Is BITCOIN the New GOLD? | Behind the Cryptocurrency Phenomenon | ENDEVR Explains

It seems like the sky is the limit when it comes 
to Bitcoin. The cryptocurrency reached milestone   after milestone in the last year and looks like it 
is finally leaving the fringes of the tech-savvy   young public to conquer the financial market. Many 
young investors are starting to consider Bitcoin   and other crypto coins as real alternatives to 
Gold, the oldest safe-haven investment in the   world. But does it make sense to treat them as an 
alternative to good old Gold? Let’s take a look. It has been a hell of a ride for bitcoin 
owners. After so many records and high-profile   investments, it looks like cryptocurrency 
is finally breaking into the mainstream.   In October 2020, a team of analysts at the J.P. 
Morgan Global Markets Strategy group touted   Bitcoin as a gold alternative for millennials. 
It predicted that prices could double or triple   if the trend continued. It was a Friday, October 
23rd. That day, Bitcoin was being sold for 13.1   thousand dollars.

The J.P Morgan 
analysts` prediction was a turning   point for the bank. Only two years earlier 
the bank’s CEO called Bitcoin a fraud   and that he would fire anyone trading it for 
being stupid. Fast forward and here we are,   hearing from the analysts of the legendary bank 
that investing in Bitcoin was not that stupid. Looking at the development of bitcoin since then, 
JP Morgan´s analysts prediction turned out to be   conservative. Bitcoin would double in price in two 
months, triple in January 2021 and by February,   after Elon Musk announced that Tesla 
invested $1.5 Billion in Bitcoin   and was planning to accept it as a form of 
payment, the cryptocurrency just skyrocketed. But the good momentum was not only a result of 
a JPMorgan change of heart or Musks endorsement.   Crypto is slowly being accepted as 
a legit investment.

Besides Musk,   other investors and CEOs are also betting on it. In 2020, Paul Tudor Jones, a well-known Wall 
Street hedge fund manager, said he invested almost   2 percent of his portfolio in Bitcoin. Larry Fink 
of BlackRock, the world’s largest asset manager,   said in December that bitcoin 
could become a “global market”. MicroStrategy, an American software company, 
announced in December 2020 that it bought 650   million dollars in bitcoin, totaling more than one 
billion dollars invested in the cryptocurrency.   Square, a financial payment company led 
by Twitter CEO Jack Dorsey, announced   in October that it was putting 50 million 
dollars of its corporate cash into Bitcoin.   PayPal also followed the trend and 
announced that it would allow people   to buy and hold Bitcoin as well 
as a few other cryptocurrencies.

There are endless examples of high-profile 
investors and companies pivoting in the Bitcoin   direction. To complete the wave of good news, 
the Office of the Comptroller of the Currency,   an American regulator, said 
in July 2020 that banks would   be allowed to hold cryptocurrencies for customers. With so many milestones being achieved, some 
buyers are now treating the cryptocurrency   somewhat like gold. Billionaire Mark Cuban, for 
example, although not an enthusiast, declared in   December 2020 that Bitcoin is investable and “a 
store of value like gold that is more religious   than a solution to any problem”.

Instead of 
trading in and out, investors are leaving their   money on it. Similar to gold, bitcoin became a 
way of keeping investments out of governments'   influence and the traditional financial market 
[13]. But can we compare Bitcoin to gold? To   answer this question, we need to understand both 
the differences and similarities between them. The biggest similarity is that 
both are finite resources.   While gold is a mineral that is mined around the 
world, Bitcoins (or any other cryptocurrency)   are also produced by a process that is 
known as “mining”, but on the internet. Gold production totaled 3,531 tonnes in 2019, 1% 
less than the year before.

And although there is   no way to be sure, some estimates indicate 
that there is only about 20% of the total   amount of gold in the world still to be mined. 
Meanwhile, as of February 8th, there are 18,6   million bitcoins with the numbers changing every 
ten minutes, when new blocks are mined. Each new   block adds 6.25 coins into circulation. In total, 
only 21 million tokens will ever be created.   This means that more than 88% of available 
Bitcoin in the world has already been mined.   And we are fast approaching the finish line.

Another similarity resides in the fact 
that both gold and Bitcoin are assets that   have little or no correlation with other 
stocks or currencies. Monetary policies,   central banks or governments cannot 
directly control their value,   even if indirectly their action can have an 
impact on it. What matters to define prices   is supply and demand. On top of that, neither 
Bitcoin nor Gold, pay interest or dividends. But while they share these common characteristics, 
one big thing differentiates these investments:   gold has an actual, physical value attached to 
it. Gold is valuable because of its historical,   commercial and cultural use as well as its 
anti-corrosive and conductive properties.   Bitcoin? Well, the enthusiasts might think this 
is not true, but scarcity in itself does not give   a thing value. Bitcoin’s value comes mainly 
from the expectation of the future and the   belief that eventually its use will be accepted 
and widespread, therefore increasing its cost. Fact is: Bitcoin is still a speculative asset in 
a largely unregulated market.

And using Bitcoin as   cash is not yet a natural process. People do not 
have the confidence undertaking large transactions   in bitcoin. Crypto in general is still far too 
inefficient to be of much use for making payments.   For example, Bitcoin is capable of processing 
fewer than ten transactions per second. For every crisis or turbulence, investors 
know that traditional investments like   government bonds will not bring the 
expected results and pivot to gold.   They search for a real asset that cannot 
lose its value by relentless supply of money.   This is not yet the case with bitcoin. 
Its price is much more volatile and has   recently moved with the stock market, which 
is different from a supposed haven like gold. On top of that, the cryptocurrency trade is 
a market where fraud and theft are rampant.   Crimes such as selling drugs online have been 
facilitated. And there were cases of even   terrorists using crypto. People have used tokens 
to bypass laws and capital controls. Countries   like North Korea, Venezuela and Iran have 
also used the cryptocurrency to evade American   sanctions. The Security Exchange Commission has 
sued blockchain payments company Ripple, accusing   them of selling unregistered securities after the 
company sold the cryptocurrency XRP to investors.

Owners of BitMEX, the world’s largest 
cryptocurrency trading exchange,   are facing criminal charges for 
allegedly using laundered money   and allowing other illegal transactions. 
Janet Yellen, US secretary of Treasure,   said that cryptocurrencies used for illicit 
purposes are a growing problem in the world. Some investors still aren’t sure about what to do 
with the new phenomenon. As Mark Cuban summarized:   “A banana has more utility, potassium is a 
valuable nutrient to every person on the planet,   but as long as people accept bitcoin as a 
digital version of gold, it's investable”.

To invest in bitcoin, one needs to believe in 
the value of it. To be honest, this is also   true for other investments as well. But when it 
comes to stocks and bonds, for example, there   are legitimate mathematical models to determine 
their value. Stocks produce earnings and bonds   produce income. This is what determines their 
value. The same cannot be said about bitcoin. It’s still an unanswered question of how a 
modern asset like crypto will fit into legal   structures dating back a century and how it 
can turn into a real safe haven. The progress   witnessed in the last years makes it easy to 
believe that these financial structures will   eventually adapt to the new model and crypto 
will be broadly accepted and easy to deal with.   And maybe even becoming a safe haven investment. However, there is no guarantee that will happen.   Until then, comparing crypto and gold still seems 
like a matter of faith more than anything else.

So that’s it for this video. We hope 
you enjoyed learning more about the   differences and similarities between gold 
and bitcoin. Since you made it to the end,   click around and keep watching. We hope you 
liked our video and subscribed to our channel..

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