Cryptocurrency enthusiasts think that Bitcoin has the potential to replace gold as the store of worth. However, as per analyst Kristoffer Inton with the independent investment research firm, Morningstar, Bitcoin and other cryptos will never comparable to replacing gold.
A Bold Claim that they can Make
This conclusion derives from Morningstar’s recently established framework which grades an asset’s “viability being a safe haven by taking care of liquidity, functional purpose, scarcity of supply, future demand certainty, and permanence.” When examined via this framework, the viewers concluded that cryptocurrencies in general are nowhere near challenging gold as a general “safe-haven asset class.”
In the post, Inton states that “If cryptocurrency were to displace gold’s investment case, the implications for gold prices is devastating.” He continues, “40% of gold demand corresponds to investment, so a shift in investment from gold to cryptocurrency will probably be seismic shock.” However, the analyst is pretty confident that type of occurrence isn’t feasible, at least for now.
While Bitcoin may not be in any state in order to change gold recently, it’s important to be aware that the leading digital asset has been around for the decade now. Gold, at the same time, has existed for millions if you’re not billions of years. Furthermore, while gold a great store of value, it’s rather inefficient as a unit of exchange.
Bitcoin, having said that, is a globally available asset class. The blockchain-based currency has a growing use case additionally, despite its current volatile state. Sure, Bitcoin has some limitations for right now, but if it effectively improves on its scalability and accessibility issues, natural meats very well see digital assets replace gold along with traditional investment opportunities.