Bitcoin is sometimes called "digital gold". And there is a reason for this. Digital money is increasingly seen as a better hedge against inflation compared to the precious metal.
According to American billionaire investor Paul Tudor Jones, cryptocurrency is a safer way to protect savings than gold. He views the digital asset as a good inflation hedge. "Clearly, it’s winning the race against gold at the moment. It would be my preferred one over gold," the investor said. Stock market statistics confirm his opinion. In particular, gold has fallen in value by 8% over the past 12 months, while bitcoin has added 437%. Another American billionaire Mark Cuban states that gold is dying as a store of value, because it cannot adapt and change to address the current or future needs of society, as opposed to the virtual currency.
Pavel Grachev, Chief Executive Officer at Russia's largest gold producer Polyus, has the opposite view. According to him, the nature of bitcoin and gold is very different. These assets have completely different investor groups that will differ even more over time. In addition, Grachev recalled that bitcoin was created precisely as a tool for calculations, and not as a means of accumulating and preserving capital. Therefore, cryptocurrency is unlikely to replace gold in this regard.
Notably, gold is often seen by investors as a way to protect themselves from inflationary risks, but the precious metal has not met their expectations lately. "There's no guarantee if there's a spike in inflation, gold will also generate above-average returns," Amy Arnott, a portfolio strategist at Morningstar.
