For centuries, gold has been considered a standard as a store of value. In 1967, banks and financial institutions scrambled to stock up around World War II, but recent reports indicate that these same institutions are doing the same again but at a much faster rate. According to reports from Ethereum World News, banks are getting ready to shore up their reserve and improve their economic situation.
In 2018, the World Gold Council states that central banks purchased more gold during the year that they have at any point in history since 1967. During the year, the banks recorded a
For centuries, gold has been considered a standard as a store of value. In 1967, banks and financial institutions scrambled to stock up around World War II, but recent reports indicate that these same institutions are doing the same again but at a much faster rate. According to reports from Ethereum World News, banks are getting ready to shore up their reserve and improve their economic situation.
In 2018, the World Gold Council states that central banks purchased more gold during the year that they have at any point in history since 1967. During the year, the banks recorded a 75% rise in these purchases, buying 651.5 MT of gold, reaching a total holding of 34,000 MT of gold by the year’s end. Converted to fiat currency, the valuation of the gold would be $27.7 billion, which is about 33% of Bitcoin’s market cap.
There are plenty of reasons that banks could be accumulating gold, like increasing their own safety net as debts increase, though there are still other possibilities. However, considering that Bitcoin is being referred to as “digital gold,” it could also benefit banks to stock up on this digital currency as well. In fact, EWN makes a solid argument in their article for why Bitcoin would be “a better alternative” to holding gold.
Bitcoin has the potential to be premier money in the next 20 to 30 years, but it comes with a wealth of technology as part of the deal. Bitcoin became a go-to asset for many people after the financial crisis and has helped the unbanked citizens around the world to have access to a payment system. It has slowly become a store of value, a way to settle payments, and a medium of exchange, earning its place as competition against many centralized processors, including Visa.
When Satoshi Nakamoto first created Bitcoin, his intention of giving the financial control to the people was clear, as he made it possible through decentralization via blockchain technology. There are many crypto proponents going after Bitcoin for their own purchases now for that exact reason.
If an economic meltdown ends up happening, Bitcoin has the strength and opportunity to provide some protection from the central banks. The purchasing power of Bitcoin will end up increasing over time, based on the design of Nakamoto’s crypto asset to be deflationary.
Bitcoin is much scarcer than Gold, making it a better store of value in the eyes of the economists in the market. Bitcoin’s supply will not increase, and it won’t ever become a physical burden to store Bitcoin, because it has no matter of its own.
As of July, last year, the inflation rate of Bitcoin was only 4.25% and it will continue to dwindle until the inflation rate is zero, based on the way it was constructed. Most banks may be investing in gold as a way to maintain stability, but the people that have found ways to trust cryptocurrency are doing so with a much better store of value, thanks to Bitcoin.