El Salvadoran President was seen suggesting recently to a globally known investor of Bitcoin that his company’s present gold reserves exceed over 44,106 oz, however, in the past few years, instead of any increment in the gold reserves, there has been a decrease in the reserves. The President then revealed to the gold investor that only if the El Salvadoran Government had disposed off gold reserves and bought Bitcoins, the Government would have made handsome profits.
It is argued many times that Bitcoin is a great store of value. The other argument is that, in recent times, Bitcoin has overpowered gold. It is, therefore, claimed that Bitcoin is a replacement for gold and therefore investors should invest in Bitcoin.
It is true that in the past 3 years Bitcoin value has not only increased thousand-folds yet it has skyrocketed as well. In the month of April 2019, in the crypto market, Bitcoin was trading for just under US$ 4,000. As of today, Bitcoin’s value has increased exponentially since April 2019. It is now exceeding US$ 50,000 and during this timeframe on several occasions, Bitcoin’s value went past US$ 68,000.
Considering the high-value increase in less than 3 years’ time, the argument that Bitcoin is a gold replacement, cannot be taken for granted. In fact, there is a vast number of people in the digital currency economy who firmly believe that Bitcoin is better than gold.
In the month of September 2021, El Salvador approved Bitcoin use at the national level under Legal Tender. Since then, El Salvadoran Government has been utilizing state funds for purchasing Bitcoins. President Nayib Bukele of El Salvador has complete faith in Bitcoin. Recently President Bukele was in conversation with Peter Schiff, who is known for being the world’s biggest gold investor.
During the conversation, President Bukele told Schiff that his country’s gold reserves exceed 44,106 oz. However, he told Schiff that for the past many years, there are not been profits earned by gold reserves. Instead, the reserves are shrinking because of the falling prices of gold in the international market, particularly because of the pandemic. He informed that the value of the gold reserves is down since last year by at least 0.37%. He further informed that the present gold reserve’s value is approximately US$ 79 Million.
President Bukele suggested that only if the country had utilized some portion of the reserves for Bitcoin purchase, the situation would have been different. He said that Bitcoin is currently facing a dip and there was a time when Bitcoin’s value went down to US$ 44,000. Only if he had utilized gold reserve and bought Bitcoin, then the state would have earned profits of US$ 125 Million.
For President Bukele and others like him, Bitcoin is definitely a gold replacement. This is the level of confidence guaranteed by Bitcoin to its proponent, even if it is undergoing a price reduction.
