Is Cryptocurrency Digital Gold or Digital Currency?

By siliconindia  |  Saturday, 26 June 2021, 05:09:20 PM IST

Is Cryptocurrency Digital Gold or Digital Currency?

Have you come across the term digital gold? This is a term that is used in reference to cryptocurrency and its ability to store and increase value like real gold. In the same way that the supply of gold is limited in the world, digital currencies also have a cap limit. Most investors do not buy gold so that they can use it to buy items; the intention is to hold it and hope that the value increases at some point. This is the same with cryptocurrencies; there are many people who buy and hold the coins and sell them when the value increases.

One good example of digital gold is Bitcoin, which is the very first digital currency. However, initially, Bitcoin was intended to be a P2P payment method and not a digital coin. The highly volatile nature limited its purpose and this is why it is considered to be digital gold. A good number of investors and traders have Bitcoin and other types of cryptocurrencies in their digital wallets. These are traders who keep an eye on the markets with the hope of making profits.

In recent weeks, the prices of Bitcoin have been quite volatile making it hard to be considered as a currency. There has been an ongoing debate on whether Bitcoin should be regarded as digital gold or digital currency.  

Understanding the Cryptocurrency World

With the prices of cryptocurrencies going really down, most experts argue that Bitcoin should be digital gold. However, there are those who are still optimistic that the price of Bitcoin may get to the 100K mark in 2021 and as such, hold it as digital cash. One of the most worrying things about cryptocurrencies is the fact that the prices are extremely volatile, which makes them rather unstable. If you are a trader, this may not be your preferred method of receiving payments as the value may fluctuate downwards to your disadvantage.

Besides Bitcoin, Ethereum is also another popular cryptocurrency. Apps like Big Money Rush allow users to trade with such coins. This is a unique type of coin as it provides an environment to program cryptocurrencies. As such, 3rd parties are able to use the cryptocurrency network for different applications. There are many investors who have bought Ether and stored it in their digital wallets. Such traders hope against all odds that digital gold will increase its value at some point. A good example is the NFTs tokens, which are assets that were created on the Ethereum network. Their value is determined by the supply and demand in the network.

Digital Fiat or Stablecoin

When thinking of investing in cryptocurrencies, it is advisable to understand all the options that are available to you. A digital fiat is a system that is backed by a government on the public ledger or blockchain. Stablecoin, on the other hand, is a cryptocurrency whose value is pegged to a commodity or another currency. The Tether is one of the best examples of a digital fiat as it is backed up by the U.S dollar. 

Tether is a great platform as it will allow you to have currency, which is similar to cash. However, this will only be available on crypto exchanges.  With the Tether system, you can easily be able to move your digital assets easily in the exchanges. Tether is also considered to be a stablecoin seeing that its value is pegged on the USD.

Conclusion

Whether cryptocurrencies are digital gold or digital cash is a discussion that will keep swinging back and forth. There is so much to learn and you have a wide range of investment possibilities with this new baby known as cryptocurrency.

ON THE DECK

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