As cryptocurrency continues to rise on the world stage, many crypto fanatics are adamant that crypto will eventually become the standard for financial transactions around the world. To become the standard, it means cryptocurrencies, particularly popular ones like bitcoin, will have to overthrow the already dominant financial tools such as fiat currency and also concepts such as gold. While crypto certainly has a long way to go before it can replace the existing financial systems, many are confident that this will eventually be the case.
One of the proponents of this is Coinbase who has recently come out to state that the upcoming bitcoin halving will lead to bitcoin becoming the new digital gold and this is due to take place in the next 93 days.
This opinion was published in a February 7, 2020 blog post by Coinbase in which comparisons were drawn between bitcoin and gold. The gold standard was broken in 1971 and ever since then, gold has continued to grow in value to the tune of 4000 percent. Some of the factors that have contributed to the growth are the fact that gold is scarce and not easily attainable. Bitcoin, in comparison, is also artificially scarce but has the trump card of being able to be transferred seamlessly compared to gold which needs physical interaction.
“Armed with a myriad of technological advantages, accelerating development, and maturing global market, Bitcoin is a store of value to rival gold in the digital age,” the post says.
This is where the halving comes in. In its initial stage, whenever a block was mined on the bitcoin blockchain, 50 bitcoins were given as a reward. Several halvings have taken place and the current reward is 12.5 bitcoins. After the halving takes place in May 2020, it is expected to fall through 6.25 bitcoins per block. This creates further scarcity of bitcoin which could drive up its value as the issuance supply of bitcoin will be at 1.75 percent per year.
“Gold’s stock to flow is higher than any other metal commodity, and bitcoin is set to soon follow,” the post says.