When you look over the data it’s obvious that cryptocurrencies like Bitcoin have outperformed most other assets like fiat currency and gold. After 14 years of cryptocurrency expansion, many now believe this technology surpasses fiat and gold in terms of store-of-value characteristics.
Store of Value
A store-of-value is an asset that is designed to retain value over time. These assets need to be resilient to items such as inflation and manipulation to ensure their longevity. Both gold and fiat currencies have been used as reserves in the past due to their SoV traits. However, technology has introduced a better option in the form of cryptocurrencies. Here’s some valuable insight into why crypto is beating out the competition in 2023.
Gold was the Champion
The primary thing to understand is why gold became the global reserve currency in the first place. For one, it’s limited in supply. This means that there was a strong demand for precious metals. Additionally, it’s hard to counterfeit and impossible to create, especially using the technology available to the average person.
Gold has remained a stable asset that has stood the test of time. There were entire centuries when countries held their reserves in gold exclusively. Interestingly, the desire to secure more gold reserves fueled the slave trade and colonialism, which has led to lingering problems until this day.
Gold was ideal for a reserve currency because it was internationally accepted and no single country controlled the entire supply of it. This structure meant that it was a reliable store-of-valu that could be used in any part of the world and converted into goods and services.
Problems with Gold that Cryptos Solve
Gold was ideal when the world was smaller and less populated. Additionally, it was never meant for the middle or poor class. Gold has too many restrictions that would make it impossible to bring back as a daily currency. Even gold reserves can’t match the amount of fiat currency printed at this time. Here are the main issues that gold has that cryptocurrencies solve.
Expensive to Send
Gold is very expensive to send You need to account for its weight and security. These costs can end up equaling more than the amount of gold you’re trying to send. Royals would use an entire caravan to send gold across their kingdoms and in many instances, the funding was still lost, stolen, or tampered.
It would be hard to imagine a person attempting to pay for an item using gold today. The cost and risks of sending it through the international mail system are high. Imagine your gold bar going through the local postal service and getting dropped off on a front porch. Additionally, this process could take weeks to complete.
Sending Crypto is Easy and Fast
You can send cryptocurrencies like META 1 Coin across the planet in seconds. The decentralized nature of blockchain technology makes these processes efficient. Transactions are completed in a p2p manner which eliminates delays and lowers fees. It also eliminates censorship.
Regular users aren’t the only people who have noticed that cryptos are better for sending funding internationally. The project Ripple XRP focuses on helping banks send funding to each other using blockchain assets. Additionally, banks are looking into native blockchains to improve asset transfer rates.
Store
Unless you have some serious security at your home, it’s not wise to hold a bunch of gold in your residence. There are other options to consider but they are more expensive. You could elect to have your gold stored in a community vault. However, as soon as you let an asset leave your hands, there is always the risk it may never return.
Storing gold in 2023 would at the very least require a safe location and discretion. It would be recommended a nice safe be installed and security cameras to improve storage conditions and reduce the risk of theft. At this point, the cost of storing gold has now become an ongoing overhead which will reduce its overall value over time.
You Can Store Cryptos for Free
On the flip side, cryptocurrency can be stored in a multitude of different ways depending on your goals. There are online and mobile wallets for daily use. There are also hardware wallets for long-term saving. These wallets are ideal because they only cost around $100 and they keep your crypto stored offline and safe from hackers.
The best wallets will be noncustodial options. This structure means that you are the only person who has access to your cryptocurrency using a private passphrase. If you lose the passphrase nobody can help you to get it back. As such, you must protect this as if it was a piece of gold.
The main things to consider when storing your crypto are how much crypto, the type, and for how long. If you’re leveraging a safehaven token like META 1 Coin, you could store your crypto in a digital bank like the META VAULT. This approach would enable you to enjoy 10% APY and compounding returns.
Unlike gold, you don’t need a thousand-dollar safe or alarm system to prevent theft. However, like its predecessors, discretion is going to be your best defense. Always be private about your crypto or gold holdings. The fewer people that know about your savings and the better protected you are from theft and hackers in general.
Not Available to Everyone
Gold isn’t readily available to the masses. It’s expensive to mint and can be diluted to make more tokens. This strategy has been used by gold counterfeiters and scammers for thousands of years with great success. The average person would have no way of verifying a gold coin’s authenticity without the help of a third party.
Cryptocurrencies can be distributed more efficiently than gold. For example, during the COVID-19 pandemic governments issued stimulus payments to the masses. This strategy was bungled but could have never been possible using gold. There simply isn’t enough gold available. Reports say that there are only a few Olympic size swimming pools of gold in the world.
Cryptocurrencies are readily available. They can be created and issued to the masses at a very low cost. Additionally, they are not be counterfeited and they provide transparency to all parties of the network in real-time.
