It is estimated that Gold might have been in use as an acceptable medium of exchange in Africa circa 1500 B.C. The use of Gold as a store value in international trade is both prolific and winded, culminating in the establishment of the Gold standard in 1945. It has therefore taken thousands of years for humanity to accept Gold as premier money. Now, Bitcoin enthusiasts believe it will take less than a quarter of a century for Bitcoin to achieve the same feat.
Strategic Intelligence’s Jim Rickards, though, begs to differ. Jim, author of Currency Wars: The Making of the Next Global Crisis is a Bitcoin bear. While a Gold ounce today changes hand at around $1,286, Jim believes that Gold has the $10,000 an ounce potential. He nonetheless says take a swipe at Bitcoin saying it is a Bubble:
“It’s clearly a bubble — it looks like the second biggest bubble in history after tulip mania. Although at the rate it’s going it will pass tulip mania, you know, in a matter of days….name your bubble, it’s bigger than all of them.”
Jim is not in denial but is opposed to its price action. He blames the asset’s fantastic price, even after last year’s drop on, fraudulent trade activities. Similarly, like most skeptics he believes that BTC traders are “painting the tape“; trading BTC back and forth in a ramp to increase its price through manipulative activities like wash trading. He goes on saying that Bitcoin could survive a financial crisis thanks to its supposed ill-gotten value.
Why Bitcoin Will be Premier Money in 25 Years
Even so, most Bitcoin believers associate Bitcoin’s prized value to the coin’s fantastic programming. They love what the token stands for, though those two reasons really cannot dictate BTC’s worth. However, if you combine its marvel architecture, its utility and scarcity values, the pioneer digital asset is straight up, new age Gold.
Economics says that value is a product of utility and scarcity. Bitcoin has a 21 million coin cap meaning that unlike Gold, there’s not going to be a Gold rush, albeit a digital one. There are similarly no hidden treasure troves of BTC awaiting discovery that could cause an influx and crash in price.
Tom Lee, Fundstrat Global Advisors head of research opines that “There are potentially millions of times more Gold underground than actually has been extracted.”Gold is actually becoming easier to mine, thank to technological advances.
Then again, Bitcoin is increasingly becoming market accepted, and supply-demand dynamics is therefore dictating its price. Supports further believe that its pillars of decentralization, security, immutability, divisibility, and its open-source nature. When Satoshi stepped away from it, he allowed the masses to own it. While BTC’s value is not intrinsic, neither is paper money’s or Gold’s. The value currencies have is given to them by their users.
As more businesses like Amazon, Netflix, Facebook or Google rake in billions from digital trust, it, therefore, should be natural that currencies too could evolve and go digital as well. Cryptocurrencies, consequently, could entirely replace Gold.
Bitcoin’s inherent advantages make it most poised to replace Gold in its entirety. Are 25 years too short a time for this change to take place? Maybe not, it’s only taken ten years for crypto to make the vast waves it is making in the financial world.