Bitcoin or Gold? Market Giants Debate Which Asset Is Superior

Source: Exame
Original Title: Bitcoin or gold? Market giants debate which asset is better
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Bitcoin is a good alternative to gold? This question was the central theme of a debate involving two famous figures from the cryptocurrency market: Changpeng Zhao, former CEO and founder of a cryptocurrency exchange, and Peter Schiff, businessman and financial analyst known for criticizing cryptocurrency.

With opposing views, the businessmen met during a Blockchain Week held in Dubai. One of the rare points of agreement found by Schiff and Zhao was the view that the dollar and other fiat currencies will increasingly lose value in the future, strengthening the search for stores of value.

Gold

For Schiff, original gold is still more useful and valuable than cryptocurrency, and the tokenization of the asset would already be enough to make it better than bitcoin.

Although he agrees that “something doesn’t need to be tangible to have value,” Schiff stated that “what makes bitcoin have no value to me is not the fact that I can’t touch it, because I recognize that the intangible can have value, but it’s the fact that it has no utility beyond the ability to transfer it to someone else.”

“If I transfer tokenized gold to you, I’m transferring the ownership of something with specific characteristics and a demand in the market. There are things only gold can do, and because it is scarce, it ends up having a high value. It’s supply and demand. If I transfer bitcoin, I’m not transferring anything,” he argued.

The businessman also commented that “one of the functions of gold is to be a monetary store of value for central banks, and this helps determine the price of gold. Since gold does not decay, does not lose value over time, when I have gold I also own what someone could do with it in 10,000 years, because it does not disappear or change. You don’t have this with other commodities.”

“Bitcoin is not being used as money today. It’s not because it has value, people want to buy, don’t want to sell and want to speculate on it that it has value. For me, people have bitcoin to speculate,” the businessman also said.

Schiff argued that “there are dozens of tokens that can do the same thing as bitcoin. It has no unique characteristic of its own.” He also argued that the cryptocurrency’s difficulty in having real utility ends up undermining its potential value.

The analyst also pointed out that, in the last four years, the value of bitcoin in relation to gold has fallen, and not risen as in the case of the dollar. He believes that this movement shows that the cryptocurrency is still not able to replace the traditional store of value for investors.

“In the last four years, we’ve had unprecedented levels of money, hype, announcements, speculation, but the value of bitcoin in relation to gold fell during this same period, it did not rise. If bitcoin couldn’t rise even with all this, why will it keep rising in value?” he questioned.

Bitcoin

The founder of the exchange said that bitcoin would be an “improved version of gold.” For Changpeng Zhao, the cryptocurrency has a number of specific characteristics that make the asset valuable, in addition to being a better alternative for investors seeking stores of value.

“The internet has nothing physical. Everything is virtual, but things have a lot of value, the internet has value. Bitcoin itself does not exist, there is no bitcoin physically or virtually, what exists is data on a blockchain network. When we say we send a bitcoin, nothing was transferred, there is only a record of the transaction. And when we analyze the entire transaction history, we calculate how much each person has,” he explains.

Zhao commented that “just because it’s virtual doesn’t mean it has no value. Twitter has value, Google has value. The value of the item is not associated with its physical properties. Even if we look at gold, the gold used in industries has less value than the gold used in investments.”

“About gold, if someone finds a big new mine or finds a way to synthesize gold chemically, there could be a significant change in supply and demand. We know exactly how many bitcoins we’ll have, exactly where they are. Gold is also no longer so used by central banks. The value of gold doesn’t come from its commercial utility, but from its rarity, and bitcoin has a lot of utility because it’s a new technology for money,” he argued.

The billionaire also defended that “many people recognize bitcoin as money,” but said that “the central debate is not whether bitcoin is money or not, but whether it has value. It’s true that part of the value comes from speculation, but part also comes from its utility, from the fact that it’s an asset with different use cases and characteristics.”

“Tokenized gold requires me to trust a third party, and bitcoin doesn’t require that, it only requires that I trust the technology. Bitcoin went from having no value in 2010 to being worth more than $90,000 today and is still the best use case for blockchain technology,” said the businessman.