04.03.202115:59 Forex Analysis & Reviews: Developing and gaining popularity faster: are cryptocurrencies capable of taking the place of gold?

The economic situation in the world leaves much to be desired, even despite the emergence of the anti-virus drug and the start of vaccination. Market economies are fluctuating amid news of new strains of coronavirus, but are gaining ground amid active vaccinations in specific regions. The instability of the economy affected traders, who (in the hope of preserving their investments) turned to financial instruments, including cryptocurrencies.

The main option for traders remains the gold – a time-tested asset that helps to avoid inflationary losses. However, at the beginning of 2021, there was a significant "case" that changed the balance of power of gold and the first cryptocurrency – bitcoin. Some merchants chose the first crypto asset as a protection against inflation – and were pleasantly surprised. Bitcoin not only saved their investments from price fluctuations but also increased their savings by 30%. This happened against the background of the active growth in the value of the first cryptocurrency and was a unique situation that showed the indisputable advantage of digital coins over gold.

The famous billionaire and owner of the Dallas Mavericks basketball club, Mark Cuban, also said that soon cryptocurrencies will send gold to the landfill of history. Cuban noted that gold is a relatively inert asset that does not develop and does not change. Cryptocurrencies, on the contrary, are at the stage of active growth, and their final potential is still unclear. Moreover, thanks to numerous studies, investment injections, and the development of algorithms, digital money is becoming faster, safer, and cheaper.

It is hard to argue with the arguments of Cuban, but his position concerned only Ethereum and Bitcoin. Here we will allow ourselves to disagree and mention the actively developing Polkadot and Cardano. These altcoins are still far from being recognized, but constant research processes and increasing interest in coins in India will bring the necessary margin of safety to crypto assets in the foreseeable future. Despite this, it is bitcoin that will soon become the main tool for protecting against price fluctuations. A bold point in this question was put by JPMorgan experts, who pointed out that 1% of the investment portfolio should be left for the purchase of bitcoin, just to protect against inflationary losses.

You can argue in favor of cryptocurrencies as much as you want, but the main advantage of this tool is its main disadvantage. Digital coins are still developing, and they are showing encouraging results. At the same time, most market participants will not want to risk high-volatility coins and will trust proven, though less promising, assets such as gold.