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Four factors bitcoin is using to unseat Gold as asset-class king



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Before bitcoin became the new catch among investors’ community, there were other investment options. From Gold to bond and stocks, investors had various asset options to invest their capital for short-term and longterm gain.

While Gold, bond and stocks are the only regulatory-backed investments options in the 21st century, Gold has remained king, having served as the longest and most valuable asset for investors.

Bitcoin challenging Gold’s hold on assets throne

Gold’s reign has been unchallenged for centuries, since 650 B.C, when Gold first came in form of coins. Non-gold coins, paper currency and other forms of assets have been erected within the centuries, but none could challenge Gold for the king’s throne.

Gold has created a charisma that every investment options can only wish to be, but the king’s throne is not for every asset – at least that’s what the world thought until bitcoin was created in 2009.

Gold’s rich history and appeal made it the most valuable asset. But now, Bitcoin is competing that throne with Gold. Twelve years after its creation, bitcoin seems to be taking attention from Gold, and simultaneously redirecting capital from Gold to the most popular cryptocurrency.

Bitcoin’s attempt to unseat Gold

This month witnessed the battle between a regulatory-backed asset and a rebel-asset which has got several Central Banks across the world rolling out warning after warning against bitcoin.

Their fear was quite understood, as bitcoin achieved Gold’s record in asset value within twelve years, even knocking Gold off the throne twice. In 2009, bitcoin was worth $0.03 per unit, but in 2020, bitcoin was already worth $20,000 per unit at the end of the fourth quarter.

Read also: Promoter acquires more Bitcoins, fails to impact price value

Then February came, and bitcoin value shattered the ceiling glass, rising close to $60,000, but halted at $58,012 on February 21, 2021. However, on February 19, bitcoin traded $57,439 per unit above Gold, which was worth $57,365 per kg during the same day – although, bitcoin now trades at $47,184.04 as at last check, below the $55,774.47 Gold kg sells for.

Ripples Nigeria findings showed that this wasn’t the first time bitcoin took a jab at Gold’s dominance. On March 3, 2017, bitcoin sold at $1,290 per unit, while an ounce of gold cost $1,228, before bitcoin took a nosedive on the same day, trading at $1,284.58 per unit, below an ounce of Gold value, which was worth $1,319.60.

Four factors aiding bitcoin’s challenge against Gold

New store of value: Bitcoin has become the new asset darling of the 21st century investors. While Gold, bond and stocks are still much playing a role in the class of assets, bitcoin is being used as a false 9 by investors to grow their wealth.

While bond and stock fell to the onslaught of COVID-19, bitcoin was able to weather the storm, offering itself as the best store of value for investors to protect their capital against financial upheaval – this grew the acceptance of bitcoin, and increased its reach, while taking capital away from Gold, bond and stock.

Not elitist: Bitcoin is for everybody and for no one. In the sense that everyone, regardless their social class, can lay claim to bitcoin unlike Gold, which is elitist. Gold is admired by everyone, but the precious metal is an asset owned by the extremely wealthy class.

However, bitcoin is accessible to the lower, middle and upper class of people. That’s one of the reason bitcoin, in short period, was as valuable as one ounce of Gold. It’s lack of classism increased its adoption globally, including Nigeria.

Deepen financial literacy: Bitcoin has been penned down as an important factor in driving financial inclusion deeper across rural and urban areas due to its digital footprint.

Gold is not a currency that can be used to deepen financial inclusion, as it is only used by the wealthy, while bitcoin can be accessed by the poor or used to pay low income individuals. The likes of Mastercard have already shown interest in allowing its customers to pay with bitcoin.

Backers of bitcoin: Bitcoin has been tagged a fraudulent scheme, and in the same category with Ponzi schemes like MMM and Loom. It has been projected to go out of style by individuals against its use, but since 2009, bitcoin has been active in global transactions.

This is due to those backing bitcoin to succeed and last as an alternative asset to the likes of Gold, bond and stocks, including for transactions like fiats. Elon Musk, richest man in the world, Twitter founder, Jack Dorsey, Michael Saylor, are some of those who have bought into it.

Then we have companies like Tesla, Microstrategy, Mastercard throwing their weight behind bitcoin. These credible businessmen and globally acclaimed companies have given bitcoin a legitimate claim, and soon, it could break the $60,000 projection, before later heading for the $100,000 mark.

By Fakoyejo Olalekan…

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