All The Reasons Cryptocurrencies Will Never Replace Gold as Your Financial Hedge
The comments above & below is an edited and abridged synopsis of an article by Olivier Garret
Having seen the astounding rise in Bitcoin’s value, those who remained on the sidelines are now kicking themselves for not buying it when it was first released. Surely they’d be millionaires by now.
But is the meteoric rise of Bitcoin and other cryptocurrencies really an indication of true value?
It seems that more and more people justify investing in cryptocurrencies—even at current record prices—by claiming that they’re an effective hedge against the instability of fiat currencies, but is it true?
A fiat money system where central banks can and do print money at will has weaknesses. That’s why hard assets like gold are so popular among smart investors: As real stores of value, they provide a safety net against currency depreciation.
It’s doubtful that the same applies to cryptocurrencies. Despite what the crypto-evangelists will tell you, digital tokens will never and can never replace gold as your financial hedge.
Garret discusses six reasons why cryptocurrencies won’t replace gold: they are more similar to a fiat money system than you think; gold has always had and will always have an accessible liquid market; the majority of cryptocurrencies will be wiped out; lack of security undermines cryptocurrencies’ effectiveness; hype and speculation continue to drive cryptocurrencies’ value; and cryptocurrencies do not have gold’s history as a store of value.