Bitcoin Forum

Since its birth, Bitcoin (BTC) has been lauded as an alternative to traditional assets day in and day out. Most notably, the cryptocurrency is. in the eyes of some pundits, a replacement to gold, specifically the metal’s store of value capabilities. But if Bitcoin takes over gold’s hegemony, what would happen to the value of BTC?
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According to HodlWhale, a Seattle-based cryptocurrency investor, a world where Bitcoin has absorbed all the value of the gold in circulation would see BTC valued at $350,000.

This figure isn’t exactly baseless. As reported by NewsBTC on an earlier date, all gold in circulation is currently valued at approximately $7.83 trillion, while all BTC has a mere $94 billion valuation. If the latter was to fully displace the value of the first, Crypto Voices, an industry analytics and research group, estimated that BTC would swell to a value of $450,000 — slightly above HodlWhale’s estimate.



reference: https://www.newsbtc.com/2019/04/20/bitcoin-displacing-gold-entirely-value-btc-350000/ (https://www.newsbtc.com/2019/04/20/bitcoin-displacing-gold-entirely-value-btc-350000/)

That's interesting, people here were quite often saying that Bitcoin can reach hundreds and thousands or even millions of dollars per BTC, but this comparison with gold really adds some perspective. I think Bitcoin is very far from being as good as gold in terms of store of value/asset/money, so $350,000 or similar price levels wouldn't be sustainable in the near future. The current ATH of $20,000 is already 5.7% of gold's marketcap, which is a pretty good result for an asset that was only 8 years old at the time.

This is under a very optimistic scenario in which a 10-year old digital asset will replace a physical asset, which has been in use for more than 5,000 years. I don't want to discuss about the probability of that happening. But have you checked the gold prices for the past few years? After reaching the peak in 2011, gold has lost almost 40% of its value.

this calculation is just based on market capitalization metrics. i'm not sure that accurately characterizes what would happen if the entire gold economy were to flow into bitcoin. it doesn't account for bitcoin's scarcity (including lost coins) and thus how illiquid the spot market is. the price can be driven up much more easily than gold. i suspect we would see much higher valuations for BTC if it truly were to replace gold.

Bitcoin is actually better in almost all aspects already. Gold's all time high was reached in 2011 and peaked at just over $1800. Currently it hovers just under $1300 (which is a level Gold has been struggling with for over 5 years) and it doesn't seem to be willing to leave it behind for good.

As for the money aspect, it's pretty useless as money aside from high value transactions that are settled physically, but I don't consider that to be a function as money. Every physical object with value can be used like that (i.e. paintings, cars, watches, etc). Bitcoin has everything going for itself to at least usurp 50% of its total market cap.

The thing with Gold is that this asset is absolute in the sense that nothing will be able to replace it as precious metal. This gives people a lot of confidence to park their capital in Gold for decades. Bitcoin has to catch up there to obtain a similar form of absoluteness.

Bitcoin's advantage is that there aren't that many cash settled derivative platforms yet, which is working in its favor at this stage. Gold on the other hand is being suppressed due to how insignificant the spot volume is.

As long as that is the case, I am quite sure that it won't be that much of a problem for Bitcoin to reach levels beyond the $100k mark. We reached $20k without any actual adoption, and it could have gone towards $50k too at that point.

That being said, I am not really a fan of looking at the market capitalization of assets. It's meaningless when it comes to altcoins and I think it's meaningless when it comes to gold.

Gold's staying put no matter what. Governments and banks won't give it up. I think it's crap myself but it's an eternal lump vs code. They may have nominally similar functions for some on the surface but thousands of years vs 10 years will never be enough to tempt the heaviest gold buyers and holders.

As much as I love that scenario to happen, I think I won't see it in my life though. 10 years old and we've reached 20k mark, assuming the cycle repeat that it would need more than 50 years to reach 100k. (I know, this is just some bad math).

If that does ever happen then anyone who enters the market at this point would be crazy rich. Though it would be really volatile as hell if people start taking profits and move their money to other assets.

I'd say that this is actually a much more probable scenario compared to somehow displacing the fiat money supply.

Bitcoin's current role is very similar in terms of how it is a store of value able to operate independently of a government, have intrinsically a capped supply that can't be manipulated, but much more robust in its transaction facilitation, way more portable and fungible (given that you'd have to verify the purity and weight every time you transact with gold), and just generally more usable as a medium of exchange in the modern era as well as being a store of value. That's why I think bitcoin can essentially attract gold investors in the future seeking these needs, when they understand the things BTC offers.

