World Economy

Bitcoin Could Be the New Gold

Bitcoin Could Be the New GoldBitcoin Could Be the New Gold

Cryptocurrency bitcoin could be the new gold. Gold has traditionally been seen as a safe haven asset by investors—when uncertainty and risk is high, gold seems like a safe bet. 

Bitcoin, likewise, has attracted investor attention when uncertainty and risk is high. The currency spiked on Donald Trump's shock victory in the US election and bitcoin wallet provider Blockchain had a record month as a result, Business Insider reported.

"I think the world is starting to realize that, just like gold is a good hedge, bitcoin is a great hedge against the system because it’s outside the system," says Bobby Lee, the CEO and cofounder of BTCC, one of China's three biggest bitcoin exchanges.

"Gold is sort of the hedge against the system, the status quo. Our society is ingrained with the current monetary system of fiat money, where governments issue it, they can put out as much of it as they want. Today’s money system, in a very rude way, it’s no different to airline miles or hotel reward points."

Like gold, cryptocurrency is not controlled by any one central bank or country. The network is instead run by a distributed and dispersed network of computers who do the back office work required to run the system in return for bitcoins. However, the work to earn one bitcoin gets harder and harder, requiring more and more computing power.

"The philosophy of bitcoin is that it’s a limited digital asset," Lee says. "There are only 21 million bitcoins. The smallest amount you can get is not one bitcoin, you can get fractions of bitcoin. But if you own one bitcoin or 0.1 bitcoin you’ll forever have that percentage of the world’s supply. No one can dilute you. In that sense it’s very attractive, it’s very unique."


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