Coinbase: Says Bitcoin Will Get Closer to Digital Gold in 93 Days
With May's Bitcoin halving event getting closer, Coinbase recently pushed Bitcoin into "digital gold". In a tweet storm to promote a accompanying blog post published on February 7, he addressed the main reasons why halving and reducing the subsequent supply rate further strengthened this link.
Scarcity creates value
Since the gold standard was broken in 1971, the value of the dollar fell, and the value of gold in dollars rose above 4000%. Gold has more value than similar metals, such as copper, due to its relative scarcity and difficulty in acquiring.
Bitcoin is designed to be scarce like gold and is artificially difficult to achieve through the Proof of Work mining process. However, it also has an advantage over gold that can be transferred via a communication channel.
Halving increases famine
Bitcoin supply is limited by design, new coins are issued as rewards each time a transaction block is removed. The first reward level of 50 BTC per block has already been subjected to two half events, reducing it to 12.5 BTC available per block.
After halving May 2020, mining rewards will drop to 6.25 BTC for every new block issued every ten minutes. This will bring Bitcoin's supply export to about 1.7% per year.
Flow to stock (S2F) is a measure of the new supply rate over total supply, and after halving, Bitcoin's S2F shortage will be equal to gold.
"Gold's stock is higher than any other metal commodity, and bitcoin will be tracked soon," said Coinbase.
No value without demand
S2F's price estimates will fail if there is no demand, and this applies to fiat money as well as other commodities. Economies can sometimes develop as central banks increase their money supply. However, hyperinflation events may occur if the money supply exceeds demand.
According to the Global Economic Policy Uncertainty Index, such events are increasing demand for secure shelters like gold and Bitcoin, and the latest economic fear is reaching its all-time high.
According to Coinbase, this justifies Bitcoin's digital gold title with numerous technological advances and accelerating development.
As Cointelegraph reported, senior employees of Coinbase and Ripple recently created a working group to advise US regulators on policies to promote innovation in the industry.