Is Bitcoin Digital Gold?

By November 12, 2020March 28th, 20225 minute read
Is bitcoin digital gold - WazirX

World-renowned financial magazine Bloomberg has recently published a report, wherein it has revealed that Bitcoin can soon attain gold-like value. The coronavirus outbreak had induced a momentary stock market tailspin, but Bitcoin is back on track with its bull run. In general, investors tend to compare new asset classes with the traditional ones, and today, we are going to answer some common queries about Bitcoin as digital gold.

Gold – Our Most Trusted Asset

Humans have highly valued the yellow metal since time immemorial. In ancient Europe, gold was an integral component of various temple rituals. Even in the modern world, gold serves as the paramount choice for jewelry. The importance of this precious metal has been retained nonetheless. Gold has also played an important role in shaping the U.S. economy, given its rarity. The value of each dollar was pegged against a certain amount of gold until President Nixon ended this practice in 1971. 

According to the renowned ancient philosopher Aristotle, any means should cover these three following attributes for being treated as money:

  • It should act as a store of value.
  • It should act as a medium of exchange.
  • It should possess a unit of account.

Coming to modern times, gold is not used as money anymore. Rather it is used in the form of jewelry and a store of value. However, it has also gained importance in other spheres like dentistry, electronics, and aerospace. The country’s health is also indicated by the price of gold, which remains lower during the spans of expansion. Similarly, the gold price rises during the inflation phase. As the financial market crashed mid-September in 2008, the gold price bounced below $740 per ounce, while it rose over $1900 per ounce in August 2011. 

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The Highly Volatile Bitcoin

Bitcoin was incubated in 2008 for providing the global population with a currency that shall not be controlled by any bank or government body. The main idea was to create a decentralized currency to solve all the problems faced by fiat currencies. Initially, Bitcoin had a negligible value but this crypto started gaining global traction on 9th February 2011, when it attained parity with USD. The Bitcoin price in INR during that time also corresponded to one dollar. 

Bitcoin’s price skyrocketed from $4.6 to $426 between 2011 to 2015, which accounted for a growth of 9000%. This kind of unprecedented growth has never been seen in finance history, which made investors around the world sit up and take notice of this new contender to traditional currencies. The BTC rate in India today is 1146172 INR. 

But just like other cryptocurrencies, Bitcoin suffers from an inherent limitation, and that is its high level of volatility. This has made it a component of the high-risk asset category coupled with double-digit variation, which occurs daily. Irrespective of all this, the profitability of Bitcoin is undeniable. 

Gold Versus Bitcoin

For being considered as digital gold, Bitcoin needs to possess certain attributes. Let’s check each of them to gain a clearer knowledge of the criterias it fulfills:

  • Bitcoin and gold are both excellent means of exchange as both can be traded for goods and services.
  • Just like gold can be divided into quarter or half ounces, you can also divide Bitcoin up to 1 satoshi (the smallest unit of a bitcoin) while converting them in bitcoin exchange India. This validates Bitcoin’s claim as a unit of account.
  • While Bitcoin served as a store of value previously, its role amidst the current market turmoil has made bitcoin skeptics argue that the intangible nature of bitcoin causes it to have zero intrinsic value. 

Recent Advancements

Mike Novogratz, the billionaire investor, and CEO at Galaxy Investment Partners, recently revealed that Bitcoin’s price is expected to go higher as digital gold. This is going to cause more and more people to wish for Bitcoin as a considerable portion of their entire portfolio. He further added that Bitcoin will not gain acceptance as a transactional currency in the coming five years. He shared his thoughts on Radio and Bloomberg TV, where he vouched for Bitcoin to serve as a store of value. 

Various crypto aficionados around the globe have raised concerns about central banks printing money to counter the pandemic. This can bring about inflationary trends in days to come. Different central banks around the globe are trying to create their indigenous digital assets, and China is already in the path of testing out a digital yuan. PayPal Holdings Inc. allowed customers to make transactions in cryptocurrencies around a year back. This has helped its large user base to hold, buy and sell cryptos like Ether, Bitcoin, Litecoin, and Bitcoin Cash using their digital wallets. They can even shop from the 26 million merchants enlisted with PayPal using their crypto holdings. 

Novogratz has forecasted that companies like Visa Inc., E*Trade Financial, American Express Co., and Mastercard Inc. will follow suit within 12 months by offering its enlisted merchants to transact in cryptocurrencies and stable coins. Without a doubt, blockchain will develop into an integral part of our financial infrastructure, and every company needs to prepare themselves to be a part of these winds of change. 

