all, a safer option for transactions on the internet and this is an ever-growing scenario.
