Gold is known as an inflation hedge or store of value for as long as human civilization goes.
But lately Many are calling #Bitcoin a Digital Gold. An 11-year-old Blockchain-based currency currently trades at $814 billion.
Simple Thread of Gold, Bitcoin, Price/Supply Dynamics
But lately Many are calling #Bitcoin a Digital Gold. An 11-year-old Blockchain-based currency currently trades at $814 billion.
Simple Thread of Gold, Bitcoin, Price/Supply Dynamics
Gold has superior chemical properties
It cannot be destroyed by water, as it doesn't rust;
Coins remain recognizable after a thousand years
It takes 1945.4° F to melt
It is also uniquely malleable, as it spreads without cracking
It’s ductile, as it stretches without breaking
It cannot be destroyed by water, as it doesn't rust;
Coins remain recognizable after a thousand years
It takes 1945.4° F to melt
It is also uniquely malleable, as it spreads without cracking
It’s ductile, as it stretches without breaking
Random Fact
No one knows how much Gold is above the earth and how much is beneath the earth.
Everyone Institution has its own guess.
No one knows how much Gold is above the earth and how much is beneath the earth.
Everyone Institution has its own guess.
We have been mining gold for more than 6000+ yrs.
As per the world gold council, 180K tonnes of gold is mined to date. All of the gold discovered thus far would fit in a cube that is 28 meters wide.
As per the world gold council, 180K tonnes of gold is mined to date. All of the gold discovered thus far would fit in a cube that is 28 meters wide.
The below-ground stock of gold reserves is currently estimated to be around 50,000 tonnes, according to the US Geological Survey.
Reserves - gold that is economic to mine at the current gold price
Resources - gold that will potentially become economic to mine in future
Reserves - gold that is economic to mine at the current gold price
Resources - gold that will potentially become economic to mine in future
As of December 2020, the United States had the largest gold reserve + 8,000 metric tons of gold. This was more than twice the gold reserves of Germany and more than three times the gold reserves of Italy and France. China was ranked sixth for the amount of gold it has on reserve
Interesting Inflation Hedge fact
Gold returned (in USD) were negative from 1981 ( $578 / Oz) to 2006($550 /oz)
Average Inflation in US in these 25 Years is 4% (right chart below)
( Inflation hedge how??) )
Gold returned (in USD) were negative from 1981 ( $578 / Oz) to 2006($550 /oz)
Average Inflation in US in these 25 Years is 4% (right chart below)
( Inflation hedge how??) )
My parents still believe:
"Gold ka bhav nhi girta"
Gold corrected by 28 % between 2012 to 2016
"Gold ka bhav nhi girta"
Gold corrected by 28 % between 2012 to 2016
Moving to Bitcoin
The limit of Bitcoin’s supply is set at 21 million coins. Out of this, 18.77 million have already been ‘mined’. That means, 83% of all the Bitcoin that will ever come into existence have already been brought into circulation within 12 years of its creation
The limit of Bitcoin’s supply is set at 21 million coins. Out of this, 18.77 million have already been ‘mined’. That means, 83% of all the Bitcoin that will ever come into existence have already been brought into circulation within 12 years of its creation
As per the World Wealth Report by Capgemini, there are 2800 Billionaires in the world with a total wealth of $13 trillion+.
There are 56.1 million millionaires worldwide at the moment.
Between 2020 and 2025, global wealth is projected to rise by 39%
There are 56.1 million millionaires worldwide at the moment.
Between 2020 and 2025, global wealth is projected to rise by 39%
The percentage of millionaires in the world will also likely grow over the next five years, reaching 84 million people.
5.2 million new millionaires appeared worldwide in 2020
5.2 million new millionaires appeared worldwide in 2020
84 Million Ultra-rich people vs 21 Million BTC
The Law of Economics.
Price -Demand Principle for Veblen goods. Provides clarity.
The Law of Economics.
Price -Demand Principle for Veblen goods. Provides clarity.
Currently, there are only 57 Million different addresses that own bitcoin. 50 % of them own less than .001BTC
To add
Institutional investors are also increasingly buying up Bitcoin too.
