Bitcoin enthusiasts and investors are looking forward to the day central banks will start stockpiling the digital asset as the hunger for hard assets increases. Central banks around the world are moving towards gold as a store of value as de-dollarization picks up pace as US wars continue with China, Iran, Russia and other sanction-able countries. With Bitcoin (BTC) providing a better rate of return and wealth preservation, will central banks start stocking the digital asset in favor of gold?
A Bloomberg report earlier last week confirmed the stockpiling of gold reserves by China and Russia as the two mega states look for alternatives to US Dollar reserves. Russia currently hold a little over 2,200 tons of gold after adding 106 tons during 2019 while China holds 1,900 tons following the addition of 100 tons since December 2018. This has propelled the asset to a six year high price – $1,550 USD – amidst trade wars between the US and China.
The disagreements between the two countries and the US are causing them to diversify their reserves to other hard assets. Can BTC finally be considered a better store of value than gold?
Across cryptocurrency circles, investors believe the digital asset is better a better SoV than bullion in any aspect that gold gains its value from. First, BTC has a set maximum cap which ensures the asset will remain scarce unlike gold. No one knows the exact quantity of the shiny precious metal under the earth or in the universe. With advancement in technology, the supply of gold is likely to increase exponentially reducing its value significantly.
Furthermore, BTC is easier to store, transact, transport and conceal than gold. The cumbersome metal requires extra money to store it safely or transport it which is expensive in the long run. Gold only tramples BTC in its historical precedence as more people trust the metal than BTC.
With the opportunities that Bitcoin holds and the increasing pressures of de-dollarization, central banks across the world will start seeing the benefits and switch to buying the digital asset. One investor, Melik Manukyan, sees the opportunity for hyper bitcoinization once a single central bank takes up bitcoin reserves. He tweeted,
“The first nation state that announces that they are adding #Bitcoin to their reserves will kick off the ‘Bitcoin Arm’s Race.’ Shortly thereafter, all nations will follow and begin position themselves accordingly for the digital age. Frenzy, panic, and #hyperbitcoinization. HODL.”