The gold narrative is no longer going to be the same. With bitcoin taking over the world, people are starting to draw major comparisons with gold. In that process, we are seeing gold have more flaws than actual qualities. And the qualities or functionalities that gold carries seem to have declined over the last fifty years.
On the other hand, a digital cryptocurrency like bitcoin is solving some of the biggest financial problems in the world while providing a better alternative to hedge against inflation. We are already seeing signs of bitcoin being the best or next biggest ‘anti-fiat’ asset that will outpace every other asset class.
Even in terms of ‘store of value,’ gold does not provide you the tools required to protect the fruits of your labor and suffers from its flaws. With bitcoin, you do not have to worry about having large storage safe, and you don’t have to depend on banks.
So bitcoin is inevitably going to end up as the greatest store of value ever created, and it is going to overtake gold sooner or later. Some also believe the market cap of gold will go down in the future, and one of the main reasons could be millennial buying behavior. The younger generation is not interested in buying gold as a store of value or hedging against monetary inflation.
Most of us love to look at ROIs and data points to make sound investment decisions. Well, here is one for you. The table given below represents the return on investments on gold, bitcoin, and S&P 500 (just to compare). Also, this does not include the year-on-year inflation we are witnessing. If we take inflation into account, the value of gold went down by 14-15% in the last year.
The shocking part about gold’s decline is that it happened when the government started printing trillions of dollars and dropped interest rates to zero. At the same time, bitcoin faced some major challenges in miners, FUD, and other problems circling back to the pandemic. But it is still up by more than 250% (real-time).
Even some well-thought individuals in the financial space believe gold will overcome this inflationary period, but history says otherwise. In previous inflationary periods, gold has failed twice and soared during the 70s.
If we talk in terms of asset correlation with inflation, gold sits at 0.16 over the last fifty years. It means that gold never managed to properly go in unison with inflation rates for over a half-century. All of this combined only makes the bitcoin case stronger and stronger. The new generation is not interested in investing in gold. With more people adopting crypto, we will see bitcoin take over as the greatest safe haven asset on earth. We cannot definitively say it will be the future of money, but it is safe to assume it will overtake gold.
Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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