Bitcoin Will Never Be Like Gold, Says World Gold Council

The World Fold Council (WGC) has recently stated that cryptocurrencies will never be able to replace or substitute gold or its value, in any way. The council, which serves as a market development body for the industry of this precious metal, has argued that gold itself is rather different in nature from cryptocurrencies.

It has justified its stance by saying that gold is absolutely not as volatile as cryptocurrencies. Cryptocurrencies are actually quite notorious for being rather volatile, with its prices going up and down, ever so often.

You May Also Read: Why Does The Price of Bitcoin Move So Much?

Moreover, the difference between the gold industry and cryptocurrencies also lie in the fact that the former has a much more liquid market and greater regulatory clarity.

The WGC said that the price of gold has increased at a rate of 10 per cent year over year, since the Bretton Woods monetary system for pegging key fiat currencies to gold was discontinued. Over the last 40 years, according to the Council, the volatility of gold has fallen quite significantly.

According to the World Gold Council, the high volatility makes cryptocurrency not suitable as a currency, “let alone a store of value, potentially limiting bitcoin’s use as a transaction token.” It described its problem as being “extremely volatile – some 10 times that of the dollar denominated gold price.”

Bitcoin trading volumes are also much lower when compared to gold or even other currencies. Unlike gold, Bitcoin’s demand, it said, is not as diverse, supply not as “responsive” and suitability as an investment option not as “tried and tested effective”.

It opined:

“[Bitcoin’s] performance has, until recently, been remarkable, but its purpose as an investment seems quite different from gold. Cryptocurrencies have yet to be tested in multiple markets.”

We have earlier had staunch Bitcoin proponents, the Winklevoss twins, claim that Bitcoin would soon touch the 1 trillion dollar market cap of gold itself. However, World Gold Council is clearly in no mood to entertain such ideas of Bitcoin being “digital gold”.