The cryptocurrency’s price has soared more than 70% over the past six weeks to more than $18,000 a coin and is 11% below its all-time peak of $20,089. At the same time, gold’s price has traded in a tight range between $1,850 and $1,950 an ounce.
“To try to act like bitcoin is some kind of improved version of gold, it’s going to disrupt gold because it’s a better store of value, it’s a better medium of exchange, all that is pure nonsense,” said Peter Schiff, CEO of Westport, Conn.-based Euro Pacific Capital. “It’s not a store of value because it has no value in store.”
Gold, widely viewed as a safe haven for investors seeking to preserve wealth during periods of market upheaval such as the coronavirus pandemic, has value not only in trade but its use in fine jewelry and electrical conductivity.
Bitcoin, generated — or mined — by the verification of transactions in a blockchain digital ledger, has no use other than as a limited medium of exchange and has historically been subject to wide price swings.
Early in the Trump administration, a run-up in bitcoin prices prompted speculation that it could replace sovereign currencies. Excitement surrounding bitcoin in December 2017 spurred the launch of bitcoin futures and led to several platforms allowing customers to buy and sell the digital currency.
The wave of interest sparked regulatory concerns in Washington and led to hearings on Capitol Hill in October 2018.
“Crypto is the mother or father of all scams and bubbles,” Nouriel Roubini, CEO of Roubini Macro Associates and a professor at New York University’s Stern School of Business, said in testimony before the U.S. Senate Committee on Banking, Housing and Community Affairs.