Gold has long been labeled a store of value.
Partly because of it's lack of "perceived" volatility.
In fact, that is one of the key differences between Bitcoin and Gold, at least according to gold bugs.
While the volatility might be slightly less with gold, check out this chart:
As you can see on the far left, that is the volatility of gold when it first started to really trade freely.
Check out the far right side of the chart, that is Bitcoin currently, which is also at the beginning stages of trading freely.
As you can see, those are some very similar looking charts.
What is most interesting is how far down Bitcoin has come down on the volatility chart as of late.
It even dipped below that of gold for a few short periods of time.
That is interesting.
Keep in mind, that I am not saying that I think that Bitcoin is a better store of value than gold, or that it will eventually be less volatile, but I do think that the longer it trades and the more hands eventually hold the coin, the volatility will most certainly come out of it.
It will be interesting to see how things unfold as time goes on.
Basically the point in all this is this...
When things are first traded they tend to be more volatile.
That, and something is a store of value simply because people believe that it is.
Right now there are a lot of people out there who would much rather sell an ounce of gold then they would sell a quarter of a bitcoin...
I would imagine some of the money currently invested in gold will find it's way into Bitcoin in the not too distant future.
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https://seekingalpha.com/article/4104272-bitcoin-investment-decade
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Digital gold !
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Really nice comparison. Also feel like the volatility isn't that crazy anymore...
Why is it a store of value? Is it beause it is finite? What if there is no application for gold or people feel they donot need gold as ornaments , then demand goes down!! Would still be perceived as store of value?
Only if people believe it is... which as you just mentioned, preferences can change. However, it has history on it's side as people have valued it for thousands of years... so there is that. :)
pocketsend:100@jrcornel, Gold has been for the ages. It will become in vogue at some point (perhaps sooner than we think).
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I think the more trade volume there is, the lower the volatility will be. Right now it takes 1 big whale to cash out to lower the price, but that is far less likely to happen when the market is as big as the Gold market. It takes more than 1 party to panic, in order to move those markets and if they do, they don't move by insanely large percentages at once.
Great point. I agree. :)
Are you guys saying that there are whales out there big enough to move the BTC market price, based on volume?
I guess in theory that is true, but I don't think in practice that is the source of volatility at current time.
I believe a big source of volatility is 24x7 trading of BTC, and you see psychology circling the globe impacting price. China/Korea/Japan are bullish or bearish on BTC one day, and then 24 hours later the US takes the opposite view. And BTC bounces up and down. And the bigger ups and bigger downs occur when both sides of globe get in sync on the psychology, and BTC and other coins go for big rides up or down.
Most of current price movements are psychology. There are no traditional fundamentals to trade on.
Someone mentioned the bigger slide in the market was caused by stop loss orders.
What we should be focused on is the fact China declared war on cryptocurrency and it barely flinched hitting at its lowest 25% decrease in prices overall and around 25 billion in lost market cap.
Which in the past 12 hours has nearly recovered from the 36 hours rollercoaster ride.
Cryptocurrency 1
China 0
Which country wants to be next?
Beercules
Very clever observation. Nice work
Thanks. Your chart observation is perceptive. I know a lot of factors go into looking at volatility but doesn't it have a lot to do with market cap size? That is one of the first things I've learned to look at with an evaluation of a crypto currency.
so much to consider as we move forward, and best for me to keep learning and making friends, with people like you, who study this daily.
In about 2 years from now, BTC will have had more trading hours that Gold (since 1969). So the light blue line should actualy be more stretched out for a better comparison!
Interesting. Where are you coming up with that number?
In this article:
https://steemit.com/bitcoin/@bullishmoney/mainstream-media-ignorantly-spreads-bitcoin-bubble-fears
The author states the following:
The stated 2 years in my previous post was just a quick math answer, but i'm sure the exact date could be calculated with this info!
That primarily refers to the U.S. Stock market. There are several gold spot price markets that trade 23 hours per day... and they have been for a long time now.
You're right, i didnt think of that...
Although it is foremost traded in USD
I think Bitcoin the digital gold more interessing to store value
It certainly is more interesting... except you can't wear it. :)
Great post @jrcornel ..Upvoted... blessings
Very interesting comparison. Thanks!
The area that you show in the 1970's is when the US Dollar peg to Gold was abandoned by Nixon. Gold went from $35 an ounce to a spike high of $850 an ounce due to inflation issues when Carter was president.
Volcker started increasing interest rates which depressed the price of Gold for the next few decades. With the advancement in computers and HFT, the overall volatility has been somewhat diminished.
There have been massive selloff days in the bear market from 2011 to 2015 that I would classify as volitile.
your post is very nice, full pack of knowledge and very attractive...
i am new here bro plz come see my blog and upvote me if you like :-)
Very perceptive @jrcornel
I choose to hoard gold, silver and btc
Great post🤑
Add some real estate to it ;)
Yes, haha and my real estate haha
Really nice post. Just got into a little understanding of how bitcoine works but still learning to understand this language so thanks really cool and helpful post 🤙🏻🤙🏻👨🏻🏫 Upvoted and resteemed 💂🏻
That is exceptional analysis. Very well done.
Makes me more confident that BTC is going to be a long term store of value
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DaveB
Bitcoin is certainly the next new INVINCIBLEGold
I agree. Bitcoin is best used as a store of value!
Good analysis and great share on steemit. I really enjoyed this one. Agree with your view of the future.
nice post
Gold is seriously overvalued right now. However I think silver is undervalued.
Silver is one of the most useful metals on earth yet we rarely use it.
I foresee technical limitation in computers, batteries and solar panels that should be overcome using silver which is the least resistant metal on earth.
Everyone should keep a few gold coins or silver coins around as they're much easier to trade in times of crisis vs fiat currency.
Just my 2cents.
Beercules
Good post in nice information Bitcoin.
Wiele już ludzi stoi przed dylematem czy inwestować w złoto czy w bitcoin. Obecnie przy tak dużym wzroście kursu bitcoin odpowiedź wydaje się prosta, jednak w przyszłości może się to zmienić. Moim zdaniem optymalnie jest zainwestować zarówno w jedno jak i drugie. Dywersyfikacja jest bardzo dobrą metodą minimalizowania ryzyka.
Well I am not againts bitcoin but one fundamental difference between two of them is gold has value and can be used for different purposes while bitcoin is just an asset with no utility but future expectation have highly inflated the price.
I would rather have my BTC than my gold. I will keep both, but if I had to chose. It means that I value BTC more than gold. Yet, the gold market is 100 times larger than the BTC market. If more people think like me, and I believe quite a lot do all ready, and more to follow..we will see BTC 500K - JUST as a store of value. Anything beyond that..
I am the same opinion. BTC is clearly superior to existing currencies, and we believe that in the near future BT can be replaced satisfactorily. Of course it probably has a better possibility of better performance than BTC coins.
However, BTC thinks that it will be traded as a form close to digital money if inferring from the present situation. Limited issue number is large. It is reliable if there is anxiety, I think that the price temporarily dropped due to a branching riot with BCH the other day is remembrance new.
When I was 10 years old, my grandfather gave me a gold sovereign and told me never to sell it. 50 years later, I still have that sovereign.
Just the same coin as when I started. nothing in between, no rent, no interest, no dividends, nothing.
I wish he would have given me some shares in the FTSE 100. With 50 years of dividends at 4%, I think it would have done better than the gold.
Meanwhile, shall I give my grandchild that Sovereign, or shall I give him one-twentieth of a bitcoin?
Gold will have its day in the sun at some moment. But for now, cryptocurrencies take the crown.