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Bitcoin is not the new gold, according to Goldman Sachs analysts who have released a report comparing the cryptocurrency outlook to that of the metal of Midas.
Bitcoin is not the new gold, according to Goldman Sachs analysts who have released a report comparing the cryptocurrency outlook to that of the metal of Midas.
"Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield," Goldman Sachs analysts Jeffrey Currie and Michael Hinds wrote in a recent report. "They are neither a historic accident or a relic. Looking at properties such as durability and intrinsic value, they are still relevant even with new materials discovered and new assets emerging, such as cryptocurrencies."
This year Bitcoin has been on a phenomenal rollercoaster ride. Last Friday Bitcoin hit a record high of $5,856. The total value of all Bitcoin in circulation has hit $97 billion, and Bitcoin has risen 480% year to date.
Gold has always been considered a safe haven asset, and recently Bitcoin has been exhibiting gold-like properties.
Bitcoin Is Similar to Gold
"Bitcoin has some very similar characteristics to gold," said Trevor Koverko, CEO of Polymath.
They're both safe haven assets, and with both, supply expands slowly and in a predictable fashion. Both are mined and require extensive resources.
"But Bitcoin's potential is much broader and exciting than gold," Koverko said. "In that sense, it is gold 2.0."
Goldman Sachs Stance on Bitcoin Is Still Unclear
Despite the recent comment from analysts, Goldman Sachs stance on Bitcoin is still unclear. There have been reports that the bank is now considering a trading operation that focuses on Bitcoin.
On October 3, Goldman Sachs CEO Lloyd Blankfein tweeted: "Still thinking about #Bitcoin. No conclusion - not endorsing/rejecting. Know that folks also were skeptical when paper money displaced gold."
Bitcoin Gold Is Scheduled on October 25
The crypto community has something to look forward to in the next few weeks. There will be a shock in the market as there are two hard forks scheduled -- one for Bitcoin Gold on October 25, then a second hard fork, Segwit2x or (BTC1), will occur around mid-November.
Nolan Bauerle, CoinDesk director of research, explained the Bitcoin-gold analogies in mining and limited supply have been made many times.
Bauerle says: "But being the 'new gold' requires much more than these two analogous qualities," he said. "Some other metals are rarer and more difficult to extract as it is. What makes gold, gold is its behavior as a store of value - its most important above ground form is held in bank vaults around the world. While Goldman might be correct about bitcoin vs. gold today, their analysis is without vision as to whether bitcoin's behavior can echo the rise of gold as a store of value."
Bauerle explained this quality of gold only came about after gold survived the rise of fiat paper money and the end of gold's use as a medium of exchange. "Bitcoin has fought to become an important store of value as it survived the rise of other cryptocurrencies based on Bitcoin's open-source -- free-to-copy -- code, forks, as well as a price crash in 2013," Bauerle added. "In this way, Bitcoin's survival and adaptability make the case for it to be an important store of value. Every day Bitcoin survives and rises, its story rhymes more and more with gold."
Yeah because Bitcoin is better.
In the future we could find an asteroid full of gold that we could mine but it is impossible to "find" more BTC.