Precious metal a liability
Is Bitcoin more valuable than gold in a crisis?
World-renowned billionaire investor Mark Cuban certainly thinks so.
Cuban recently told Wired magazine that he agreed with those who saw Bitcoin as a better version of gold.
He pointed out that gold did not draw its value from industrial or consumer demand. Instead, it came from its role as a hedge.
In fact, Cuban went so far as to suggest that the physical nature of gold made it a liability in times of turbulence.
People aren’t gonna walk around with gold bars. What are you gonna do with it? Let me slice you off a little piece? he quipped in the interview.
Bitcoin, on the other hand, possessed all the qualities needed to survive an economic meltdown. It was digital, easily divisible, and could still be exchanged across international borders.
Central banks upping reserves
Cuban’s comments have created quite the stir as the BTC to USD price faces one of its biggest challenges in years.
Market uncertainty in the US has driven investors back to gold, an asset that traditionally offers far more stability than crypto when the going gets tough.
The return to the precious metal does not appear to be a short-term measure either.
The World Gold Council recently revealed that 95% of central banks expect to increase their gold reserves significantly over the coming months.
Gold is shining amid various troubling events unfolding in the US and other parts of the world.
Bitcoin, by contrast, is having to find ways to stop the bleeding as investors seek sanctuary in the metal.
BTC seizure resistant
The present reality is that gold offers a haven to investors.
At the same time, Cuban is also not alone in his beliefs. Far from it.
Former Coinbase chief technology officer Balaji Srinivasan recently wrote a lengthy post on X explaining why he believes gold would lose its protector” status not too long in the future.
The post makes for interesting reading.
Srinivasan pointed out that Bitcoin’s value proposition was “seizure resistance”.
“To explain what that means, think through the mechanics of physical gold. It’s great…if you can buy it, transport it, secure it, and sell it safely. But it’s much easier to do that when you live in a highly organized state, like China,” he wrote.
“However, such a state can also track you to your doorstep to seize the gold, once it runs up in price. That’s what FDR [Franklin D Rooseveld] did in the 1930s and what China is fully capable of doing in the 2020s.”
He also warned investors not to “overreact towards gold”, outrightly declaring China and the Internet the “successors to the American Empire”. He said China would replace the dollar with gold along with physical commodities.
The internet, meanwhile, would replace the dollar with digital gold [cryptocurrencies], along with digital assets that it could encrypt, script, and verify.”
Srinivasan’s post immediately caught the attention of another major crypto industry player, Matt Hougan, global head of research for Bitwise Asset Management.
He reposted, commenting: “Agree with this. Bitcoin is a superior technology to gold, because it allows for self-custody through settlement. Ultimately, bitcoin will be significantly bigger than gold.”
Inevitable switchover
While the likes of Cuban, Srinivasan and Hougan obviously have vested interests in cryptocurrencies, the points they make are extremely compelling.
Investors might not want to heed them as they scramble to safeguard their assets, but the overwhelming odds are they will in time.