Bitcoin is referred to as the digital gold and after the incredible performance the digital asset has put on over the last couple of years, there is no doubt that this title was rightfully given. Now, though, the asset has moved on from competing against other digital assets to competing with gold. The latter has not done too well in the last couple of years, crushing confidence in its future.
This is how bitcoin has managed to float into the radar of small and large investors alike. The digital asset, returning over 200% gains per year, has proven to not only be a better investment in terms of gains but in terms of hedging against inflation.
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However, gold still maintains a much higher market valuation than bitcoin. This is due to the fact that while bitcoin has only been around for a little over a decade, gold has been in existence and used for thousands of years. But what if bitcoin got to the valuation of gold? How much would one bitcoin be worth?
Bitcoin With The Valuation Of Gold
Currently, bitcoin’s valuation still sits under a trillion especially after the downtrend recorded in the market. Compared to this, the market valuation of gold sits at a whopping $11 trillion. If bitcoin’s total market valuation were ever to rival that of gold at any time, then one BTC would be worth about $400,000.
Market experts like ARK Invest CEO Cathie Wood have placed the market in this position in the next five years. Wood who was going off the premise that institutional investments move 5% of their portfolio into bitcoin put the digital asset at $500,000 apiece in less than a decade.
BTC market cap at $787 billion | Source: Market Cap BTC on TradingView.com
Most who are involved in the crypto space do follow the school of thought that BTC would inevitably touch this price point in the not-too-distant future. However, it is important to assess what gives gold its value and compare that to bitcoin’s utility.
Where Does All The Gold Go?
Gold which is mined from the earth is usually put into some use depending on what it is needed for. Yes, the world’s federal reserves do use gold as a store of value. But what a lot of people do not know is that the percentage of mined gold used for this purpose is not as grand as they might expect.
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This report outlines where the world’s gold ends up being used. The most common use case for gold is in jewelry. It is estimated that about 78% of all gold mined are used in the design of jewelry, making it the most prominent use case for the coveted metal.
Bullion coins and bars used by banks and investment funds only take up 19% of gold, while medical and industrial use cases account for the remaining 3%. These use cases give gold more real-world uses than bitcoin.
However, bitcoin does present better opportunities when compared to gold in some cases. For one, it does not require the breaking of the earth and dangerous mining conditions to obtain. BTC is also easily transferrable, arriving in the hands of someone across the world in a matter of minutes.
Featured image from NewsBTC, chart from TradingView.com
