It has recently come to notice that the creator of one of the most popular digital money service, Bitcoin, has recently patterned its new, digital creation after the most wanted and the most important value of currencies and that is gold. And with this patterning, debates are going on whether Bitcoin will soon replace the amount of gold or not.
Goldman Sachs’ Still Remains Loyal To Gold
Goldman Sachs’ Mikhail Sprogis, Michael Hinds and Jeffrey Currie urge that the recent analysis done on the volatility of bitcoin’s “exchange rate imply that the merchants are accepting the term of Bitcoin (who specifically don’t want to be associated with Bitcoin themselves) should be demanding a greater volatility limit to evade” against the assumed risk involved in accepting the most popular cryptocurrency in the world.
The report which was titled Fear and Wealth stressed on to show a premium that is not enough for the officials of Goldman Sachs’, especially Mr. Hinds, who had to say a few things about the premium. He found the premium to be extremely prohibitive. He also went on to mention Bitcoin as an unfavorable medium of exchange as it first appeared. And the volatility for bitcoin stands at least six times more than the gold.
The report from Goldman’s examines the four fundamentals that are supposed to put a value on the currency. The first one being the durability, the report illustrates that bitcoin is always susceptible to hacks in the private as well as institutional network. The second factor is the portability. Bitcoin can be moved undetectably and gold, due to its massive weight is in constant need for various security measures.
The third fundamental is the intrinsic value of a particular mode. And the gold wins here again as there are many alternates to the cryptocurrency. The fourth fundamental is the unit of account which makes gold a winning counterpart. So clearly, gold wins by significant points here.
The Metcalf Future Of Bitcoin
While most people are interested in this new digital form of money, several others are not too keen on the use of Bitcoin. They prefer the traditional methods and not bitcoin for performing transaction, at least not at the moment.
The bitcoin genius Tom Lee recently explained a little bit more on the new Metcalf rule in an interview with The Bit, where the topic of the conversation was “Bitcoin vs. Gold.’
Also called the network effect, this particular law is to help people understand the importance of Facebook and Google and to know about their increases in the value of utility, respectively. He explained bitcoin as a storehouse of value because it is the perfect example of a personal, encrypted database that cannot and has not been hacked for many years.
Mr. Lee called bitcoin ‘the way to store value.’ Questioning the authority of gold for the past couple of years, bitcoin certainly is making way to be the new store of value in the recent times.
With such fierce competition going on, there might be some chances that bitcoin will be overtaking the place of gold. However, it might also happen both bitcoin and gold will be used equally by the investors, and the debate might go on for a very long time.