Founders of cryptocurrency exchange Gemini and prominent fintech twins Cameron and Tyler Winklevoss believe that Bitcoin hitting $500,000 will be the ultimate bull case for the cryptocurrency.
In a comprehensive report, the Winklevoss twins explained their theory about Bitcoin reaching a $500,000 valuation, which includes the token overtaking gold and other alternate assets. The cryptocurrency bull ultimately sees that Bitcoin will become the world’s next leading safe-haven asset, keeping investor’s funds safe from inflation and national and global economic shifts.
Gold vs Bitcoin: How Bitcoin might be a better safe-haven
Looking at the statistics at present, if Bitcoin should overtake gold, it would require that the market capitalisation increases by 45 times. This is given that gold is sitting at an estimated market cap of $9 trillion compared to Bitcoin’s $200 billion at the time of writing.
Gold, once used as currency, has been the world’s oldest and well-known store of value. However, it has two distinct drawbacks as an asset. One is that it is both difficult to transport and store, making it inconvenient as a legitimate asset to use transactional. The other is that it’s known that it has a fixed supply in the sense that it cannot be created in the same way that fiat currency can be printed, but the supply is ultimately unknown. As explained in the Winklevoss’ report:
“Currently, gold is a reliable store of value and the classic inflation hedge. Supply. The supply of gold is actually unknown. While gold remains scarce or “precious” on planet Earth, the same cannot be said with respect to our galaxy. Scientists believe that asteroids contain a plethora of metals, including gold, and have compiled a database of over 600,000 asteroids and their compositions.”
While the concept of mining on asteroids might seem a little far off the current day, it’s not a possibility we can rule out. As pointed out, Elon Musk’s fascination with space and landing on other planets coupled with his experience in tunnelling (in his tunnel construction company, The Boring Company) makes space mining seem like something which could be plausible sooner than we might think.
The benefit of Bitcoin and the value it holds
Bitcoin, on the other hand, might have the complexity of technology but it is able to offer a store of value without taking up any space. Reliant on blockchain and supercomputer nodes mining Bitcoin, the cryptocurrency is able to store value driven by a capped supply and investor demand. Unlike gold, the supply of Bitcoin is explicit and once the digital currency has been fully mined, there will be no more available.
In addition to its capped supply, Bitcoin holds a value strongly perceived by the market. This; it is an asset extremely volatile and driven by sentiment. While this sounds like a disadvantage, it can stand to reason that this is a result of Bitcoin being a younger asset.
Launched just over a decade ago, Bitcoin is still in its infancy stages and has withstood the pressure of critics and nay-sayers across both the financial and the tech industries. Despite any negativity the token has faced, it still boasts a whopping ROI of over 8 794% since its launch. Having been through cycles of bear runs and bull rallies, Bitcoin has also bounced back from crashes to combat any commentary calling it a bubble.
Bitcoin and the perception of value
It’s important to remember that Bitcoin holds the price it does at any time simply because we have ascribed its value. However, this can be said for almost all assets. As pointed out by the Winklevoss twins:
- Money has always been technology. It was initially invented to resolve the limitations that bartering and trading had.
- Money is constantly evolving. Once chickens were traded, then beads, then paper. The history of money is steeped in reiterations and improvements. It’s possible, if not likely, that Bitcoin and cryptocurrency is simply the latest version of money as we know it.
- Money is what we agree it is. The paper a dollar bill is printed on is not worth $1, and yet it holds that value. That is the perceived value of that piece of paper. The same can be said for gold, oil, and cryptocurrency.
With this in mind, it’s not hard to see how Bitcoin could be the next version of money as we know, use, transact and trade it. And if this is the case, then we’re looking at a literal worldwide adoption for the cryptocurrency industry. Under that, we’d be faced with an asset with limited supply and massive demand. Should this happen, it’s not far-fetched to imagine that one Bitcoin token could be enjoying a $500,000 price tag. at least.