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The Coronavirus pandemic has aptly demonstrated one critical element- how very fragile the systems created by humans are! One aspect of modern human societies, which has completely disintegrated has been the financial and economic systems.
The manipulation of fiat currencies by policy makers and the sheer arrogance of making its value anything, which is deemed fit has been burst. As nations start printing more and increase borrowings from their central banks, the world is looking at another disaster waiting to happen.
In this article, we talk about two financial assets, which are showing a lot of promise vis-à-vis fiat currencies- Gold and Bitcoins. While both of them are similar in many ways, we look at which one of them will emerge stronger post the Coronavirus pandemic.
Which Asset has the upper hand- Gold or Bitcoin?
Ever since the start of the Coronavirus lockdown, gold supplies in different parts of the world have been hit very hard. The physical processes involved in mining, sorting, processing and shaping gold has meant that several people who were looking to invest in gold have not been getting their hands on it.
On the other hand, Bitcoin’s mining structure and set up prevents it from falling into any issue, with regard to any problems. The supply is steady and this has been buoyed by the recent interest investors are showing in Bitcoins in different parts of the world.
Most of the issues, which have happened because of the Coronavirus has been because of the physical supply chains of gold getting affected. As Bitcoin has better and sturdier foundations, it would be no surprise that their supply chains were not hit.
Has Gold lost all its Value vis-à-vis Bitcoins and other Cryptocurrencies?
While enthusiastic crypto journals and forums are all too eager to jump into this conclusion, we should exercise more caution. Gold continues to be a stable investment options for millions all over the world. Financial experts point out that the instability in gold hovers around the 15% mark.
They also point out that the same for Bitcoins and other crypto stands at least three to four times to that of gold. However, not all is lost when it comes to the crypto front. Bitcoin and other crypto have a definite advantage when it comes to ‘teleportability’.
In other words, looking to exploit the price advantage in gold between different continents would have to move it physically. The ensuing time could be enough to rid all the price benefit. Bitcoin does not suffer from such issues. It can be moved from one location in one part of the world to another one in an instant. This is a great advantage.
Gold Backed Stablecoins- A New Step in the right Direction
Rather than see Bitcoin as a threat to Bitcoin, analysts are more interested in stablecoins backed by gold. Even though there are just three of them in the market right now, with a cumulative value of under $100 Million, the potential to bring them to the levels of Equity is for everyone to see.
Experts are also of the opinion that gold backed stablecoins will get much favourable reception from banks and authorities, as they themselves store gold. Stablecoins backed by gold, are not only a threat to gold, they are a real threat to Bitcoin itself.
Many also talk about how stablecoins is the combination of all the good elements of gold and Bitcoin, but an evolution over them. This presents stablecoins as some sort of a dialectic over gold and Bitcoins.
With more and more credible online trading app operating in Bitcoin and other crypto trading, investors are hedging their funds on crypto rather than on gold. Only time will tell, which financial asset comes out stronger- Gold, Bitcoin or Stablecoins?
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