Sorry Goldbugs and HODL’rs. You should have just stayed in bed in January. Of course, things may change.
Two means of exchange with different target audiences.
Gold and Bitcoin have one thing in common, but another puts each asset at opposite ends of the investment spectrum. Gold and Bitcoin are both means of exchange that transcend borders which puts the precious metal and the digital currency in the same boat. At the same time, both assets have a unique appeal to people around the world who would rather put their trust in the value of gold or Bitcoin rather than in the central banks, monetary authorities or governments that stand behind fiat currencies. The fact that both have seen their prices decline in 2018 is a sign that the trend towards globalism may have hit a bit of a speedbump in 2018.
Meanwhile, the target audience of gold and Bitcoin is what puts each diametrically opposed to each other. Gold is the oldest form of currency or hard money in history as it predates all fiat currencies that are legal tender around the world. Gold dates back to ancient civilizations and has survived as an asset that humans believe has tremendous intrinsic value. Bitcoin is a baby as it began trading with a value of six cents in 2010. Moreover, Bitcoin appeals to those who are children of the current age of rapidly advancing technology while gold is a financial and investment vehicle that has value because of its long history. While there are always exceptions, Bitcoin is new-school while gold is old-school.
The vast majority of gold bugs view Bitcoin, and the other digital currencies as dangerous and volatile assets whose value could evaporate in the blink of an eye or holdings could disappear via a simple computer hack job. Those devoted to the digital currency world often look at gold as a barbarous relic of the past. Gold is a mainstream asset while Bitcoin is struggling to gain acceptance. At the end of July, Bitcoin suffered another setback when the SEC denied the Winklevoss Twin’s second attempt to bring a Bitcoin ETF product to market. The regulator claimed that the underlying market is too susceptible to market manipulation making regulation of any derivate products more than a challenge.
Bitcoin and gold are both global instruments, but gold continues to have the upper hand because it plays a significant role in the global financial system.