Former U.S. Treasury Secretary Lawrence Summers said cryptocurrencies could stay a feature of global markets as something akin to digital gold, even if their importance in economies will remain limited.
During the third week of May 2021 in which Bitcoin whipsawed, Summers told Bloomberg Television’s “Wall Street Week” with David Westin that cryptocurrencies offered an alternative to gold for those seeking an asset “separate and apart from the day-to-day workings of governments. ”Gold has been a primary asset of that kind for a long time,” said Summers, a paid contributor to Bloomberg. “Crypto has a chance of becoming an agreed form that people who are looking for safety hold wealth in. My guess is that crypto is here to stay, and probably here to stay as a kind of digital gold.”
If cryptocurrencies became even a third of the total value of gold, Summers said that would be a “substantial appreciation from current levels” and that means there’s a “good prospect that crypto will be part of the system for quite a while to come.” Comparing Bitcoin to the yellow metal is common in the crypto community, with various estimates as to whether and how quickly their total market values might equalize. best penny cryptocurrency to invest in 2021. bitcoin vs gold
Yassine Elmandjra, the crypto trading signals analyst at Cathie Wood’s Ark Investment Management LLC, said earlier during May 2021 that if gold is assumed to have a market cap of around $10 trillion, “it’s not out of the question that Bitcoin will reach gold parity in the next five years.” With Bitcoin’s market cap around $700 billion, that could mean price appreciation of around 14-fold or more.

Why Bitcoin Is A Superior Store Of Value
A store of value is an asset, commodity, or currency that maintains its worth and therefore can be exchanged in the future without deteriorating in value.
In this category of store of value assets, gold has been the “gold standard” (sorry, couldn’t resist). Gold has been a store of wealth for thousands of years and has outlasted the currencies of various empires and nation-states that have come and gone. Many currencies, including the dollar, were pegged directly to gold. However, this limited the government’s ability to provide financial aid (aka, print more money) and in 1971, the gold standard was abandoned by the US. Since then, the value of a dollar has steadily declined while gold has risen from $35 per ounce to over $1,800 as of January 2021. how does cryptocurrency gain value
I think it’s also worth noting that gold was not a global monetary standard that was chosen by any one person or entity. Governments only recognized gold as a monetary value once the market had adopted it. By the end of the 19th century, gold emerged as a clear, universal monetary medium used around the world due to a number of intrinsic properties. That is until now. By every measure other than adoption (for now), Bitcoin is a better store of value than gold.
Scarcity
While there are a number of characteristics needed in an ideal store of value assets, scarcity is the most important of them all. In order to be a store of value, the good cannot be abundant, easy to obtain or easy to produce in quantity otherwise it would be trivial to increase the supply of the good. As basic economics have taught us, when the supply increases by more than demand, the price falls making it a poor store of value. However, when supply is limited, any increase in demand increases the price of the good helping retain its value.
However, whereas gold has relative scarcity, Bitcoin has absolute scarcity. There will only ever be 21 million Bitcoin in existence and after 2140, no more will ever be created. Gold has been mined for thousands of years and new gold will likely still be mined for the indefinite future. Once the last Bitcoin is mined, there will never be any more.
Thus, Bitcoin is the only liquid asset in the world that has a fixed supply. That makes Bitcoin the scarcest asset in the world
Constant and Predictable Supply Schedule
In addition to overall scarcity, a constant or predictable supply schedule is desirable. Consistency and predictability increase confidence in an asset. Gold has been relatively consistent. New gold gets introduced every year at roughly 1–3% of existing supply. However, as demand starts to rise and price increases, gold mines become more profitable and thus more gold gets mined and the supply schedule increases.
Bitcoin not only has a fixed supply, but its supply schedule is also pre-determined which means we know in advance exactly what the supply schedule will always be. Furthermore, Bitcoin’s supply schedule is disinflationary, meaning the amount that gets mined per block decreases by half every four years. This event is called “The Halving” and as a result of this event, Bitcoin becomes scarcer over time, regardless of demand or price increases. Like Bitcoin’s fixed supply, it’s supply schedule can never be altered.
Verifiable
A store of value asset is ideally easy to identify and simple to verify. Knowing that the goods cannot be counterfeited ensures the market will not be flooded with fake goods and also increases confidence levels in future transactions. Gold can be tricky to verify. While there are some at home tests one can run, they often require special equipment (ie: rare earth magnets) or specific knowledge about key characteristics of gold. These methods are useful but not totally full proof. The only way to know for certain is to take the gold to a third-party specialist in order to get it certified.
In contrast, Bitcoin is simple to verify. Not only is it easy, the Bitcoin Blockchain is constantly validating and verifying each block of transactions it receives to ensure that everything in that block is fully valid, allowing anyone to trust the block without having to trust the miner who created it. Furthermore, the ledger is transparent and immutable so that anyone can verify the validity of any coin or any transaction at any time.
Bitcoin also has never been counterfeited. In fact, because Bitcoin can only be created from mining, and thus no way to create a fake bitcoin, and no way to make a duplicate of an existing Bitcoin, it’s theoretically impossible to counterfeit Bitcoin. In contrast, counterfeit gold coins routinely make their way into the circulating supply. This makes Bitcoin more easily verifiable than gold.
Storable
Because a store of value assets is meant to be held onto well into the future, there must be a secure method of storing this asset so that it can be retrieved at a later date. Gold is rather difficult and expensive to store. You either need to store it yourself or have someone store it for you. While a couple gold bars can be stored in a home safe, larger values require significant space to store. As such, most gold is stored in large vaults such as Fort Knox, private banks, or with private gold storage firms. However, storing gold with a third party comes with fees which can range from 0.3% — 1.25% per year depending on the account value. These annual fees diminish the future value of your holdings in gold.
By comparison, Bitcoin is much easier to store and can be done for free. Bitcoin is digital and therefore does not require a large vault or safe. Anyone can self-custody any amount on their own using a digital wallet that is either web based, or hardware based. The wallet can also reside on a mobile device, on a computer desktop, a hard drive or kept safe by printing the private keys and addresses on paper. There is a little bit of a learning curve on how to safely store bitcoin for anyone new to the space but once understood, there are no scaling or cost limitations to storing Bitcoin.
References :
- Crypto Has Chance of Becoming ‘Digital Gold’ – https://finance.yahoo.com/news/summers-says-crypto-chance-becoming-074337145.html
- Why Bitcoin Is A Superior Store Of Value – https://medium.com/road-less-ventured/why-bitcoin-is-a-superior-store-of-value-e5464d5fd619