While many in the industry believe that Bitcoin will surpass gold in terms of investment and popularity, an analyst at Morningstar is not so sure.


When Bitcoin was riding that $20k wave in December last year, everybody wanted a piece of the action. While nowhere near that price now, virtual currencies are still attracting attention.

MarketWatch reports that while this interest may have resulted in some enthusiasts believing that crypto could rival gold in the future, this won’t be the case. Well, that’s the opinion of Kristoffer Inton at least. As an analyst at Morningstar, a global investment firm, Inton gave his insight:

Amid the growing hype, some even floated the idea that cryptocurrency could one day replace gold as one of the world’s most widely accepted investment assets. In order to assess the threat, we’ve created a framework to grade any asset class’s viability as a safe haven by focusing on liquidity, functional purpose, scarcity of supply, future demand certainty, and permanence. Through this framework, we conclude that cryptocurrency does not and will not challenge gold as a safe-haven asset class.

Let’s Say Bitcoin Does Replace Gold…

However, Inton does believe that if certain crypto experts are to be believed, investors in gold should start to worry. He referred to John Pfeffer of Pfeffer Capital who had previously said that Bitcoin would replace gold and would eventually have a network value of $6.4 trillion.

In response to this, Inton said:

If cryptocurrency were to displace gold’s investment case, the implications for gold prices would be devastating. 40% of gold demand relates to investment, so a shift in investment from gold to cryptocurrency would be a seismic shock.

Slow Transactions and Volatility

The article also laments Bitcoin’s transaction speed by comparing it to Visa’s and Mastercard’s. While the crypto can reportedly complete five per second, Visa can do 10,000. Strangely enough, there is no mention of the latter’s 5.2 million transactions that failed in June this year.

This supposed asset rivalry doesn’t mean that Bitcoin and gold can’t have a joint future though. Live Bitcoin News recently reported that Kinesis is pursuing this by launching stablecoins that will be back by metals. However, it remains to be seen if it will increase, or even affect, the rate of global interest and subsequent adoption.

Both gold and Bitcoin have suffered losses this year with the former dropping in value by 12.4%.

In this time of belt-tightening, more and more people are looking for alternative ways of growing their wealth, with investments being an attractive drawcard. Bitcoin and other cryptocurrencies may seem like a more volatile option than precious metals but with a push for clearer and faster regulations, this could change.

Do you think Bitcoin will replace gold in the future? Let us know in the comments below! 


Images courtesy of Pixabay and Shutterstock.

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