Of course, I'm not saying that in the future bitcoin can't necessarily replace some of the functionality of fiat in certain areas, or that it is impossible, especially those who are hit hard with economic crises, but this is simply less likely to happen.

the thing about gold's value is that it's driven by inelastic demand. people that want gold want it absolutely, at any price. the price premium on gold is therefore huge in comparison to it's utility value, i.e. gold is an excellent electrical conductor, but the demand for it as a store of value is so incredibly high in relation to it's utility value that using gold for electrical purposes is far more expensive than the difference between gold's price and copper's price.



remember that Bitcoin has something that fiat will never do: programmability

maybe one day we'll be able to pay banks or payment cards people for the privelege of being able to add conditions to transaction on the banking network (this exists in a limited way already, and of course banks nad big companies exercise alot of control over how it works).

maybe it won't matter then, as everyone will already know that they can write more powerful programmable cryptocurrency transactions without having to pay someone else to do it for them.

And yet gold is being used a lot in electrical applications due to its high corrosion resistance.

https://i.imgur.com/B5qLXi1.png

I'm not here to defend gold though. I understand that because of using very low voltages and currents which are easily interrupted by corrosion, semiconductor electronic devices need gold as connector, but that's probably it. I think we are entering the times when no one will buy golden jewelry any more (I personally know few people who wears gold jewelry these days). At some point in the future wearing gold jewelry will become something like wearing baroque wigs today. As for the official coins, they will be minted in lesser amounts as long as gold will become less valuable.

right, any conducting surface exposed to air must be gold. The manufacturers are incredibly sparing with the gold to keep unit price down.



it's possible, although I predict a long term gold price crash would promote a short (and painful :D) era of people using gold for everything and anything

We only agreed the gold has a lot of worth but if we remove that then it's just really nothing. I'm very certain that once we enter an advance tech that let us enter in a vr world, gold will lose all its value. All that has worth in that future are bitcoin and other digital assets in the blockchain.

For that to happen decades will have to pass. Bitcoin is approached like technology and technology changes and goes away. One day people were using nokia phones then there was a motorola trend followed by blackberries and iphones. Who knows how long bitcoin will last.

Young people will understand how bitcoin is easy to move around while having most of gold's properties but for them to have the majority the old farts like Buffett have to go.

Excellent point. Programmability plays a big role within facilitating transactions nowadays.

I guess that's the thing. A store of value like gold and silver (any other precious metals as well) isn't convenient to use for the 21st century when tech and programmability is what it's all about, while the electronic banking system relies on fiat, which is not a store of value. Bitcoin fills the void for both.

I still think though that bitcoin adoption will pick up due to innovation alone - there probably needs to be an event that propels people into questioning the legitimacy of fiat, and actively look for alternatives.

Never heard the opinion of scientists that bitcoin can completely absorb the value of gold. I do not know who and what he said about this, but this will never happen. Gold at all times had and will have current value and it is unlikely when it will lose. With the advent of cryptocurrency, essentially nothing will change. This will be another type of cashless settlement, which will slightly press other types of cash as well as cash. However, the cryptocurrency will go in society along with the national currencies of the states and their capabilities will complement each other.

I would love to agree with you because I too think that gold is very overestimated in today's world, but, as you can see from the diagram above, gold is not completely useless, as it could be if were used for jewelry purposes only. Even if in the future all the people will become smart enough to not wear, and, therefore, to not buy gold jewelry, the electronics' part will remain no matter what. Therefore, gold can lose much of its current value but not all of it, unless a new material with the same better conductivity and corrosion resistance will be invented (which is also possible).

It’s possible to dream up, of course. However, Bitcoin will never be able to oust and replace gold. Most people will always prefer gold over cryptocurrency, because gold is the eternal value in our physical world. Cryptocurrency is a relatively new phenomenon, especially from the virtual intangible world, which is far and incomprehensible to many people. It will take a lot more time for people to understand and appreciate the benefits of cryptocurrency, but this will have almost no effect on the value of gold.

It will takes a lot of time, sure, but to say it impossible while at the same time saying crypto is new is a bit too soon imo. It might change, it might not. As you said by yourself, crypto is new, very young compared to gold, but what happens 100 years later or 1000 years later, we don't know. Gold might be out of dated by then and crypto might replace it, or not.

Gold outdated? You've got to be kidding me. Gold has been serving some form of useful utility for thousands of years and there is no reason to think it won't be the main asset in the world in the following thousand years.

There are too many moonboys wasting time behind their desks staring at the crypto prices all day.

Even in the best case scenario for Bitcoin, I don't see it swap position with gold. It's too well adopted and respected for what it is, and then we have its physical nature also playing a role of importance for people.

Gold in physical form is just as decentralized as Bitcoin is, just less convenient to deal with on a daily basis. Another thing is that you can't fork gold to create money out of thin air, which is possible with Bitcoin.

The downside of Bitcoin's forks are that they compete for the same hashrate, which I always found to be a major downside. It caused problems where there wouldn't be any if forking wasn't a thing. It's really unfortunate.

Bitcoin is considered by many as the digital gold counterpart and can be a good alternative to gold investment. However, I don't believe that it can be able to really replace gold but can be existing alongside with it serving the global investment community. In fact, there are those who have invested with gold and with Bitcoin as well.