The Federal Reserve’s Chairman Jerome Powell has said that Bitcoin is a more suitable substitute for gold than it is for the dollar. Mr. Powell was addressing delegates at a virtual summit that was hosted by the Bank of International Settlements (BIS). The summit, streamed through the BIS YouTube channel, sought to address how central banks can improve technologically in this digital age.
The Fed chair noted that cryptocurrency is not very useful as a store of value due to its volatility and the fact that it is not being backed by any tangible asset. For this reason, he asserted that cryptocurrencies are great as financial speculation tools; and not as a means of payment.
This means that Bitcoin cannot be compared to the dollar, since the latter is stable and can withstand volatility shocks. A more comparable asset is gold, which has been racing head to head with Bitcoin as a store of value. Better still, Bitcoin has emerged to be a better store of value since it is finite. On the other hand, there is a possibility that gold mining in the outer space could flood the market, driving the value down.
Bitcoin is more versatile compared to gold in that one can carry large quantities of BTC very easily, while it would be a logistical nightmare to transport gold in bulk.