LogFAQs > #952282001

The play, to me, is this: Gold currently has a total market gap north of around 10 trillion. Bitcoin currently has a market cap of around 1 trillion. In the world where cryptocurrencies replace precious metals, you would expect to see BTC reach the market cap of gold and the total crypto market cap reach the total market cap of precious metals.

If we get a bubble, during the bubble peak the value of crypto can far exceed the current value of precious metals. There some additional positive considerations in that the value of precious metals would likely be rising but for the increased competition from crypto and that at least with BTC, there is probably a substantial percentage of it that has already been permanently lost, meaning the actual current market cap is lower than the apparent one and there is more room to grow. To the extent that cryptocurrency is more useful/scarce than gold and precious metals, the value could also be higher.

Finally, crypto provides some diversification. Assets within an asset class tend to move together, and truth be told, there are really only 2 asset classes that historically have been good investments - stocks and real estate. Precious metals and bonds have never really been good investments due to low returns. Crypto, at least for now, provides an opportunity to invest in a 3rd high return asset class that has little correlation to the other 2 (stocks and real estate).

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September 1, 2003; November 4, 2007; September 2, 2013
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