Topic: [2017-10-12] Why Can’t Gold Keep Up with Bitcoin? (Read 244 times)

It all changes. Long ago bronze was also an expensive metal, used for making coins and so was copper. Nowadays we aren't using bronze plated jewelry, we aren't making coins from it, it became forgotten. Gold is valuable only because it's still being used to make jewelry and electronics, but it's already being pushed by other metals that are better, more valuable and more durable like platinum and titanium. We never know if it will retain its value, especially that it's no longer being used as a currency.

Huh?

Gold has been around since the dawn of time. People give it value, it isn't capable of establishing anything because it's just a piece of shiny metal. If it wasn't shiny, it would be considered worthless.

It is actually Bitcoin which has to catch up with gold, in terms of value. Gold has been around for thousands of years and has established itself as a store of value. Bitcoin is catching up with gold, not ahead of gold.

Gold only has one use as a store of value. You can't buy anything with gold directly but instead are forced to exchange it to fiat and then again to the goods of your choice. Bitcoin can be used in stores which makes it superior to gold. Also, we know exactly how many Bitcoins there'll be. With Gold you can only estimate.

Gold has for hundreds of years been a safe haven of steady growth investment, due to its stability and attachment to geopolitical events. Through the years, and changes in monetary policies, even the inflation of currencies, gold has remained steady.

However, there’s a new kid on the block when it comes to a store of wealth, especially one that is unmatched by any centralized authority. Bitcoin has been ruling the roost when it comes to asset growth that is similar to gold.

Rising VIX
Whenever there is global turmoil or geopolitical fears take center stage, an asset like gold is the first to rise, as people appreciate that it is not tied to any of the goings on. Along with gold price, the VIX index also rises.

The VIX measures volatility and is also known as the fear index. It’s relationship with gold still exists, but there is a much stronger correlation with Bitcoin as the digital currency benefits far more from global turmoil.

Since May 1, we have had four noticeable increases in volatility.  Bitcoin responded much more acutely than gold did to each of those rises.  Now, almost six months later, Bitcoin is up over 15.5 percent while gold is only up 1.6 percent.

Why is new Bitcoin beating mature gold?

There are a few things to ponder as to why gold, as a mature asset, is losing its battle as a safe store of wealth when things go wrong. It has never let anyone down, yet Bitcoin, still very new and unprecedented, is streaks ahead in this race.

It could be that it is simply that much more accessible. People have a much easier time acquiring Bitcoin, as well as the types of people buying Bitcoin probably would not know where to even start buying Gold.

Cryptocurrencies are also not burdened by borders or of course physical locality, thus they again are that much more accessible. Being entirely digital, there is none of the hassle that comes with a physical store of wealth.

Additionally, while Gold has stood the test of time, and has not had much revolutionary competition, there’s a feeling that digital currencies are here to take its place, rather than to live alongside it.

Adoption
However, one of the key reasons for cryptocurrency leading the race against gold is that its adoption is spreading like wildfire. Gold has built its market and essentially stagnated on it, while the Bitcoin hype train keeps steaming on.

Those who want to own gold already own it, thus limiting new flows, while Bitcoin is still a nascent 'product' to be used as a potential hedge and an exciting and accessible asset.

Why gold can't keep up with Bitcoin


More wealth, and a vast array of wealth, can access Bitcoin
Bitcoin is not burdened by borders and physical location
Bitcoin could undermine gold as a direct competitor
Much more adoption of Bitcoin
Those who want to own gold, already do, its flow is limited
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Source https://cointelegraph.com/news/why-cant-gold-keep-up-with-bitcoin