Mike Novogratz has suggested that Bitcoin is digital gold even though the currency would hardly make a transactional asset over the next several years.
Bitcoin’s Storage Potential Is There, But Transactional Momentum Stalls
Billionaire investor Mike Novogratz shared his “two satoshis,” a derivative term that better fits the cryptocurrency patois, on the topic of Bitcoin and the currency’s purpose in the investment game. According to Novogratz, Bitcoin is nothing short of “digital gold,” a claim that bolds well for the asset, but certainly doesn’t solve its value correlation issues.
In delivering his outlook on Bitcoin for Bloomberg last Friday, Novogratz confirmed that the asset is not likely to be used as a “transactional currency” within the next five years, but rather to allow investors to store wealth.
There has been a divide in the blockchain community as to who is interested in owning Bitcoin. On the one hand, there are the whales that hold large swathes of the public ledger and control supplies as vast as 10,000 or even 100,000 units.
In fact, Bloomberg wrote in 2017 that around 1,000 addresses owned 40% of the entire supply, a still better distribution of resources compared to mainstream assets. Yet, the ability of Millennials, who are billed as the primary candidates for endorsing cryptocurrencies and Bitcoin in particular, to develop a portfolio based on digital assets looks limited.
Novogratz, though, insisted that BTC is the precious metal of the future. “Bitcoin as gold, as digital gold, is just going to keep going higher,” he said. “More and more people are going to want it as some portion of their portfolio.”
A Rallying Call as Mainstream Finances Embrace Crypto
While Novogratz’s prediction sounds reasonable, and Bitcoin has little application in day-to-day transactions, this may change with PayPal announcing support for cryptocurrencies at all of its 26 million vendors.
Bitcoin’s value did rally on the news, with the currency reaching $13,169, rising by 14% in the last week. The market for crypto assets has also expanded, with the cap now estimated at $397.9 billion compared to $195 billion at the beginning of the year.
Out of this pie, Bitcoin controls $244 billion at press time, or 61% of the total market, as per Business Insider. Novogratz did comment on PayPal’s decision to support crypto, arguing that it was the biggest event of the year for crypto, and that financial institutions are now bound to start trying to catch up.
“It’s no longer a debate if crypto is a thing if Bitcoin is an asset if the blockchain is going to be part of the financial infrastructure. It’s not if, it’s when, and so every single company has to have a plan now,” he added.
While Novogratz speculation may go either way, central governments have been exploring the idea of adopting a digital currency. The European Central Bank and the Bank of England have been looking closer at the prospect of creating their own virtual money.
Others, including the Federal Reserve, have been warier of the adoption of such currencies, while the Internal Revenue Service (IRS) has looked into options to better police the sector, and private coins in particular.