Many cryptocurrency investors often call bitcoin "digital gold" whereas others have no unambiguous confidence in its internal cost.
Howard Vang, the investment director of Convoy Investments and Jeremy hedge fund Grantkham, the cofounder and the investment strategist of the GMO company, have compared growth of bitcoin (Bitcoin) to last bubbles and have come to a conclusion that it isn't reasonable.
In the letter to investors published on January 3 Grantkham has described the fears about cryptocurrency:
"The lack of obvious fundamental cost, substantially the unregulated markets in combination with artificially warmed up agiotage correspond to all signs of a bubble described in textbooks".
So far too early to say that in the market of bitcoin the bubble was inflated or that he has burst. However, already now it is obvious that the cryptocurrency can hardly be considered a risk-free asset.
If to look at the most serious falling on the schedules of the largest collapses of bitcoin since 2012 prepared by the website HowMuch the cryptocurrency has transferred to the period from April 10 to April 21 the 2013th. Then she has lost 83% of the cost in only three days. The second-large collapse has happened quite recently — from December 17 to February 6 "digital gold" has fallen in price by 70%.
Now let's compare these indicators to the quotations of usual gold. According to the London association of the gold market, the price of gold shows high degree of stability and doesn't change a little day by day.
Considering it, it will be curious to investors and owners of bitcoins to learn that large sellers of precious metal have begun to sell gold, silver, platinum ingots and other products of mints for cryptocurrency. For example, one of the largest online stores of precious APMEX metals has begun to accept payments in bitcoins through the BitPay platform recently. Ken Lewis, the CEO of APMEX, says:
"It is known that last year the cost of bitcoin has jumped up approximately by 12 times. The mania has seized investors, many have begun to trade in cryptocurrency actively. In comparison with bitcoin, the quotations of precious metals are much stabler. In the 2017th gold has risen in price for only 12%, and silver has added about 5%. While interest in bitcoin is still extremely high, many address precious metals in search of somewhat more reliable investments".
An opportunity to buy gold on bitcoins by much pleased. According to APMEX, 55% of the buyers using bitcoins are new clients. The company also marks that the amount of purchases in bitcoins is on average 3−6 times higher, than for normal money, at the same time clients prefer gold.
Consequences of exchange of digital gold for the present
Some owners of bitcoins wish to exchange digital gold for the present. However, if such transactions become popular, consequences can affect all cryptocurrency ecosystem.
Purchase of gold for bitcoins — an excellent method to diversify a portfolio, however the cryptocurrency bubble can unexpectedly burst if all run to change directly cryptocurrency for gold.
Holders of a large number of bitcoins are known as "whales". Whales in fact control the market therefore even insignificant abbreviation of their inventories can lead to sharp falling of the prices for cryptocurrency.
What will occur if these investors begin to buy gold on the bitcoins? With high probability we are waited by market sagging. If whales, investors and remaining holders in a mass order begin to exchange digital gold for the present, it will become explicit specifying that the bitcoin loses the attractiveness. In turn, the cost of gold will grow.
Everything is possible
Good news is that in the market of cryptocurrencies any scenario is possible. The unstable nature of bitcoin led as to large victories, and losses for investors. Adding of gold in the equation does a situation a little more interesting.
For example, some owners of bitcoins can use chance to exchange cryptocurrency for gold, however others will continue to hold the digital assets. In article which is recently published in Fortune it is told how some investors went on a way back and change gold for bitcoins.
One of residents of San Diego, Byron Salamida, explains the reasons of purchase of bitcoins on gold as follows:
"Why to store money in gold? Its price practically does not change. Instead it is possible to buy bitcoins which rise in price every day".
In general, both gold, and bitcoins are valuable assets. However gold is considered the safest attachment of money already long ago. The bitcoin is volatile and, in effect, represents very risky investment. In such situation investors shall decide what is suitable for their financial strategy better, however it is always useful to have near at hand spare options.