[2017-10-19] Bitcoin is not the new gold, Goldman Sachs says

[aysha9872]

Cryptocurrencies like bitcoin are not the "new gold," Goldman Sachs said in a note, advising investors that precious metals "remain a relevant asset class" in portfolios.

In a note to clients earlier this week, Goldman detailed the benefits of holding gold in a portfolio.

"The use of precious metals is not a historical accident – they are still the best long-term store of value out of the known elements," the investment bank said.

But it also addressed the rise of cryptocurrencies. Many commentators have dubbed bitcoin "digital gold" because of the fact it has a finite supply and has at times seen price rises due to geopolitical tensions.

Goldman concluded that bitcoin is not a good store of value versus gold.

"Gold wins out over cryptocurrencies in a majority of the key characteristics of money," Goldman said.

The analysts said that digital wallets, where people can store cryptocurrencies, are vulnerable to hacking, and virtual currencies also have "significant regulatory risks." For example, China recently banned cryptocurrency exchanges and put a stop to initial coin offerings (ICOs), the new way for start-ups to raise money by issuing digital tokens.

Goldman also said that cryptocurrencies are subject to network or infrastructure risk during a crisis. For example, there was a "hard fork" this summer when bitcoin split to create a new cryptocurrency called bitcoin cash.

Some regulators, like those in Japan, have allowed bitcoin to be used as a form of payment. Bitcoin can also be broken down into much smaller units. While this may make it look like a better medium of exchange than gold, Goldman said that transaction fees have risen sharply this year. The average transaction fee at its peak in mid-July was just below $9, according to bitinfocharts.com.

The investment bank said that gold is not subject to competition from alternatives. Bitcoin has rival virtual currencies like Monero or Dash for example. There are over 1,000 cryptocurrencies in existence.

And finally, Goldman said that gold "is clearly better at holding its purchasing power, and has much lower daily volatility." The note said that bitcoin's volatility averaged almost seven times that of gold in 2017.

The price of spot gold is up over 10 percent this year. Bitcoin meanwhile is up over 400 percent. However, the cryptocurrency has had wild swings in price.

"Cryptocurrencies are not the 'new gold' despite their recent popularity," Goldman concluded.
Source: https://www.cnbc.com/2017/10/19/bitcoin-is-not-the-new-gold-goldman-sachs-says.html

[darkangel11]

"Gold wins out over cryptocurrencies in a majority of the key characteristics of money," Goldman said.

Gold = money? HAHA that's a good one. I'd like to see you try to buy something for a piece of gold. They'd think you're either a scammer or simply insane. Also, the main disadvantage of gold is that it's very difficult to divide. How would you use your ounce of gold that's worth 1,2k USD to buy a bicycle that's priced at 999USD?
Gold can never be money, it's only a store of value, while BTC can be used for daily transactions.

[richardsNY]

Gold = money? HAHA that's a good one. I'd like to see you try to buy something for a piece of gold. They'd think you're either a scammer or simply insane. Also, the main disadvantage of gold is that it's very difficult to divide. How would you use your ounce of gold that's worth 1,2k USD to buy a bicycle that's priced at 999USD?
Gold can never be money, it's only a store of value, while BTC can be used for daily transactions.

You're partly right. What this article lacks in proper terms, is that gold can function as currency, but then only as last resort tool to fall back on in case of a war, or a total fiat collapse. Gold will never be something that in the regular consumer market can be seen as a currency. Things are a bit different when it comes to large scale transactions, because it from time to time happens that gold is being used in real estate transactions. But still, it's all up to the preferences of a very small group of people -- the average joe will likely never ever transact in gold.

[panju1]

Maybe Goldman is trying to talk down the price, before they set up a cryptocurrency desk. If they said Bitcoin is going to replace gold, then it will be too expensive for them to get their hands on any bitcoins.

[Kemarit]

Bankers and gold enthusiast are on the attack again? LOL. We can't deny that Gold is really a good hedge against global financial crisis. However, they should understand that people now are using bitcoin to do for everyday task like paying your bills which gold can't. (that is the case for me). Yeah and I agree that gold is not equal to money as the article suggested. Why don't we just have both? Buy gold or gold bullions then invest as well in cryptos? So that we have the best of both worlds on our hand. Instead of bashing and comparing each other which is better in terms of investment. Both have its advantage and disadvantage. But most of us here are bitcoin lovers, but if you do find golds as hedge then get it by all means.

[rjbtc2017]

"Gold wins out over cryptocurrencies in a majority of the key characteristics of money," Goldman said.

Gold = money? HAHA that's a good one. I'd like to see you try to buy something for a piece of gold. They'd think you're either a scammer or simply insane. Also, the main disadvantage of gold is that it's very difficult to divide. How would you use your ounce of gold that's worth 1,2k USD to buy a bicycle that's priced at 999USD?
Gold can never be money, it's only a store of value, while BTC can be used for daily transactions.

Exactly! Hahaha. It's really hard to do a brick and mortar/Trading type of  transactions today, like you gonna pay some ounces of gold for a service or product? Lol it will take to verify the gold if it is a gold and you need to measure the weight of the gold to get it's exact price. UNLIKE Bitcoin, real time price changes. With a lot of decimal places  .

[tweetbit]

Maybe Goldman is trying to talk down the price, before they set up a cryptocurrency desk. If they said Bitcoin is going to replace gold, then it will be too expensive for them to get their hands on any bitcoins.

I’ve suspected the same but they’re statements have no effect on bitcoin price at all, they’re just wasting money on paying mainstream media/articles to spread they’re hatred to bitcoin without good results. I think they should make a new approach if they really need to make the bitcoin community to support they’re claim(obviously impossible).

[croTek4]

Why would be bother what Goldman Sahs says ? They are completely overrun with this new market that they don't understand. All they see is that our market cap is growing day by day, and it seems like it won't stop.
They don't understand that people are just pissed off by multi-national compagnies like the one he runs.

He must be crapping his pants watching the BTC market cap slowing closing up the gap with Goldman Sachs's net funds. It's too late for them and they are half-pissed-off, half-terrified.

It won't be long before they just disappear, since they can't keep up with cutting-edge technologies.
Bitcoin is not gold, it's way more valuable.

[jack107]

Why would be bother what Goldman Sahs says ? They are completely overrun with this new market that they don't understand. All they see is that our market cap is growing day by day, and it seems like it won't stop.
They don't understand that people are just pissed off by multi-national compagnies like the one he runs.

He must be crapping his pants watching the BTC market cap slowing closing up the gap with Goldman Sachs's net funds. It's too late for them and they are half-pissed-off, half-terrified.

It won't be long before they just disappear, since they can't keep up with cutting-edge technologies.
Bitcoin is not gold, it's way more valuable.

Couldn't agree more. I wouldn't be surprised if they didn't do the same as JP Morgan. talk trash, bring the price down, and buy. lol