Halving requires, bitcoin will soon be much more difficult to find than its gold ancestor. Central banks are faced with a difficult choice.
The Last Gold Rush
There People’s Bank of China was once again the largest buyer in July (23 tonnes). Its reserves amount to 2,136 tonnes (officially). The National Bank of Poland followed closely, increasing its gold reserves by 22 tons. That’s 299 tonnes in total.
Overall, it is mainly the BRICS which amass them. This gold binge started after the Iraq War. It was further strengthened after the subprime crisis and the first “Quantitative Easing” of the Fed (printing money).
Today, the desire to get rid of the petrodollar system is clearly accepted. The BRICS no longer want to finance the American debt and gold logically benefits from this monetary rebellion against the empire.
Even the Secretary General of the United Nations is now warning against “fragmentation and fracture of the global financial system”.
Antonio Guterres made the statement during a summit in Indonesia with ASEAN, China and the United States. Knowing that the ASEAN countries also do not hide their desire to do without the dollar.
A return of the Gold Standard seems inevitable if the goal is to remove from the United States its privilege of running a chronic trade deficit without the value of the dollar collapsing (petrodollar).
Asia is not mistaken. The retail price of gold in Japan is at most historic high, as well as in China. That is to say the second and third largest economies in the world…
Enter Bitcoin
We should not forget that a spoilsport was invited into this well-crafted scenario. Ultimately, it is not the barbaric relic, but bitcoin which will replace the dollar as the international reserve currency.
Some cling to the fact that gold has stood the test of time. Others argue that Bitcoin will collapse when the incentive to mine bitcoins (secure the network) is gone.
But if the boomers are in denial, the new generations are not mistaken. They choose bitcoin for three main reasons.
The first is due to its digital existence. While gold travels slowly (by plane), BTC teleports almost instantly from one end of the world to the other.
Another advantage: worry-free border crossing. You just need to remember a dozen words! Holding a gold ingot between his two ears seems more difficult.
The price of transport is also prohibitive. Conversely, sending any amount in BTC only costs a few tens of cents. Whether the transaction is 0.01 BTC or 10,000 BTC, it is the same price.
Let’s also not forget the immense advantage of being able to make online payments. Or should we send gold dust in the mail?
Last but not least, bitcoin is infinitely rarer than gold! The more gold appreciates, the more profitable it will be to dig for more. Nothing to do with bitcoin and its absolutely fixed monetary mass of 21 million units.
Bitcoin is rarer than gold
The limit of 21 million bitcoins is ensured by halving the reward allocated to miners every four years (halving).
Next May, bitcoin monetary inflation will be 3.125 BTC per transaction block (every 10 minutes). It will then officially be much rarer than gold.
The most popular method for calculating this scarcity is called S2F (Stock to Flow) which represents the number of years it takes to double a stock based on its annual production. It is obtained by dividing the total stock by the annual production.
According to the World Gold Council, 187,200 tons of gold have been extracted from the earth since the beginning of civilization. Divide this number by the number of tonnes of gold mined each year (3,100 t in 2022) and you obtain a ratio of 60. It takes 60 years to double the stock of gold at the current rate of extraction.
Bitcoin’s ratio is similar (59), but not for long. It will increase to 119 next May and 247 four years later. Gold and bitcoin will no longer be in the same category at all.
As a reminder, bitcoin multiplied its market capitalization by 1,200 between 2013 and 2021. That of gold only multiplied by 1.5 over the same time.
The market capitalization of gold is currently 25 times higher than that of bitcoin. In other words, a single bitcoin will weigh more than $630,000 when it has absorbed the value of its competitor. The Bull Run is approaching.
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