Why invest in gold? Are you still living in the past?
Recently, an ad (the theme is DropGold) has been fired to urge investors to sell gold and invest in bitcoin. The voiceover in the advertisement is "You can see the development trend of things", "Digital currency such as Bitcoin is the future."
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(DropGold ad screenshot, image source: Twitter )
The ad came from Grayscale Investments, the encryption investment company behind the Grayscale Bitcoin Trust (GBTC), which rose 66% this year. Grayscale manages $1 billion in assets and provides investment tools related to Bitcoin cash, Litecoin, Ethereum and Zcash.
Grayscale's parent company is Digital Currency Group (DCG), the world's largest cryptocurrency venture capital firm. DCG owns Grayscale, Genesis Trading and Bitcoin news site CoinDesk and has invested in more than 145 cryptocurrency startups including Coinbase, Ripple, Coinlist, Circle and Protocol Labs. Barry Silbert, founder and CEO of DCG and Grayscale, founded the trading platform SecondMarket and sold it to NASDAQ in 2015.
Although this ad ends with GBTC, Silbert says:
We don't think this is the promotion of Grayscale. For us, DropGold is 'Got Milk' (an advertisement that ignited in the 1990s to encourage people to drink dairy products). He said that the first concern of the campaign was to open a dialogue about Bitcoin vs Gold. If the ads let people want to get into Bitcoin, we don't mind what they do.
Silbert believes that everyone in the cryptocurrency industry should support the sport.
Why is Bitcoin more than gold?
Grayscale's ads may confuse viewers. Why is Bitcoin a gold substitute? Gold is a physical commodity with hundreds of years of history; Bitcoin is a digital currency created in 2009, and few Americans can understand it.
The gold industry has been vigorously promoting that gold is the only and best hedge tool in times of economic uncertainty. This may be true. But now that we have bitcoin, in our opinion, it offers the same attributes as gold – interchangeable, scarce, and unforgeable. But the biggest difference between the two is that Bitcoin actually has practicality. In addition to being made into jewels, gold is of little use. The threshold for getting gold is also high, compared to anyone who has access to the Internet. As a result, Bitcoin brings something that has been missing in history and has been greatly offset in terms of usability and accessibility.
Of course, mainstream retailers rarely accept bitcoin payments, but buying goods in bitcoin is not what Slbert says.
We are not promoting that you should buy coffee in bitcoin. What we mean is that Bitcoin is better at doing gold work than gold. We believe that bitcoin will be a better value storage method than gold in the long run.
This may not be of much weight to the opponents. Bitcoin has indeed risen 113% in the past two years, while gold has only increased by 2.5% over the same period. But the volatility of bitcoin prices will be used by many critics.
Silbert acknowledged that the volatility of Bitcoin has caused concern among mainstream investors. But he believes that Bitcoin will prove itself to be a means of storing value and driving it into the mainstream world.
A childish activity?
But it seems that not everyone is full of confidence in this event. Mati Greenspan, senior market analyst at the bitcoin trading platform eToro, said:
The reason I can understand them (to shoot this ad) is to create a topic and controversy, but ignore the definition of Bitcoin. Bitcoin was born to provide a currency that is independent of government and bank operations, but that doesn't mean replacing them.
Greenspan says it holds the same amount of cryptocurrency (including bitcoin) and gold. He believes that the cryptocurrency cannot be over-invested because its price is not stable. In fact, he said, having a reasonable amount of gold is a good thing, because gold has long been a reliable means of preservation.
Compared with Bitcoin, gold has obvious advantages. If there is no electricity, you can use gold – you can't use bitcoin. Bitcoin may be sent via satellite, etc., but these methods are not feasible in everyday life. If there is no electricity, you cannot pay with bitcoin.
Greenspan mentioned that there have been reports earlier that gold reserves in space are abundant. He said that it is clear that if we can mine gold at a low price, its price will plummet. But before that – it could be a long time – gold will continue to maintain its current value. Therefore, his conclusion is that launching the DropGold campaign is "a naive mentality."
Want gold or bitcoin? Or neither can you throw it? What do you think?