In early February, cryptocurrency exchange Coinbase posted an article that argued that Bitcoin was a better store of value than gold. It claimed that Bitcoin is easier to audit; transaction fees are cheaper (as opposed to the high costs of physically transporting gold); it’s relatively anonymous; and it’s easy to divide it up into smaller parts.
Now, following March’s pandemic-driven market crash, Coinbase, which sells Bitcoin, has doubled down on that assertion.
In the wake of the market meltdown, many investors are pouring their money into gold as a so-called “safe haven”, in the hopes that its value won’t waver like fiat currency.
But Coinbase noted a problem: there isn’t enough physical gold to meet demand right now.
Coinbase’s latest blog post, entitled “Market efficiency of gold and Bitcoin,” highlights recent reports from news publications about the surge in demand for gold and the lack of adequate supplies.
One Bloomberg article describes a gold “supply squeeze”. The shortage is due, in part, to reduced refinery output and grounded commercial flights. The article says that gold bars are being sent from Australia’s Perth Mint to New York to try and fill the void.
In Coinbase’s view, such news only affirms its perspective that crypto’s digital nature and ease of transfer makes it a better store of value than gold.
“The recent challenges of the gold market reveals Bitcoin’s distinct advantage over gold: Bitcoin does not rely on fragile physical supply chains and is truly globally accessible,” said Coinbase post.
The post goes on to highlight evidence to support the authors’ pro-Bitcoin claims.
The point out that the value of gold on CME’s New York Gold Comex has split from spot gold trading in London due to the hampered supply chain. Meanwhile, Bitcoin’s value in USD has remained essentially identical across several top exchanges all over the world, aside from a single, brief deviation from Bitmex.
Bitcoin and gold are very different stores of value, and while Coinbase is obviously inclined to prefer the former, its (admittedly) narrow reasoning checks out. You might not be able to physically touch Bitcoin, but its digital nature gives it a big edge in the modern markets.
“Compared to transporting, depositing, or withdrawing gold to exchange globally, Bitcoin is at a technological advantage,” the report concludes. “And if current market conditions continue, Bitcoin may yet distinguish itself further.”