There is an ongoing debate between the more traditional hunters of a safe haven asset, the newer. Digital proponents who eye Bitcoin and its potential to fill the need to be an alternative, easier to use and handle, safe haven asset.
Bitcoin and gold do hold a lot of similarities as an asset, and as Bitcoin heads more down this road of being an asset rather than a digital currency, so it is being heralded more and more as a digital gold. But, the question remains, at this time, which is the better option?
Gold has a lot in its favour in terms of its established market and reliable market movements, but being a physical asset and one that is predicated on an uncertain supply, there are issues that arise. Bitcoin on the other hand is still quite unknown in its short life span, but its volatility, and liquid nature does add a lot of extra enticing factors.
Interestingly, Coinbase has published a report arguing that the recent disruptions during the Covid-19 pandemic have highlighted Bitcoin’s advantages over gold.
Physicality at stake in the pandemic
At this current time, we have seen the destruction of globalization as countries have locked down and shut off their borders to protect citizens from the virus, but this is not ideal and the world needs all the advantages it can get to get around these issues.
This is where Bitcoin immediately makes its cause. The report states that unlike gold, Bitcoin;s digital nature means it is not stuck on traditional supply chains which are in trouble at the moment.
“Bitcoin does not rely on fragile physical supply chains and is truly globally accessible,” the report reads.
Coinbase emphasizes the recent price gaps exhibited by gold markets worldwide, as disruptions to supply chains result in disparate levels of scarcity across different markets.
Mining vs mining
Part of the physicality issues of gold is that there are also disruptions at the start of the supply chain as mining the precious metal has been disrupted while Bitcoin’s mining is only on the up ahead of the halving.
Further, the report asserts that “Bitcoin will be approximately as scarce as gold,” however, possesses the distinct quality of being portable.
“Bitcoin’s rate of new supply is ~3.6% per year and will soon drop to ~1.7% on May 12th, setting it on par with gold’s historic scarcity. As gold miners and refineries have gone offline, Bitcoin’s global mining ecosystem seems resilient according to hash rate measurements in recent days.”