Can Bitcoin Take Over Gold as Store of Value?

By Prashant Jha

Whenever a crypto enthusiast or a Bitcoin enthusiast talks about the Bitcoin phenomenon there are certain parallels in the story. The biggest common factor in all these Bitcoin fairy tales is Gold bashing, or pointing out how Bitcoin, with its current progress rate, can not only surpass the Gold as a store value but also come out as the one-sided winner.

So, the obvious question, can Bitcoin take over Gold as a store of value? Well, that depends on which side of the spectrum you belong to, if you are a Bitcoin bull, for sure it can surpass the Gold as a store of value, and if you are a nocoiner and naysayer you might have your criticism and pessimism whether  Bitcoin has the potential to surpass the $8 trillion economy.

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Gold Store Value Vs Bitcoin Current Market Capitalization

Gold is the traditional store of value which has been the option for centuries and currently has a total valuation of $8trillion. The valuation of Gold comes from its limited supply and the scarcity is a driving force in taking its prices up.

On the other hand, Bitcoin which has a comparatively shorter life span of just 10 years has seen many ups & downs. Currently, the market cap of Bitcoin stands at $6 billion despite losing 80% of the total market cap to the bearish trends throughout 2018. However, the rate at which Bitcoin has risen over the years and peaked a price of around $20k in December 2017 many believe that it has the potential to surpass gold.

The December 2017 prices rise was the turning point for Bitcoin and the whole community behind it. The price rise boosted the morals of crypto investors and analysts so much that they started projecting it as the digital equivalent of gold.

Despite the bearish trends of 2018, which saw many price predictions for Bitcoin come crashing down, the optimism was not affected as there are still plenty of crypto believers who see the new technology breaking all trade market charts in a decade worth of time.

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What Can Propel Bitcoin To Dethrone Gold as the Most valuable store of Value

The reason for gold to be the world’s most valued store of value is its physical limited supply and the scarcity and inflation which help it climb the market charts.

The same holds true for Bitcoin as well, apart from the fact that it has no physical real-world entity backing it. However, that should not be a major disruptive force in the long run.

Bitcoin has a finite supply of 21 million BTC tokens out of which 80% has been already mined and the rest 20% is supposed to get mine by 2140. The recent longest bearish market has also made many institutional Wall Street investors rethink their restraint towards the cryptocurrency.

JP Morgan one of the biggest financial institutions and a critique of the price volatility of Bitcoins have started to see the good in the digital asset. Recently one of the analysts from the firm has gone public with his views. The analyst believes that the recent rally of prices around the $3,400 market is a clear sign that Bitcoin’s early bust and rinse cycle are nearing to an end, which might bring the price volatility.

He also said that this could attract more institutional investors into the crypto space as the coins have shed its Bubble like behaviour.

Now the limited supply factor might kick in like 80% of the coins have been already mined and the prices might touch new heights with the foray of institutional investors.

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Conclusion

The reason that many people see Bitcoin as a potential replacement to Gold as a traditional store of value is because of the fact that the relatively new technology has gained a lot in its short-term life period.

Thus, analysts are quick to point out that as we move forward and a few technical roadblocks like scalability issue, transaction time, transaction fee, etc., will get sorted out in a couple of years time. And with regulators finally coming around in creating a secure reform policy, the market prices will skyrocket to reach new heights. Thus, replacing gold as a potential store of value will become a reality rather than an assumption.

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Prashant Jha

As a content writer Prashant believes in presenting complex topics in simple laymen terms. He is a tech enthusiast and an avid reader.

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