OKEx is an asset exchange. The headquarter of the exchange is in Hong-Kong. On 4th April, the crypto exchange released a blog article which suggests that Bitcoin BTC can serve better as a ‘store-of-value’ SoV.
The blog further described the exchange’s view on the store of value. The blog says that it holds as much worth as much as the customer is ready to pay for. For instance, Gold is regarded as a unit of the store of value SoV, due to the limited quantity of gold. It is regarded as valuable universally, and therefore trading the precious metal is always a viable solution at any given point of time regardless of which country you are in.
In addition, the exchange further said that even though gold is literally not money, nevertheless, it holds a certain value and therefore, is an asset. Since cryptocurrency is a new form of financial asset, it is still difficult to fully define it as a store of value asset like gold, or simply as a medium of exchange- MoE, the blog added. The same debate goes when looking at the cryptographic assets.
One can say that the newness of the cryptocurrency is also a hurdle in the way of the cryptos to be taken as seriously as gold or any other valuable asset. Also, the decentralized technology used in the cryptocurrency is still quite new to many.
OKEx said that Bitcoin was initially positioned as a “new digital form of money a peer-to-peer electronic [cash] system, with one of its major functions being to serve the needs of people who want to transfer money to the other end of the world efficiently.”
Still, Bitcoin is not ‘cash.’ It can’t work as cash given you can’t exchange it for goods and services “virtually at stores.” That is why according to OKEx many people have adopted it as a store of value since the market turbulence always make the investments quite risky.
So the hot question is that is gold better or Bitcoin better? The blog says that in order to protect the money from inflation, people used to invest in gold traditionally. But gold lacks liquidity, and keeping it safe from theft is another challenge that comes with it.
Therefore, there are high chances that due to the reasons mentioned above, people, with time, will adopt cryptocurrency as a better solution. Already the crypto industry is getting adopted in almost every sector of life. In coming times, there are high chances cryptos will be fully embraced as they do not bring along challenges like gold, as per the blog.
Moreover, cryptocurrencies’ qualities such as low fees, instant transfer, liquidity and so on, can be much suitable for the people who hail from financially-challenged places where hyperinflation is a major challenge. These places include- Venezuela and Zimbabwe etc. The local citizens face difficulty in buying daily use items because of the declining fiat currency’s worth. On inflation topic, OKEx said that cryptocurrencies also face inflation and there are always the chances of the rates to go up too. Still, in an economically unstable scenario, people are in better position money wise with cryptocurrency, in comparison to fiat currency. The blog mentioned that the current annual inflation of BTC is 3.8 percent.
An excerpt from the blog-
“It is expected that Bitcoin’s inflation rate will further decrease in 2020, dropping to around 1.8% after the halving of Bitcoin block mining reward according to BitcoinBlockHalf.com. Comparing to the annual inflation rate of the US dollar (2%), will you start to consider using cryptocurrencies to store your wealth?”