Despite the fact that Bitcoin remains a super popular financial asset, paradoxically, its similarity with currencies is dropping. For example, the online payment company Stripe has already stopped supporting Bitcoin. There are several reasons for this. First of all, despite the fact that many have long ceased to treat Bitcoin as a currency, and instead a valuable investment, it is gradually drifting towards a security state, thereby claiming the role of gold.
Common Features of Gold and Bitcoin
From a technological point of view, the mining of Bitcoin is becoming an increasingly slow and time-consuming process. In general, this issue can be solved. It is possible that very soon Bitcoin or another cryptocurrency will cope with this problem.
In any sufficiently efficient financial market, there is a trade-off between risks and rewards. What gives a good long-term investment can often not be used as a payment for everyday purchases of goods and services. The fact is that they are subject to short-term volatility, and this negatively affects the ability to establish a specific price for a particular item. For example, dollars are long-term securities, depreciating according to the rate of inflation at about 2% per year. Since the rate is stable, it is predictable, and we know how much we pay and how much we get. Therefore, people are paid with money, not company shares or gold.
For this reason, in the medium term, Bitcoin cannot become a real currency. The only exceptions are criminal structures, which, of course, cannot accept ordinary money as payment. But in terms of investment, Bitcoin will certainly remain an excellent financial investment.
Why can Bitcoin dethrone gold? First of all, it is worth turning to history. Why did gold become so expensive? One of the reasons is that mankind uses gold for jewelry and some industrial applications, which keeps it in deficit. Its extraction was complex in the Middle Ages at the time of its formation as a security resource, and to this day it remains a rather labor-intensive process.
Another reason is that people simply believe in gold. In general, the price of any asset is based on the fact that people simply accept the fact that it costs a certain amount. In recent years, however, people's belief in gold has been gradually declining. Interestingly, the same faith still supports most of the fiat assets, because no state in the world allows outside auditors to assess their gold reserves.
Formally, Bitcoin meets all the requirements for a gold guarantor since time immemorial, but it has such advantages as transparency and openness, which cannot be said for the yellow metal.
Some experts have incredible predictions about the fate of Bitcoin. For example, according to the partner of British company Pfeffer Capital LP, John Pfeffer, Bitcoin can overcome the mark of $700,000.
"Bitcoin is the first candidate to replace gold. There was no such analog before it, " said Pfeffer. Therefore, if Bitcoin becomes the dominant, if not a sovereign source of value, it can really become a new gold or a new reserve currency." To prove his belief in the cryptocurrency, Pfeffer donated 10 Bitcoins to the Sohn Foundation.
A similar opinion is shared by the crypto enthusiast and founder of DeCenter Evgeny Gordeev. He believes that Bitcoin can gain a new quality in the near future. "Of course, I'm not saying that Bitcoin is a new metal. Even gold has long ago ceased to interest people as a metal. But I believe that Bitcoin can become the reserve gold of the new generation on the basis of which it is possible to create new currencies, as it was with the gold standard hundreds of years ago. Bitcoin exceeds both gold and dollars as a reserve element in all respects," he commented.
Ron Paul, a well-known U.S. economic figure who ran for the presidency in 1988, warns humanity about an inevitable global financial crisis. "We are already in a dangerous financial situation," Paul said.
That is why the demands for monetary reform are growing louder. More and more people are offering variants of alternative economic structures. And if there are talks in the U.S. about replacing the dollar with a cryptocurrency, other countries are completely ready to challenge the dollar as a world reserve currency.
Moreover, Ron Paul urges people to form their retirement savings based on Bitcoins.
Also, Paul wants competition with the dollar to be fair. He offers a new economic model combining Bitcoin, other cryptocurrencies, and gold.
Ron Paul's son, Senator Rand Paul, severely criticized U.S. foreign policy and the existing economic model that leads to stagnation. In his view, the U.S. generally does not have a free market economy. "The economy is governed by a conglomerate of individuals and special interests, both inside and outside the state, including the Deep State, which controls central economic planning," he writes.
In addition, he accuses the Federal Reserve Bank, the Treasury, the Securities and Exchange Commission, and the Commodity Futures Trading Commission in defending the "cash elites" that hamper the change in the current economic system.
While it is not clear whether Bitcoin will replace gold and what the new economic system will look like, it is obvious that the changes have matured and are ripe for taking.