Press X to doubt. Global investment bank, Goldman Sachs, is questioning whether Bitcoin can be digital gold, a store of value long-term. The analysts at the firm have cited various issues with the cryptocurrency.
Including, but not limited to, environmental problems, competition from other cryptocurrencies, and lack of real use. The latter concern being one of the most vocal issues raised by detractors of Bitcoin and other similar digital currencies.
The bank published a note outlining these problems with Bitcoin as a digital gold on Wednesday.
Goldman Sachs analysts, led by its top commodities strategist Jeffery Currie, have voiced these concerns while maintaining that Bitcoin benefits from greater liquidity. Where it falters, though, is the lack of real use, and weak environmental, social, and governance scoring due to its high energy consumption.
These factors, alongside competition from other cryptocurrencies is a factor stopping Bitcoin from becoming digital gold:
“Traditional long-term stores of value such as gold, art, diamonds, wine and collectibles all have value and use beyond being stores of value.”
Goldman Sachs explained that real use is important because it smooths the volatility of the price. Real demand adjusts to absorb swings in investment demand.
It also means that the asset is unlikely to go to zero.
Factors like these, the institution says, make Bitcoin vulnerable to losing store-of-value demand to another cryptocurrency that is better designed. Bitcoin has already given ground to other cryptocurrencies such as Ether and a bunch of other altcoins, and continues to do so every day.
These thoughts are, of course, being floated around, as Goldman Sachs has brought back its cryptocurrency trading desk. The bank is also planning to launch a full spectrum of crypto investment products.
What do you think about these fresh comments from Goldman Sachs on Bitcoin as a store of value?
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