While large financial companies are rapidly buying up free bitcoins, there are still people of the “old school” on Wall Street who continue to criticize the main cryptocurrency.
The day before, the creator of the world famous Forbes magazine Steve Forbes and the head of Fidelity Digital Assets Tom Jessop announced their negative attitude towards BTC. The arguments are the same: too high volatility, that is, sharp jumps in the rate, and the “unreliability” of Bitcoin.
The main disadvantage of Bitcoin
According to Steve Forbes, the image of the main cryptocurrency is improving amid rising inflation and uncertainty in the global financial system. Here is his remark, in which he voiced his claims to the first coin. The quote is from Decrypt.
The biggest incentive for the hype around Bitcoin is concerns that the Federal Reserve and other central banks are printing too much money.
Recall that the maximum number of bitcoins in circulation is strictly limited to 21 million coins, and this number will reach only after 120 years. In addition, after the extraction of the last BTC, nothing terrible will happen.
A fixed supply of Bitcoin in circulation is one of the main advantages of a cryptocurrency. The latter becomes especially obvious and serious this year, when the central banks of various countries, against the backdrop of the coronavirus pandemic, began to increase the money supply. However, the same scheme will not work with BTC, which means that the cryptocurrency remains stable in any conditions. In addition, it does not depend on the actions of various governments – which is also a plus.
However, at the same time, Bitcoin should not be considered an excellent investment for preserving capital – it is much “safer” to solve such a problem by investing in gold, Forbes is sure. Here is his line.
Bitcoin remains too volatile to be considered a long-term store of capital like gold. Bitcoin’s arbitrary supply limit will seriously hinder its future usefulness.
We have to disagree with this quote. Yes, throughout its history, cryptocurrency has more than once “frightened” investors with large collapses of more than 50 percent of its value, and a striking example of this is the collapse of Bitcoin in March this year. But at the same time, the price of Bitcoin in ten years has risen from a couple of cents to 20 thousand dollars. Isn’t this the best investment of the past decade? Compared to these numbers, the profitability of gold looks ridiculous.
Bitcoin price in ounces of gold. The higher the chart, the more valuable the cryptocurrency is in relation to the precious metal.
At the same time, Forbes singles out the annual gold production rate of 2 percent of the total precious metal as something positive. At the same time, the maximum amount of bitcoins is strictly limited, which makes BTC an even more scarce asset than gold.
Conclusion: criticism of Steve Forbes has no serious arguments. In addition, it is a kind of unwillingness to keep up with progress and a clear indication of conservatism in financial views.
Moving on to a quote from Tom Jessup at the Reuters Global Investment Outlook Summit 2020, quoted by CryptoPotato.
We use the word “potential store of value” because Bitcoin is still extremely volatile and by any standard it may not reach the title of true store of value.
Jessop, unlike Forbes, is less critical of cryptocurrency. In addition, his company Fidelity Digital Assets actively supports and invests in digital assets, as this is the main vector of the activity of this division.
For clarity, here is a graph of gold in 2020.
Both of the aforementioned “sharks of the financial world” are frightened off by the volatility of the BTC price, which really takes place. However, it is thanks to the huge price swings and the right investment strategy that even amateur investors can make a fortune on Bitcoin. Therefore, for them, cryptocurrency remains almost the only “road to wealth”.
We believe that the volatility of Bitcoin is its property, which is a consequence of independence from central banks and imposed financial constraints. This means that in the wake of euphoria in the market, the rate will grow, and in moments of falling sentiment, the value of the asset will fall. Since no one is able to influence the participants in the BTC network and other cryptocurrencies, this situation will continue in the future. Therefore, it is easier to come to terms here.
So this position seems irrelevant to us. Plus, in 2020, gold hasn’t shown itself to be a great store of value. Yes, the precious metal set an all-time high, but it didn’t go further than that. Therefore, here Bitcoin has already won.