Perth Mint Says Gold is Far More Decentralised Than Bitcoin

Australian bullion company Perth Mint, has stated in a recent report that they think the gold market is far more decentralized than Bitcoin.

The article, written by Jordan Eliseo – Manager Investment Research at Perth Mint, explains reasons why they think Gold is better than Bitcoin.

The gold market is far more decentralized, with the precious metal mined, refined, and owned by central banks, households and investors the world over. Bitcoin on the other hand is predominately held by a small group of owners, while mining is overwhelmingly concentrated in one country.

Perth Mint “Gold vs Bitcoin” article

Some key points in the article (with some commentary):

• “Gold breaks its price correlation with Bitcoin – since August 2020 Bitcoin has been soaring, while Gold has declined.”
• “Gold has a multi-millennia track record as a store of value and has been the best performing asset in equity market corrections over the past 50 years. In contrast, it is far too early to say that Bitcoin is a store of wealth.”
• “Free storage options for gold can be much lower risk than free bitcoin storage options, given the counter-party risk inherent in the latter.” The free storage with Perth Mint is for “storage with the working inventory of the mint”.
• “Gold is a lower cost investment than bitcoin, with gold ETPs like Perth Mint Gold (ASX:PMGOLD) offering gold exposure for 0.15% p.a., versus 1-2% p.a. for existing bitcoin products.” Bitcoin ETF EBIT is at 0.75% p.a.
• “Gold’s network effect is far stronger than bitcoin’s, best evidenced by the perpetual marketing of bitcoin itself as digital gold. Gold is not marketed as analogue bitcoin!”
• “there seems little compelling reason for institutional investors and large corporations to include bitcoin in diversified portfolios or on company balance sheets.” Many companies have already adding Bitcoin to their balance sheets. Large fund advisors such as Kevin O’Leary have publicly said that the reason they are holding a 3% allocation of BTC because it’s as a hedge against inflation. They also hold a basket of Fiat currencies, because they hedge against each other. He also said they he has owned Bitcoin for a long time but could not do or say anything due to regulations, and he believes with the introduction of the approved ETFs, these regulations are now being adopted by large investors.
• “Bitcoin remains under threat, both from hard forks and corruptions of the bitcoin network itself, well as thousands of other cryptocurrencies.”
• “By the end of 2015, more than 70% of all the bitcoin that will ever supposedly be issued had already been mined, and was held by a small group of people, before 99.9% of the world had ever heard of it”
• “Research published by Glassnode in early 2021 suggest just 71% of bitcoin is controlled by the largest 2.1% of bitcoin network entities.”
• “Bitcoin beats gold hands down from the perspective of generating speculative returns in rapid fashion — but it is 12 times more volatile than the precious metal.”
• “Corruptions and or degradation of the Bitcoin network itself (for example, in 2010, someone altered the network and temporarily created more than 180 billion bitcoin, while there have been at least 40 bugs detected in its short lifespan). Gold on the other hand is not a piece of software. It is an inert physical metal. It will never evolve the way the Bitcoin network can and has. It will also never degrade.”
• “The gold market is far more decentralized, with the precious metal mined, refined, and owned by central banks, households and investors the world over.” See video below for the debate between Bitcoin and Gold.

The Bitcoin vs Gold Debate

The debate between Bitcoin and Gold has been ongoing for quite a few years now with both having pros and cons. Bitcoin has been named “the digital gold” with investors large and small adding it to their portfolios.

For those of you that haven’t seen this debate between Peter Schiff and Erik Voorhees, it’s a great watch.