Mohi-uddin believes that bitcoin must conquer every obstacle to replace gold as a store of value. The bank also considers that cryptocurrency custodians should guarantee more confidence to investors.
In a report that appeared on January 22, Bank of Singapore chief economist Mansoor Mohi-uddin explained that he considers it unlikely that bitcoin (BTC) and other cryptocurrencies will replace government-issued currencies as a traditional medium of exchange. However, it has the potential to displace gold as a store of value.
The executive said that cryptocurrencies must achieve people’s trust, defeat volatility, achieve regulatory acceptance, and solve risks to have the required potential to become a store of value that could match and even defeat gold.
Chief Economist of the Bank of Singapore, Mansoor Mohi-uddin, said that Bitcoin’s staggering rally is on pair with the largest investment booms of the past decades, including gold in the 1970s, Japanese stocks in the 80s, Internet stocks in the 90s, the price of oil in the 2000s, and tech companies that emerged in 2010.
Cryptocurrencies are unlikely to replace national currencies as the primary medium of exchange in any economy. Instead, digital money could, over time, partially displace gold, offering an electronic rather than a physical store of value.
In this regard, The Chief Economist explained that investors need reliable institutions to offer protection and safety to digital assets. He also stressed that “volatility should find a balance to a more manageable level to improve liquidity.
The executive believes that to reduce bitcoin price volatility, more institutional, retail, and hedge fund investors should join the cryptocurrency business. That will likely increase liquidity, and prices would be free from any speculation.
The executive also highlights that young people prefer bitcoin and other digital assets over gold due to more comfortable handling and storage in virtual wallets. In contrast, precious metals are difficult to use for daily transactions and must receive daily protection in secure physical locations.
Similarities between Bitcoin and Gold
The economist came to a conclusion that establishes similarities that, in his opinion, exist between gold and Bitcoin. It specifies that the prices of both are set many times by “investor demand and financial speculation.” It also maintains that bitcoin and some cryptocurrencies have a “limited supply,” as does gold.
Other analysts have talked about this argument before. The management firm of hedge funds SkyBridge Capital is transparent that “bitcoin is like digital gold, and as such it can even surpass its value, Bitcoin has the potential to be better gold than gold.” Bitcoin is better because it solves the portability and divisibility problems that make it difficult to use gold as fiat money.
At the end of 2020, SkyBridge estimated that there were approximately 18.5 million bitcoins in circulation. They calculate that users will mine in about 120 years the remaining 2.5 million of the 21 million total bitcoins to exist to date.
By: Jenson Nuñez
