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Opinion
Jared Dillian

The Crypto-Is-Gold Crowd Is Asking the Wrong Questions

The issue is more nuanced than whether Bitcoin or some other digital currency will be the only true store of value.  

Will cryptocurrencies supplant gold?

Will cryptocurrencies supplant gold?

Photographer: Jung Yeon-Je/AFP via Getty Images

The enduring debate in the cryptocurrency community is whether Bitcoin will outperform “altcoins,” which are generally defined as digital currencies other than Bitcoin, such as Ethereum, Solana, Cardano and Polkadot. The Bitcoin maximalists say that the only true store of value is Bitcoin, as it is perfectly decentralized and the number of coins that can be in existence is strictly limited. This is true. But the real question is whether crypto investors necessarily need a true store of value, or whether there is space for multiple blockchains that do different things.

Consider that 2,000 years ago the financial system consisted mainly of gold. There were no stocks, bonds or anything else in the way of financialization aside from informal loans. Not much changed for the next 1,400 years, until the first financial institutions sprang up and debt began to be treated as a financial asset. The first publicly-traded companies came about in the 1600s and financial markets in both equity and debt gradually developed from there.