A new trust layer is forming around digital assets and blockchains are becoming the access layer for hard money.
Gold’s historical monetary premium came from five properties: the difficulty to create, which translates to scarcity, gold survives time, the durability factor, it is also movable across borders—the portability factor—the years-long asset is lastly verifiable and not issued by the government.
These properties have practically given it a monopoly over "hard money" , a concept of money that is difficult to create, inflate, or debase, and therefore tends to hold its value over long periods of time.
But the emergence of digital assets is challenging that monopoly.
Spot Bitcoin exchange-traded funds (ETFs) could surpass gold ETFs in total assets under management (AUM) as investor demand expands beyond the traditional “digital gold” narrative, according to ETF analyst James Seyffart.
“There are just more use cases of why somebody would put a Bitcoin ETF in a portfolio,” Seyffart said on the Coin Stories podcast published to YouTube on Friday. He pointed to Bitcoin’s role as digital gold, a store of value, a portfolio diversifier, and a form of digital capital and property, adding that the market also views Bitcoin as a “growth risk asset.”
US-based gold ETFs recorded net outflows of $2.92 billion in March, while US spot Bitcoin ETFs attracted $1.32 billion in net inflows over the same period. — Cointelegraph report
Bitcoin, a $1.38T asset, at current prices, is the leading competitor for hard money value flow.
Bitcoin challenges Gold's monopoly because it is everything gold is but cheap. Of course, Bitcoin may lack the industrial and jewelry demand floor, but on most others, the decentralized asset shows significant promise.
For starters, Bitcoin has a hard supply cap that makes it more scarce than Gold. It is also more portable with moving cost near zero in comparison to gold, and probably more importantly, it's performed consistently better than Gold over recent years, which has earned it the "digital gold" identity.
The concept being the digital gold itself proves Bitcoin's direct competition for gold's value flow.
The institutional market no longer treats gold as the only monetary hedge. There's growing categorization of Bitcoin and digital assets as hard currencies with effective hedge against inflation, and a measurable increasing interest in diverging both idle and active capital into them.
This value migration marks the beginning of the end of Gold's monopoly on capital seeking hard money hedge.