Despite Bitcoin’s (Bitcoin) phenomenal performance this year, Goldman Sachs Group Inc. (NYSE: GS) says gold wins out over cryptocurrencies when assessed on the majority of the key characteristics of money, Bloomberg reports.
“Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield,” analysts including Jeffrey Currie and Michael Hinds wrote.
Looking at properties such as durability and intrinsic value, they are still relevant even with new materials discovered and new assets emerging, such as cryptocurrencies, they said.
The bank listed several characteristics to compare them, adding that it’s focusing on the currency, not the blockchain technology. They include durability, portability, intrinsic value and unit of account
When it comes to durability, gold wins because cryptocurrencies are vulnerable to hacking and are subject to regulatory risk. In contrast, it’s much faster and cheaper to move Bitcoins.
As for intrinsic value, there’s a limited supply of gold and other precious metals in the Earth’s crust, whereas in the case of cryptocurrencies, it’s easy to create alternatives, meaning there’s effectively no control over supply at a macroeconomic level and no intrinsic value due to rarity.
Menwhile, gold is better at holding its purchasing power, and has much lower daily volatility, the bank said.