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Can Crypto Become The New Gold?


Cryptocurrency is yet to meet the standard of being a true currency, given the low rate of transactions taken for services outside the blockchain. This hasn’t prevented crypto from continuing to gain popularity, with CNBC reporting that a huge 13% of Americans traded digital coins in 2021. The real role of cryptocurrency is increasingly looking to be that of a store of value; an asset, in effect, that can retain and grow value over time outside of the volatility of normal stocks and shares market. The original player in this respect is, of course, gold, and analysts are questioning whether cryptocurrency can replace it.

The role of gold

Gold is an incredibly important asset even with the dollar no longer being tied to its value. Gold is used as the basis for a huge range of savings and investment accounts, including crucial retirement holdings such as those deploying the gold IRA rollover. Banks use golds as a huge store of value, according to Investopedia, and retain it in order to maintain their own solvency to debt ratio which enables them to continue lending and growing investments for their customers. It is a protection against risk, and retains a high value, despite dips throughout the year as other markets react and push against the value of gold.

Crypto as value store

The big banks are starting to look to crypto as a value store in a way that will overtake gold in the long-term. Reuters reported that one senior Goldman Sachs analyst, Zach Pandl, was predicting that 2022 would be the year in which cryptocurrency would fully overtake gold and become an important store of value. This is due to the inherent value in cryptocurrency, especially in the modern economy – in many ways, the value of digital coins is derived from the energy required to mine them, and that’s more relevant than the cost of gold in the current year.

Is cryptocurrency sustainable?

There are problems with designating cryptocurrency a store of value. Bitcoin and Ethereum have been marked with volatility; the former experiencing fluctuations in value of over $20,000 within 2021 alone. However, cryptocurrency is more versatile. It can be stored digitally, reducing physical imprints significantly, and even if converted to a non-networked wallet, it can be stored securely in vaults. However, as Bloomberg notes, gold is significantly less volatile and has the benefit of thousands of years of history behind it. After all, gold has been used as currency in Asia Minor and has had an impact on world economies ever since. It seems old fashioned, but the physical solidity and quality of gold makes it a long-term investment.

However, with big banks and other financial institutions driving crypto forward, change is on the horizon. Cryptocurrency has been a fixture of large-scale financial planning for some time, and that’s unlikely to change. While gold will remain in the vaults, it may be time to see the trickle of change move assets across.

Source: Plato Data Intelligence: PlatoData.io


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