The possibility that cryptocurrencies could become a part of everyday life has received a major vote of confidence. In a new report — “Bitcoin At the Tipping Point” — Citigroup suggests that the virtual currency could become “the currency of choice for international trade” if all continues to go well for it. The company says that step could be the start of a “massive transformation of cryptocurrency into the mainstream.”
And if things don’t go well? The Citigroup team says that “speculative implosion” could happen. Analysts explained the potential failure, saying that there are “a host of risks and obstacles that stand in the way of Bitcoin progress. But weighing these potential hurdles against the opportunities leads to the conclusion that Bitcoin is at a tipping point.”
According to the report, Bitcoin’s enormous upside has been driven by recent aggressive moves by companies like Tesla, which invested $1.5 billion in the currency, and Mastercard, which has decided to accept some cryptocurrencies as payments later this year.
“Gold is dead”
The Citi report explains that Bitcoin has worked its way through several stages so far: technological oddity, censorship-resistant money, and digital gold. It’s that last part that has many analysts cheering the cryptocurrency on, primarily because there is a current lack of alternative gold-like assets. The company says the need for those will only continue to grow.
“Because of what is going on in the world, besides there being a growing need for money or storehold of wealth assets that are limited in supply, there is also a growing need for assets that can be privately held. Because there aren’t many of these gold-like storehold of wealth assets that can be held in privacy and because the sizes of their markets are relatively small, there exists the possibility that Bitcoin and its competitors can fill that growing need,” Dalio wrote.
The biggest question with Bitcoin, Dalio says, is what it can realistically be used for and what amount of demand it will have. “Since the supply is known, one has to estimate the demand to estimate its price.” While gold can be mined from the earth, bitcoin can only be mined via computational means. Bitcoin’s source code dictates a limited and finite supply of 21 million bitcoins that will ever be produced.
Billionaire Mark Cuban’s take on the gold vs. bitcoin debate is that the former is “dead.” In a debate with gold lovers on Twitter, he explained his stance this way: “Gold is hyped as much as Crypto. Do we really need gold jewelry? Gold can make you a ring. (Bitcoin and Ethereum) are technologies that can make you a banker, allow friction free exchange of value and are extensible into an unlimited range of biz and personal applications”
The truth is, Cuban doesn’t see gold as having much of a future and will eventually die as a “store of value” (SOV). “What we are seeing built…
Read more:Bitcoin gets major vote of confidence as currency for international trade
