23 Jan Jim Powers in Forbes: Is Bitcoin the New Gold?
When geopolitical events such as the current trade war create an environment of global uncertainty, investors often turn to gold as a hedge. However, a paper published by the Department of Economics at the University of Pretoria claims that Bitcoin has joined gold among the ranks of safe-haven assets, citing the multivariate extreme value theory. But could Bitcoin really be the new gold?
Not everyone is convinced. Forbes recently spoke with Delegate Director of Investment Research and Chief Compliance Officer Jim Powers to see why investors may want to think twice before deeming Bitcoin the new gold.
“Bitcoin is not the new gold because the old gold (i.e., gold) still works fine,” Powers explains. “While similarities exist between gold and Bitcoin (e.g., store of value, price determined by supply and demand), gold has been recognized as a store of value for millennia. Bitcoin has been recognized as a store of value for less than a decade.”
Furthermore, Powers brings attention to Bitcoin’s dependency on the Internet. “In an end-of-the-world-style financial apocalypse, individuals can still hold and trade physical gold,” says Powers. “Try buying a loaf of bread with Bitcoin if the Internet stops working.”