• Bitcoin increasingly popular as a safe haven
• Correlation between bitcoin and gold is increasing
• Vitalik Buterin thinks gold is “incredibly impractical”
Crypto fans are now used to the fact that there can be major fluctuations in the crypto market. Nonetheless, crypto veteran Bitcoin has seen an impressive increase in value since its creation more than a decade ago. Even if quite a few investors doubt that Bitcoin will ever succeed in establishing itself as an actual payment alternative, the cyber currency has now built up a reputation on the market as digital gold. The digital currency benefits from the fact that the amount of bitcoins that can be mined is limited to 21 million coins.
advertising
Trade Bitcoin and other cryptos with leverage (long and short)
Bitcoin and other cryptocurrencies have recently corrected significantly. Trade cryptos such as Bitcoin or Ethereum with leverage at Germany’s No. 1 CFD provider and participate in rising and falling prices.
Increasing correlation between bitcoin and gold
The latest data from the Bloomberg news portal also show that the idea that the crypto currency, like the precious metal, could be used as a store of value, for example in times of crisis or inflation, is not entirely unreasonable. Bloomberg recently reported that the 40-day correlation between Bitcoin and the Philadelphia Gold and Silver Index (XAU) reached 0.5. In August, this was still zero. Bank of America experts Alkesh Shah and Andrew Moss take this as a sign that bitcoin is increasingly sought after as a safe haven: “A slowing positive correlation with SPX/QQQ and a rapidly rising correlation with XAU suggest that investors Bitcoin may be viewed as a relatively safe haven as macro uncertainty lingers and market bottom is yet to be seen,” Bloomberg quoted the two strategists as saying.
Why choose bitcoin over gold?
The question now remains which of the two stores of value investors should choose when looking for a safe haven. This question was recently discussed on the short message service Twitter. Twitter user Zach Weinersmith asked why investors who didn’t want to use centralized authorities for money wouldn’t just go for gold, prompting none other than Ethereum founder Vitalik Buterin to advocate cryptocurrencies as a store of value.
Gold is incredibly inconvenient. It’s difficult to use, particularly when transacting with untrusted parties. It doesn’t support safe storage options like multisig. At this point, gold has less adoption than crypto, so crypto is the better bet.
– vitalik.eth (@VitalikButerin) October 26, 2022
This is how the crypto mastermind argues that gold is “incredibly impractical.” It is difficult to use, especially when trading with other parties that are not trustworthy. In addition, it is difficult to keep gold safe. There would be no multisig procedure, as is the case with cryptocurrencies. Multisig wallets are digital purses that require at least two private keys to authorize a transaction. Also, gold would have even lower adoption than cryptocurrencies at this point, which is why digital currencies are ultimately the better choice, according to Buterin.
Editorial office finanzen.net
Image sources: REDPIXEL.PL / Shutterstock.com, Steve Heap / Shutterstock.com