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Ignore Naysayers, Bitcoin is the New Gold

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Bitcoin investors are going through a rough patch right now as the cryptocurrency struggles to hold on to its gains from 2016. The main reason behind the headwinds facing Bitcoin is the government-led probe on Bitcoin exchanges in China. Interestingly, critics are taking the current weakness facing Bitcoin as ‘proof’ that their gloomy forecasts on Bitcoin will happen.

However, that Bitcoin is undergoing a rough patch doesn’t erase the fact that Bitcoin is a disruptive new force. This piece seeks to explore some of the reasons you should ignore naysayers and embrace the hedge that Bitcooin provides as a safe haven on par with gold.

Bitcoin is the new gold

It is no longer news that gold is a safe haven commodity that provides investors with a measure of safety and stability in times of economical and geopolitical uncertainty. Interesting, Bitcoin is shaping up to be another important commodity/currency with a safe haven appeal that leaves gold in the dust.

To start with, Bitcoin’s value as a safe-haven alternative currency became obvious during the 2016 U.S. presidential elections. Wall Street investors have mostly believed that the U.S equities market could crash if Donald Trump won the elections. Hence, when the news of Trump’s victory broke, investors pulled out their funds from traditional assets into alternative assets such as gold and Bitcoin. In fact, Bitcoin surged to towards breaking its all-time record high before the rally eventually slowed down.

More so, Bitcoin is an ‘independent’ currency that is not subject to the oversight of a central control unit. Bitcoin’s independence means that no government can rise up to introduce monetary or fiscal policies to influence the value of the Cryptocurrency. Bitcoin’s safe haven status as an alternative currency lies in the fact that its value is enmeshed in the realities of demand and supply as opposed to fiat currencies whose values can be manipulated at the whims and caprices of a government or its agents.

The fact that the Bitcoin system is built on a network of distributed and dispersed network of computers globally also helps to decentralize its operations. Bobby Lee, the CEO and cofounder of BTCC, a Bitcoin exchange in China agrees s that “the world is starting to realize that, just like gold is a good hedge, bitcoin is a great hedge against the system because it’s outside the system.”

Bitcoin’s reputation for fueling illegal transactions is not factual

Another point that critics often tout in their attacks against Bitcoin is that the cryptocurrency is often used to buy and sell illegal activities. The prevalence of Bitcoin on the dark web and its association with Silk Road has also fueled the flames of its questionable reputation.

However, the fact remains that any currency can be used as payment for illegal transactions and the noise about Bitcoin’s  use in illicit activities is mostly propaganda designed to discredit the cryptocurrency. One of the facts that Bitcoin critics might not want to acknowledge is that other top tier currencies such as the U.S. dollar are used as payment for illegal and illicit activities much more than Bitcoin. In fact, Bitcoin doesn’t cause illegal activities anymore than the U.S. dollar cause counterfeiting, drugs, and kidnapping among other crimes.

 

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