Gold continues to strengthen its hold as the best store of wealth as creation of more and more cryptocurrencies saturate market
With even Bitcoin and its new spin-off Bitcoin cash proving that cryptocurrencies do not necessarily remain limited in supply since that determination is completely in the hands of their primary crypto miners, gold still remains the world's best store of wealth to the majority of individuals.
In fact new information out of China late last month seems to indicate that gold production may have hit its peak in recent years as the world's largest producer of the precious metal saw their output fall by 9.5% in the first quarter of this year.
Chinese gold imports jumped 64.5% on an annual basis in Q1 2017, while the production of the yellow metal tumbled 9.3%, as the world’s top gold producer and consumer phased out older production facilities and miners faced lower gold prices, this according to a statement released by the China Gold Association (CGA).
The drastic rise in imports was triggered by a supply and demand gap created between January and March of this year, CGA explained on Friday, adding that imports totaled 10.5 metric tons in Q1 as compared to last year’s first quarter.
Quarterly output was down at 101.2 metric tons as compared to Q1 2016 figure of 111.6 metric tons, the association said. - Kitco
Yet even as global gold production continues to decline while demand once again ramps up following a short six month pullback, on the cryptocurrency side of the house the number of virtual currencies being created is accelerating at a fast clip, prompting many in the industry to believe they will surpass 1000 unique cryptos by the end of the year, and have that number double and double again over the next few years.
This of course will lead to a huge saturation in the cryptocurrency sphere, with savers and investors unsure of the viability of some cryptos as a long-term store of wealth.
Aside from direct competitors like Ethereum, Pal points out that the Indians have already shifted to a cashless society. “This was the great Western Union/Swift payment system we were going to dump on Bitcoin. Well, India went and did it for 1.1 billion people. It’s 50 times faster than Bitcoin, and it’s rolled out and working now.”
If anybody can do it—and do it better and faster—then maybe it’s not that interesting, he concludes.
It looks like cryptocurrencies are becoming a dime a dozen. So far in 2017, there have been about 20 initial coin offerings (ICOs) per month. An ICO is the cryptocurrency equivalent of an IPO in stocks. That means approximately 140 new cryptocurrencies have been launched in 2017… and we’re not even at the end of the year. - Forbes
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I agree precious metals will continue to serve as a store of value in the future but I do think crypto certainly has a role to play (otherwise I wouldn't be here). I do agree that the proliferation of coins is damaging crypto as a concept but I think many of the over 900 coins which don't have proper use cases will simply die out as crypto goes more main stream!
Right, but do any cryptos have proper use cases? The few biggest ones are pretty effective for making the process of moving money across borders easier (albeit, only an advantage where that might be controlled or otherwise difficult).
Payments processing is a big opportunity, but it's a bit of a chicken and the egg problem where you need magnitude to spark interest / use and you need interest / use to grow and gain magnitude. BTC has the uptake but can't handle the volume, and while others (most notably ETH) seem to have addressed most technical hurdles and can handle the volume, but there are so many and they're so fragmented that no magnitude has built up.
I think several cryptos have solid use cases. Those such as Bitcoin/ Ethereum/ Steem etc have a real life application and can solve a problem. The vast majority of the others have no real use case and are simply clones being used for speculation. Over the next few years I think many of the alts will die off as people realise they serve no purpose. Those that actually solve real world problems will flourish. I see core coins making upgrades (such as segwit (whether you agree its a good thing or not)) rather than forking off new coins instead. How can we hope for mass adoption when we keep forking coins? Which coin do retailers etc use? They want to accept payments, safe in the knowledge they will get their money, not worry about which fork to follow etc! This will not help adoption but will slow it down.
Lots of cryptos are junk, but not being able to see the importance of the block chain and crypto currency is foolish.
The world is evolving and these new cryptos on the blockchain are a fair stock exchange. Each coin is like buying stock in a company. The old system is dying and this one is taking its place, those that do not adapt will be left behind.
I also love gold and silver but can also the importance of this paradigm shift
Well, no. When you buy a share in a company, you're buying something that creates value and return to you the shareholder. When you buy crypto, you just buy an asset that's supposed to have value for the exchange of goods and services.
Crypto can create value in some of the more advanced applications (e.g. smart contracts) but even there it's minimal.. value comes from the creater of the contract and the services behind it.
Crypto itself, as far as I see it, is more analogous to gold or fiat currency. The difference is that the former has thousands of years of history being a unit of value for transactions and the latter the backing of every major state in the world. There are lots of other things I could get into too (e.g. scarcity of gold providing some stability to it's price) but won't.