Here’s What It Would Take for Bitcoin to Overtake Gold

Bitcoin (CRYPTO: BTC) Boosters often call the cryptocurrency "digital gold" due to its scarcity and finite supply. However, might it potentially surpass the total value of all circulating physical gold one day?

This has a higher probability than it initially seems. In fact, it could very well be unavoidable. For this scenario to become reality, these conditions must be met.

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Mathematics is the smallest aspect of this formula.

For Bitcoin to surpass gold, it would have to increase significantly in value, yet this isn’t as significant as it might appear.

Today, Bitcoin's market cap Is nearing $1.7 trillion. Currently, the overall market capitalization of gold stands around $20.1 trillion according to current pricing. Consequently, Bitcoin’s price must increase by roughly 12.2 times from its present level to match gold’s total worth. This means that each individual coin would require an estimated valuation above $1 million to indicate such a shift has taken place (currently, one Bitcoin trades at approximately $84,000).

Over the last five years, Bitcoin’s value has surged approximately 1,460%. This indicates that historically, this asset can indeed increase sufficiently to surpass the value of gold. However, what's even more crucial to understand is that the factors fueling such significant growth remain active today, making the scenario where Bitcoin overtakes gold quite plausible.

Individuals purchase and keep gold since it is anticipated to maintain its worth over extended periods, particularly during challenging economic times, as various issues such as inflation diminish the purchasing power of currency. fiat currencies That makes it salable since gold is rare, demanding considerable effort to extract and process. Additionally, it’s traded on highly liquid international markets, ensuring a good chance of sellers locating buyers even amidst financial instability. Gold also retains its worth due to its essential role in practical uses such as producing smartphones.

Therefore, it functions as a storage of value, a means of exchange, and also possesses practical utility. However, it may not be the most straightforward asset for investors to possess or utilize.

Physical gold must be kept under secure conditions, and it can be quite cumbersome to convert into cash when necessary as opposed to stocks or cryptocurrencies. Exchange-traded funds (ETFs) Those investment options that provide access to gold come with yearly charges. Assertions about gold stored in a bank’s vault might not be readily tradable, and they necessitate considerable faith in an external entity.

Bitcoin isn’t plagued by these issues. Of course, it faces different challenges, such as significantly greater volatility and fairly restricted practical use. However, the primary factors contributing to its worth are the difficulty of mining it and its inherent scarcity , will undoubtedly appeal to global investors, considering the asset's rapid ascent since its debut in 2009.

And this production will continue to decrease over time.

Will this actually happen?

For Bitcoin to surpass gold’s value, it will have to keep on being adopted and held By global financial organizations, government entities, and financiers.

This indicates that additional governments must start and genuinely implement policies similar to those proposed in the U.S. Strategic Bitcoin Reserve , which has yet to be realized. For Bitcoin to progress further, it must strengthen its ties with conventional finance through continuous approval of new ETFs backed by it, along with those that include both Bitcoin and other digital currencies. Essentially, major banking institutions and similar entities will spearhead this transition.

Currently, around 106 million individuals possess this digital currency, which suggests that many adults worldwide might become interested in it in the upcoming years. This implies that substantial additional funds have the potential to enter the market. With Bitcoin becoming increasingly available for investors, greater numbers may seek some level of investment in it. Furthermore, should the value continue climbing consistently—as it has done since inception—this growth can act as compelling promotion, drawing even more people to purchase and retain it indefinitely.

Could Bitcoin potentially surpass gold as a larger asset one day? Indeed, it might, but speculating about when this would happen isn’t very productive. The most prudent approach is to gradually accumulate a stake and hold onto it; doing so will allow you to benefit from it. benefit of its growth Over an extended period, even if it requires several years to turn over gold.

Is it wise to put $1,000 into Bitcoin at this moment?

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Alex Carchidi The Motley Fool holds an interest in Bitcoin. They also recommend investing in Bitcoin. Additionally, The Motley Fool discloses their involvement with this asset. disclosure policy .