Skip to main content

Bitcoin: digital gold or not?

 


The fact that Bitcoin is digital gold 2.0 is one of the classic crypto narratives. In fact, over the past few months, the correlation between Bitcoin and gold has increased, giving new impetus to the narrative. Especially now that currencies like the British pound are experiencing ups and downs, there is an increasing demand for digital currencies like Bitcoin . But is Bitcoin a store of value?


"But apart from their function as a store of value, Bitcoin and gold have less in common than is often assumed at second glance."

In theory, there are many similarities between bitcoin and gold. Stock-to-flow models state that the growth in Bitcoin is similar to the growth, i.e. the production, in gold. Both are only available in limited quantities, both are untraceable and there is no state influence on the price development of either.

Beyond these theoretical similarities, however, practice shows that the Bitcoin price behaves completely differently than the gold price. Aside from the general volatility , albeit a recent drop, Bitcoin and other cryptocurrencies are more like tech stocks. Because unlike gold, the price of bitcoin reacts almost identically to macroeconomic impulses such as such risky assets.


The correlation between gold and bitcoin that can currently be observed should therefore be regarded as more of a coincidence. The gold price suffers from the strong dollar. According to the pure theory, the macroeconomic data should ensure a rising price of gold: inflation, recession, war, actually signs of crisis that caused the price of gold to rise historically.


“But the strong US dollar counteracts these factors”

Bitcoin has been more stable than the tech stock market in recent weeks and is constantly fluctuating around the 20,000 euro mark. "It is questionable whether a weaker US dollar would have the same effect as on the price of gold," says Giesen.


Bitcoin as a store of value - but in different contexts than gold

Irrespective of this, it can be said that Bitcoin is used as a store of value.


"However, it behaves differently than gold and is also used in other contexts"


Gold derives its underlying value from a rarity and the opposing demand as a precious metal, which is required in many different industrial and commercial use cases: from the luxury to the aerospace industry.


"Gold owes its importance as a store of value to these use cases, which have been known for thousands of years," says Giesen. "However, gold has the disadvantage that it is difficult to transfer."


Bitcoin draws its base value from its real value as a means of payment and alternative currency wherever state payment systems and currencies do not work or should be circumvented. There is also an ideal value that results from the founding myth as money independent of the state.


"This can also be found in part in the real use cases".


"In these use cases, Bitcoin has the classic money functions: store of value, medium of exchange, unit of account."


Bitcoin benefits from its excellent portability and non-traceability.


"The latter he shares with gold, through the former he is far superior to gold in these use cases"


says Giesen. Seen in this way, gold and bitcoin are stores of value for different use cases – gold more for macroeconomic crises, bitcoin more for crises in the monetary system, in which other monetary properties are required in addition to the store of value that gold does not possess. The value storage character of gold and bitcoin makes both interesting for investors who use them to diversify their investment portfolios - albeit in different directions.


"That's why Bitcoin isn't and won't be digital gold"


like Giesen. Its price will rise and fall for different reasons than the price of gold, even if these reasons should partly exist in parallel and temporary correlations arise. The current synchronization is therefore rather coincidental.

My Top Picks
Honeygain - Passive earner that pays in BTC or PayPal
MandalaExchange -The Best no KYC crypto Exchange! 
BetFury - Play And Earn BFG for daily Bitcoin and ETH dividends!
Pipeflare - Faucet that pays in ZCash and Matic, Games pay in DAI
Womplay - Mobile dApp gaming platform that rewards in EOS and Bitcoin
Cointiply - The #1 Crypto Earning Site
Torum - Join the latest Social Network and earn TRM for Free! 
LiteCoinPay - The #1 FaucetPay earner for Litecoin 
LBRY/Odysee - YouTube Alternative that lets you earn Money by viewing videos!
FaucetPay - The #1 Microwallet Platform
FREEBTC - The #1 FaucetPay earner for Satoshi's
FaucetCrypto - An earning/faucet site that pays out instantly
FireFaucet - An earning site that pays better for some than Cointiply
DogeFaucet - Dogecoin Faucet
xFaucet - BTC, ETH, LTC, Doge, Dash, Tron, DGB, BCH, BNB, ZEC, FEY - Claim every 5 minutes
Konstantinova - BTC, ETH, LTC, Doge, Dash, Tron, DGB, BNB, ZEC, USDT, FEY, 25 Claims Daily

Comments

Post a Comment

Popular posts from this blog

From offchain to offchain: Statechains meets Lightning

  Without a doubt, the most significant off-chain Bitcoin solution is the Lightning network. But in its wake, the statechain has emerged as an intriguing replacement. There is currently a proposal to link the two offchain networks. From an ocean, for example, you can see sunbeams glistening in the water, waves rippling, and possibly a jellyfish drifting toward the light. But you only see a small portion of it. The distance from the sea's surface to its bottom is hundreds of meters. It has dozens of different fish species swimming in it, crabs and starfish crawling on the bottom, shells clinging to rocks, and sea plants climbing up. A completely new world starts where your gaze diverges. You can picture a blockchain like Bitcoin, just like the sea. What you see on the outside is only a small portion of what is actually there; the set of UTXOs (coins) and transaction history that full nodes store are just the beginning of a much larger world. It's the plan, at least. With Bitcoin...
Post a Comment
Read more

Phishing attack on popular crypto sites tries to empty wallets

  Several major crypto sites such as Etherscan, CoinGecko, DeFi Pulse, and others report malicious pop-ups scammers use to try to trick users into connecting their MetaMask wallets. The phishing attack came from a domain displaying the Bored Ape Yacht Club (BAYC) logo. "We are investigating the root cause of this attack to fix the threat as soon as possible," CoinGecko founder Bobby Ong tweeted. The phishing attack appears to have been triggered by a malicious ad script from Coinzilla, a crypto ad network, according to CoinGecko. Etherscan also advises its users not to confirm any transactions that may appear on the website. The attackers attempted to use the hype around the “bored monkeys” non-fungible tokens (NFT) to gain access to the cryptocurrencies of unsuspecting website visitors. Although the websites affected by the scam attempt have reacted in the last few hours and deactivated the advertising pop-up, it is still recommended not to connect your MetaMask wallet to ne...
Post a Comment
Read more

Bored Ape Yacht Club NFTs stolen through phishing on Instagram

  Bored Ape Yacht Club ( BAYC ) developers announced on Monday that hackers have hijacked the official Instagram page of the popular NFT collection and posted links to a fake airdrop. Crypto enthusiasts who connected their MetaMask wallet to the rogue website subsequently had their Ape NFTs stolen. Apparently, the attack was planned to coincide with the one-year anniversary of the BAYC collection. This increased the "perceived credibility" of the phishing link. About 100 NFTs are said to have been stolen in the phishing attack . According to CoinGecko data , the minimum price for a BAYC NFT is 139 Ether ( ETH ) or $400,726. So if reports are correct, over $40 million worth of NFTs were stolen in the attack. These numbers are only the lowest estimate, however, as they are based on the lowest price.  At the time of writing, it was still unclear how the hackers gained access to BAYC's official Instagram account. Social media users have pointed out the importance of two-fact...
Post a Comment
Read more