NaMaidani NaMaidani
Blog 28, Oct

Is Bitcoin Digital Gold?

Gold may not be in use as a mode of exchange money but carries immense value and is considered a trusted instrument when it comes to parking your money
In a recent interview, billionaire Ray Dalio said that Bitcoin, the world's biggest and oldest cryptocurrency, is like "digital gold". His skepticism about cryptocurrencies is well known, but Dalio has admitted that he owns an undisclosed amount of Bitcoin — just to diversify his portfolio. The founder of Bridgewater Associates further says that if somebody put a to his head, and said he could only have one, “I would choose gold”. While Dalio is clear about what he'd choose, several others continue to look at cryptocurrencies, including Bitcoin, critically. This, despite the digital currency market witnessing an unprecedented boom in the last year.
And, therefore, the question arises if Bitcoin is really digital gold or just a passing fancy?
As bitcoin continues to show remarkable resilience amid an intensified clampdown in China, Deutsche Bank has updated its research material on the cryptocurrency market by drawing parallels not only between bitcoin and gold, but also Ethereum and silver.
Marion Laboure, senior economist and market strategist at Deutsche Bank, made the comparisons on a new research page outlining her perspective on the world’s two most valuable digital currencies.
“History shows that humans had always a strong willingness to store their money in an asset which is different from the day-to-day working arrangements of governments and authorities,” she said in response to a question about safe-haven assets, which have a limited supply on the planet and therefore cannot have their value manipulated by central banks.
“Until recently, gold has been this primary asset. So I could envision bitcoin to be a kind of digital gold where people can store their value as well.”
This isn't the first time that a major investment bank has drawn an analogy between the world’s leading cryptocurrency and the world’s most valuable precious metal. In January, J.P. Morgan strategists opined that “bitcoin’s competition with gold has already started” and that millennials are likely to trigger a “crowding out of gold” owing to their preference for digital assets.
However, financial institutions have largely avoided making the same comparison between Ethereum and silver.
The world’s second largest cryptocurrency has a market cap roughly half the size of bitcoin’s, but is favored by some in the industry owing to its adoption of smart contracts – automated scripts of code that improve the functionality of a blockchain.
Broaching that subject, Laboure added in written remarks: “Bitcoin is clearly the pioneer, and the most traded crypto. Its market cap is ways bigger than the market cap of the number two Ethereum, which offers many applications and use cases, such as decentralized finance (DeFi) and non-fungible token (NFT). If bitcoin is sometimes called ‘digital gold’, Ethereum would then be the ‘digital silver’!”