Bitcoin Report: Seeing Bitcoin as a Gold Replacement
Given that the design of bitcoin’s peer-to-peer system was partly inspired by gold, it’s not a surprise that many bitcoin enthusiasts are also fans of the precious metal. Both gold and bitcoin are scarce commodities used as stores of value by those who might be distrustful of fiat currencies.
The bitcoin community has long been interested in courting gold users – Ripple, for example, recently introduced gold trading to its platform. Even so, gold enthusiasts have not always been bitcoin champions. Some even go so far as to vocally oppose bitcoin as an investment vehicle.
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It’s important to establish why bitcoin users believe the digital currency could take the place of gold in the global market. One of the main reasons is because some see bitcoin as an investment without the common pain points associated with gold. In addition, significant investment capital pouring into the bitcoin market could make it more valuable than gold. The high-water mark for those who share this value belief took place on 29th November, when the price of bitcoin on then-operational Mt Gox exchange reached a high of $1,242, trading two cents above gold’s $1,241.98 at the time.
That price similarity was short lived, however. Soon after the start of 2014, bitcoin’s price fell due to uncertainty in the Chinese market – along with the collapse of Mt Gox. Despite a brief correlation in price, high volatility is the reason some still think that most gold bugs don’t believe in bitcoin as an investment.
Gold prices fluctuate too, but not as much as bitcoin has this year. BTC has seen an over 62% drop in 2014 after hitting a high of $951.39 in early January down to $360.84 in April.
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