Final Words

People are finding a safe haven in this numero-uno crypto which is helping with its mainstream adoption. Tracy Alloway, a financial journalist for Bloomberg, has shared bullish predictions for BTC. She added that Bitcoin has served as a means for making payment, hedge against inflation, speculative, and financial assets which can benefit its holders when interest rates are minimal. The opportunity cost of holding Bitcoin is very less and this further strengthens its stronghold as digital gold. An enduring decline of cryptos has been experienced in this COVID-19 pandemic, but BTC is expected to appreciate in the days to come, given its attributes of a hedge asset. The pandemic will tag along with specific macroeconomic effects, which will add inertia to Bitcoin’s process of appreciating in value compared to peer cryptos.

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What Is Meant By Bitcoin?

Bitcoin is a digital currency that was initially released in January 2009. It is based on ideas offered by Satoshi Nakamoto, a mysterious and pseudonymous figure, in a whitepaper. The name of the person or individuals who invented technology has not been revealed. Bitcoin promises lower transaction fees than other online payment systems, and unlike government-issued currencies, it is decentralized.

What Is Bitcoin?

Bitcoin is a decentralized digital currency that may be purchased, traded, and traded without intermediary like a bank. Bitcoin is built on the blockchain, which is a distributed digital ledger. Wei Dai suggested a new kind of money that relies on cryptography rather than a central authority to oversee its production and transactions on the cypherpunks mailing list in 1998. Bitcoin was the first application of that notion. In 2009, Satoshi Nakamoto sent out the first Bitcoin specification and proof of concept to a cryptography mailing group.

Is Bitcoin Safe And Legal In India?

In 2020, the Supreme Court of India lifted the RBI’s restrictions on cryptocurrencies. According to the Supreme Court, the existence of Bitcoin or another cryptocurrency is unregulated but not unlawful. The verdict has greatly aided the world of digital money in the country. To put it another way, investing in Bitcoin is perfectly legal, and you may do so through various apps and traders.

What Is Bitcoin Used For?

Bitcoin was created as a means of sending money over the internet. The digital currency was designed to be a non-centralized alternative payment system that could be used in the same way as traditional currencies. Bitcoin is being used by an increasing number of businesses and individuals. This includes establishments such as restaurants, apartments, and law firms.

Can Bitcoin Be Converted To Real Money?

Crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, and Peer Peer Transactions are all options for converting Bitcoin to cash. This can be accomplished by using Bitcoin exchanges such as WazirX. A Bitcoin ATM is a real place where you may purchase and sell Bitcoins with cash, unlike standard ATMs that allow you to withdraw money from your bank account. Many websites provide the option of purchasing Bitcoin in return for a prepaid debit card that works similarly to a standard debit card. Through a peer-to-peer marketplace, you may sell Bitcoin for cash faster and more privately.

How Can I Convert Bitcoins To Cash?

Bitcoin may be converted to cash in various ways, including crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, and Peer to Peer Transactions. You may do this by using Bitcoin exchanges like WazirX. You may also sell Bitcoin for cash faster and more anonymously through a peer-to-peer marketplace.

How To Make Bitcoin?

Bitcoin mining is not just the process of putting new Bitcoins into circulation, but it is also an essential part of the blockchain ledger's upkeep and development. It is carried out with the assistance of highly advanced computers that answer challenging computational math problems. Miners are rewarded for their efforts as auditors. They are in charge of ensuring that Bitcoin transactions are legitimate. Satoshi Nakamoto, who is the founder of Bitcoin, innovated this standard for keeping Bitcoin users ethical. Miners help to prevent the "double-spending problem" by confirming transactions.

Is Bitcoin Trading Is Legal In India?

In 2020, the Supreme Court of India lifted the RBI’s restrictions on cryptocurrencies. According to the Supreme Court, the existence of Bitcoin or another cryptocurrency is unregulated but not unlawful. The verdict has greatly aided the world of digital money in the country. To put it another way, investing in Bitcoin is perfectly legal, and you may do so through various apps and traders.

Who Created Bitcoin?

Bitcoin is the first application of the concept of "cryptocurrency," first articulated in 1998 on the cypherpunks mailing list by Wei Dai, who proposed a new form of money that relies on cryptography rather than a central authority to manage its creation and transactions. Satoshi Nakamoto published the initial Bitcoin specification and proof of concept on the cryptography mailing list in 2009. Satoshi exited the project in late 2010, with little information about himself available. Since then, the community has evolved, with numerous people working on Bitcoin. Satoshi's anonymity has sparked unfounded fears, many of which may be traced back to a misunderstanding of Bitcoin's open-source nature.

How To Create Bitcoin Account?

Firstly, Go to the WazirX website and sign up. Then, a verification mail will be sent to you. The link sent via verification mail would be available only for a few seconds so make sure you click on the link sent to you as soon as possible, and it will verify your email address successfully. The next step is to set up security, so select the most suitable option for you. After you have set up the security, you will get a choice to either proceed further with or without completing the KYC procedure. After that, you will be directed to the Funds and Transfer page, where you could start depositing Bitcoins to your wallet. You can also deposit INR and then use it to buy Bitcoin for your WazirX Bitcoin wallet.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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