Not predictable
A huge issue that gold has is that it’s not predictable. There have been moments in time when gold discoveries led to a flood in the market. When colonization was in full swing, gold influxes in England caused the country to use silver to avoid inflation. This is in part some of the reason why you have the Pound Sterling.
At any moment, any country could stumble upon a massive gold reserve. This influx in the precious metal would result in more supply, thereby reducing demand and pricing. In turn, gold savers would lose out. Sadly, this scenario will never change as there is always the prospect of a gold deposit discovery.
Cryptocurrencies like Bitcoin and META 1 Coin leverage a predictive issuance schedule to ensure transparency. For example, when a Bitcoin miner receives their rewards, that’s the only time a new Bitcoin enters the market. This makes it easy to see when the entire 21M Bitcoin will be mined. As such, it adds to the long-term demand and security of digital assets.
Not Digital
Gold isn’t going to work for any type of digital transaction. The markets of today are light years ahead of what was considered a market when gold reigned as the king. Today, it’s all about e-commerce and cryptocurrencies are on the rise. Reports have placed crypto usage for online payments as the fastest-growing sector in the market.
No micro transactions
Another major issue that gold can’t overcome is its cumbersomeness. Gold is heavy and hard to work with. It is not going to work for any type of micro payments. You couldn’t pull up to the drive-thru and chip off $5 in gold to pay for your meal. Additionally, the metal is too malleable to make a $5 coin in the first place. Now take that concept further and imagine buying a pack of gum.
Cryptocurrencies are ideal for micros transactions. Networks like META 1 Coin can handle transaction throughput on par with the NASDAQ exchange. You can send your friends micro transactions in seconds using blockchain technology. Even earlier cryptocurrencies like Bitcoin can now send micro-transactions using layer 2 solutions.
Fiat vs Crypto – Easy Winner
Fiat currencies took the resigns from gold as the most common store of value for the average person. It’s normal for someone to have a bank account with their savings in it at their local branch? However, with the current inflation rate, this maneuver results in losses. The bank simply doesn’t pay enough APY to keep up with inflation.
Fiat has Reigned last 50 Years
Ever since the Vietnam War, when the US went off the gold standard, the world economy has been floating on a variety of measures. However, the average person leverages fiat currency for their savings and daily transactions. In many countries, this option has now been surpassed by cryptocurrencies.
Nations that have suffered from hyperinflation have seen their economies wrecked. Sadly, sometimes hyperinflation is imposed on a country via sanctions as a way to pressure the government of an opposing nation. This approach hurts the citizens as it steals their savings from them.
Easy to Use
Fiat currency is easy to use and accepted everywhere. You won’t have any problem finding people to take your money. Additionally, accounting and banking services are all built around fiat currencies. As such, it’s nearly impossible to avoid using them in some instances. However, they are not great as store or value options
Bad Monetary Policies
Fiat currency has a major cloud over it in terms of a long-term store of value like gold. That cloud is the fact that it can be manipulated by outside forces. For example, a bad monetary policy such as overprinting can lead to a complete loss of value in a fiat currency.
Nations like El Salvador suffered from intense hyper inflation due to economic factors and over-printing. The country introduced Bitcoin as a legal tender last year and now citizens have another option to consider when thinking about storing value over time.
Inflation
Inflation is a loss of buying power from an asset. It occurs for any reason. During the COVID-19 pandemic, a combination of supply chain issues led to increased prices. Additionally, the government printed out trillions in stimulus funding didn’t help the situation. These actions created a perfect environment for inflation to flourish.
Currently, the US has hit 40-year high inflation rates. The same goes for many countries in the EU. Interestingly, nations that are normally wrecked by hyperinflation are not suffering as badly because they were quick to kick their interest into double digits to prevent spending.
Cryptocurrencies like Bitcoin and META 1 Coin were designed to eliminate inflation. META 1 Coin leverages a basket of gold-related assets which enables it to enjoy self-appreciation. The token saw a 1.35% increase during the last market correction. It outperformed all the top 10 cryptos as most major cryptos lost as much as 60% from their all-time highs in 2022.
It is About Decentralization
Another point that must be understood is that cryptocurrencies like Bitcoin and META 1 Coin were designed for people to prosper. They integrate decentralization to ensure that no one party controls the faith of the community. This structure improves transparency and opens the door for more ROI opportunities.
Cryptocurrencies are the Real Winner
Now that you have more insight into the debate on if cryptocurrencies are better to store value than gold or fiat, you are ready to start making your savings work for you. Safehaven assets like META 1 Coin are changing what it means to save by eliminating inflation and providing high-yield options. As such, you can expect to see more savers make the switch moving forward.