As bitcoin’s price has soared to new all-time highs and a parade of big-name investment professionals such as BlackRock CEO Larry Fink and hedge fund legend Stanley Druckenmiller have talked up its prospects as a provably scarce store-of-value, a war of words has sprung up between gold bugs and bitcoin fans.
GOLD VS BITCOIN
It’s durable. Gold can’t be destroyed.
It’s fungible. In its pure state, bullion holds the same value regardless of which bar you have in your hand, enabling its acceptance as both a medium of exchange and store-of-value.
It’s divisible. After smelting, gold can be broken down into coins and ingots of any size.
It’s portable. Within limits, you can transport gold from one place to another.
What about Russia? Well, like China, one of the reasons it is thought to be keen on creating a digital currency is to have a mechanism by which it can reduce its dependence on the dollar – in its case, to achieve the explicitly expressed goal of avoiding U.S. sanctions. A hefty gold reserve might also help it do that.
The bigger question is whether these countries will eventually be better off accumulating bitcoin, rather than gold, as the backstop to their currencies.