There’s a new trend popping up within the bitcoin community: CryptoGold. You hear it on the streets, and see it projected from every corner of our tablets or PCs when surfing the web. Even governments are betting hard on the possibility of profiting with cryptocurrencies backed by gold. However, if just a year ago the discussion was about the apparent rivalry between gold and crypto, the questions now are, “How did this happen?” and, “Is this just a transitory trend or is it here to stay?”
A charm offensive is currently underway to convince investors of the possibilities. The idea of combining the power and popularity of blockchain as a means of auditing and managing the trade of gold coins is an exciting one.
As a result; one crypto coin will be equivalent to one gram of gold. Even more exciting, the gold is not digital. It’s physical. And it is conveniently stored, preferably by a third partner acting as a custodian. Because of this, investors can count on the minimum value of any crypto asset being backed by the price of gold at all times.
And of course, with the added convenience smart technology lends by allowing investments to be sold dynamically without the seller having to depend on schedules or opening and closing times of the markets adds tremendous value. According to several analysts, the joint effect of #cryptogold could be enormous, because the natural gold market is much larger than that of cryptos.
Traders have invested heavily in bitcoin. This year, there’s been a noticeable shift of bitcoin traders adding gold to their investment portfolios. There are a number of reasons why this has happened.
First, there’s transparency and safety. It’s impossible to damage or fake gold. Bitcoin is also hard to corrupt. With Bitcoin, there’s no infrastructure in place to ensure safety and security. Bitcoin is also nearly impossible to track, unlike gold.
Second, is the liquidity. It’s easier to get cash for gold than for bitcoin, Therefore making gold as an asset more liquid. Bitcoin’s global reach and appeal is much smaller than gold.
Last, is the value. Bitcoin’s route to market has not yet been fully clarified, giving it limited application as a currency. Gold, on the other hand, can be used to make jewellery and other goods, making it a highly valuable asset.
Why all the buzz?
Are we missing something here? Well yes, and it has to do with the universal acceptance of gold as an asset. Bitcoin has more than a few hurdles to overcome before it can surpass gold’s reputation as a valuable asset around the world.
For example, despite Muslims making up around 25 per cent of the global population, and around one per cent of global GDP, many Muslims cannot trade in cryptocurrencies. Sharia Law restricts crypto’s legal status in most Muslim countries, unlike gold which is accepted widely within the Muslim community. As a result, the door is opening onto a whole new market as gold prepares to participate in the world of digital business.