Note to Readers: MC ExpertEye is a weekly series of articles that will dive deeply into an important topic by seeking answers from experts.
With Bitcoin soaring above the $37,000 level last week, many first time buyers are driven towards crypto-currency. We ask experts on what this euphoria means and if crypto can be regarded as the gold for asset allocation in the long term.
Here is what they have to say.
Nischal Shetty, Founder – WazirX
Both Bitcoin and gold are seen as a hedge to protect fiat portfolios due to their inflation-beating properties. Today, Bitcoin is slowly emerging as a mainstream investment class especially among millennials. The majority of WazirX users are below 30 years of age. The youth is looking at crypto as an alternate investment option, and increasingly participating here. Bitcoin is labeled as digital gold by many, and is also seen as more superior to gold in several respects. It offers a high degree of accessibility, allowing anyone to send and receive Bitcoin in a permissionless way.
I am not advocating all cryptocurrencies, but I would say that Bitcoin has dwarfed the other players and seemingly has emerged as the store value, an asset class to have for every investor like gold. Yes, bitcoin today is a better alternative to gold but with a history of only a decade while gold has been in vogue since centuries. Today the Bitcoin would be priced at 550k+ USD if it were to replace gold’s current 10 trillion market cap. While gold is also finite, we do not know about the reserves, and new mining opportunities keep emerging worldwide. There are only 21 million bitcoins that can be mined in total.
Once bitcoin miners have unlocked all the bitcoins, the planet’s supply will essentially be tapped out. Hence bitcoin is more important as a store value. Bitcoin recently touched $40,000 Levels. Whereas gold recently fetched $1,939 an ounce, down $11.50 4. It has been observed that recently many investors have started viewing Bitcoin as an inflation hedge and as a reliable alternative to the declining value of the dollar. One bitcoin is divisible to eight decimal places, 100 millionths of one bitcoin hence better than gold.
Today, bitcoin has better custodian solutions for institutional investments. – Vatsal Kankiya, CTO and Principal at 100X.VCBitcoin is portable as a digital asset while gold has to be available in a physical format, so portability is limited. Millennials are more comfortable with technology than their elders, and can probably grasp the potential more quickly. It is easier to trade in bitcoin as there are exchanges like CoinDCX in India, which can help investors securely buy and store in its wallet. The bottom line is that the worst-case for gold for investors is that Bitcoin takes all the gains from gold over the coming months and years to deliver a multibagger.