Several major firms, among them Tesla, Square and Coinbase, have collectively purchased hundreds of millions of dollars worth of cryptocurrency.
Institutional investors are also increasingly buying up Bitcoin too.
Several major firms, among them Tesla, Square and Coinbase, have collectively purchased hundreds of millions of dollars worth of cryptocurrency.
Interesting fact
Morgan Stanley has bought 11 % stake in Company MicroStartegy which owns 1.25 lacs BTC worth $2billion.
Morgan Stanley has bought 11 % stake in Company MicroStartegy which owns 1.25 lacs BTC worth $2billion.
Bitcoin price will remain highly volatile.
Currently trading at $43K ie down by 36 % from its peak of $67K.
In the past corrected by up to 80%.
as @akshat_world says
Currently trading at $43K ie down by 36 % from its peak of $67K.
In the past corrected by up to 80%.
as @akshat_world says
Why so volatile?
Average Trading Volume
Gold had the third highest average daily trading volume at 145.5 billion U.S. dollars.
Bitcoin's Average Trading volume is $5-6 Billion only.
Better trading volume =better price discovery = less short term volatility
Average Trading Volume
Gold had the third highest average daily trading volume at 145.5 billion U.S. dollars.
Bitcoin's Average Trading volume is $5-6 Billion only.
Better trading volume =better price discovery = less short term volatility
Similarities
Gold is a rare metal with established trust.
Bitcoin is a rare blockchain-based digital currency trusted by few thus will remain more volatile and will be challenged by media/regulators and its own hype.
Gold is a rare metal with established trust.
Bitcoin is a rare blockchain-based digital currency trusted by few thus will remain more volatile and will be challenged by media/regulators and its own hype.
As more you mine both Gold & Bitcoin, mining cost goes up.
The mining process of both is not environmentally friendly.
But Mining process of Bitcoin can improve by using more renewable sources of energy.
The mining process of both is not environmentally friendly.
But Mining process of Bitcoin can improve by using more renewable sources of energy.
Pricing model Stock to flow
SF = stock / flow
Stock is the size of the existing stockpiles or reserves. Flow is the yearly production. Instead of SF, people also use a supply growth rate (flow/stock). Note that SF = 1 / supply growth rate.
SF = stock / flow
Stock is the size of the existing stockpiles or reserves. Flow is the yearly production. Instead of SF, people also use a supply growth rate (flow/stock). Note that SF = 1 / supply growth rate.
Gold has the highest SF 60, it takes 62 years of production to get current gold stock. Silver is second with SF 22. This high SF makes them monetary goods.
Gold’s SF ratio has fluctuated over the past 100 years.
Gold’s SF ratio has fluctuated over the past 100 years.
In 2021, the circulating supply of BTC was 18.8 million. There is a flow of 0.33 million bitcoins (328,725 ÷ 1,000,000).
This gives Bitcoin a current stock-to-flow ratio of 18.8 million ÷ 0.33 million = 57.
This gives Bitcoin a current stock-to-flow ratio of 18.8 million ÷ 0.33 million = 57.
With limited supply, SF for BTC will only move up. Price prediction of BTC basis SF
Model And chart by @100trillionUSD
Model And chart by @100trillionUSD
The current stock-to-flow ratios of Bitcoin suggest that it’s an increasingly rare resource. The stock-to-flow model shows a market relative of Bitcoin’s current price is almost half of the model price, suggesting Bitcoin is actually relatively cheap.
I believe Bitcoin has an advantage over Gold over a longer period of time. But clearly riskier.
Bitcoin can go down by 80% or can go up to 10X. Even Both.
Bitcoin can go down by 80% or can go up to 10X. Even Both.
This is not investment advice. The above thread is for my own understanding.
I use Twitter for making notes for myself for better clarity. And keep coming back to them.
If you like it please retweet.
I use Twitter for making notes for myself for better clarity. And keep coming back to them.
If you like it please retweet.
Some of the thoughts are sourced from @Akshat_World tweets and videos. Marking him for better reach.
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