Tags: bitcoin | gold | investors

Why Bitcoin Might Just Be the New Gold

Why Bitcoin Might Just Be the New Gold
(Dreamstime/Jan-Lievenss)

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Sunday, 25 August 2019 11:16 PM Current | Bio | Archive

ryptocurrencies have always looked like a unique class of asset. Untethered from central banks, they can’t be moved by the whim of the Fed.

As international currencies, they’re not tied to a single economy. In theory, their value should be dictated by nothing more than the demand for their use as a way to exchange value.

Recently, however, they seem to have found a new use. According to a report from Digital Assets Data, the last three months have seen Bitcoin acting in tandem with gold.

While the stock market has stumbled, gold has risen. That’s to be expected: gold might once been a form of currency but it has also has long acted as a safe haven at times of financial instability, a place to keep money when everything else is high risk. But recently Bitcoin has shadowed gold’s movements. The changes in the value of the digital coin have correlated with gold’s changes in value, and have shown an inverse correlation with the stock market.

As MarketWatch pointed out, the correlation may be statistically significant. But it does appear to show that investors are starting to see Bitcoin as a place to put their money when they lose faith in the stock market, just like gold.

“The findings tend to signal that Bitcoin is starting to behave more like a store of value and is potentially being used as a safe-haven asset during global uncertainty in traditional markets,” said Ryan Alfred, president of Digital Assets Data.

Bitcoin has been around for a decade now. The blockchain technology that underpins it is being used by companies as big as Walmart and FedEx. Investors are increasingly realizing that while Bitcoin may be volatile, it’s not going anywhere and it can hold value over the long term. At a time when the US-China trade war shows no sign of being resolved, an asset that’s separate from the usual financial influences looks like a safe place to store value. Bitcoin’s recent gold-like moves are a sign that investors are showing increasing faith in the digital currency’s long-term future.

That’s likely to have a couple of consequences for businesses and business owners. The first is that just as the price of gold falls when the stock market rises so the price of Bitcoin may also fall when traditional markets start to look more stable. The trade war won’t last forever and when it ends, Bitcoin will appear to be a less attractive place to keep funds.

The second consequence though is that Bitcoin may not fall as fast as gold. Unlike gold, Bitcoin is easy to transfer. It’s also new and unfamiliar but once investors have become used to buying and selling Bitcoin on Internet exchanges, storing them in wallets, and tracking the price changes, they may well find that it’s not a currency they need to fear. They may also start to see it not just as a safe haven, but as a genuine currency that they can use to buy and sell goods.

The stock market’s recent volatility might well have turned Bitcoin into a new gold—but it could also end up giving it gold’s more ancient use too.

Joel Comm is New York Times best-selling author, blockchain enthusiast, professional keynote speaker, social media marketing strategist, live video expert, technologist, brand influencer, futurist and eternal 12-year old. His latest project is as co-host of The Bad Crypto Podcast, a top cryptocurrency show making the future of digital payments easy to understand.

 

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Cryptocurrencies have always looked like a unique class of asset. Untethered from central banks, they can't be moved by the whim of the Fed.
bitcoin, gold, investors
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2019-16-25
Sunday, 25 August 2019 11:16 PM
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