Bitcoin on Pace to Clear More Than Double the Transaction Volume of Gold in 2018

Francisco Memoria
  • Bitcoin is set to clear over two times the transaction volume of gold this year.
  • The flagship cryptocurrency hit parity with an ounce of gold last year, when it started surpassing its transaction volume.

Bitcoin, the flagship cryptocurrency, has been clearing a larger amount of transactions than global gold markets for well over a year, a trend that doesn’t appear to be slowing down, despite the crypto ecosystem’s bearish trend.

The data, first spotted by social media personality Kevin Rooke, shows bitcoin’s transaction volume surpassed that of the global gold markets since the beginning of last year, before its bull run that led to a near $20,000 all-time high, and is on track to process $1.1 trillion of transaction this year, while gold will process $0.4 trillion.

Interestingly, bitcoin surpassed gold at about the same time it hit parity with an ounce of gold. The flagship cryptocurrency is often seen as a “digital version” of the precious metal, which has been seen as the de facto store of value for thousands of years.

Bitcoin enthusiasts believe the cryptocurrency can serve as a store of value, just like gold, but with a few advantages. In fact, both are often compared, with most bullish BTC price predictions being based on it taking a portion of the gold market.

As CryptoGlobe covered, experienced crypto analyst Willy Woo stated earlier this month that BTC will “have a bull run” after its value significantly drops because of a “flash dump,” just like gold did in WFC (Wall Street Financial Crisis).

Bart Smith, Head of Digital Assets at Susquehanna International Group, one of the largest privately-held trading firms in the world, has touted bitcoin is “digital gold” and the “reserve currency” of the crypto space, as it can be used for cross-border money transfers.

Veteran entrepreneur Kim Dotcom has recently warned its over 700,000 Twitter followers they should get ready for an economic crash. Per his words, the USD is bound to crash in the future and, to hedge, investors should buy gold and bitcoin.

The famous Winklevoss twins, who founded the Gemini crypto exchange, have also argued bitcoin could see its price grow 30 to 40 times earlier this year, as its market cap could hit $5 trillion, if it manages to disrupt gold’s $7 trillion market. They said:

…we think that there's a potential appreciation of 30 to 40 times because you look at the gold market today, it's a $7 trillion market. And so a lot of people are starting to see that, they recognize the store of value properties. So we think regardless of the price moves in the last few weeks, it's still a very underappreciated asset.

At press time bitcoin is trading at $6,500 after rising 1.44% in the last 24-hour period, while one ounce of gold is trading at $1,191.8 after rising 0.66%, according to Yahoo Finance.

Binance CEO Says ‘Everyone Will Be in Crypto’, Calls It ‘Inevitable’

On Wednesday (March 20th), Changpeng Zhao (aka "CZ"), the CEO of cryptocurrency exchange Binance, sent out a tweet that suggested he disagreed with JP Morgan executive Ron Karpovich that banks would always be needed for moving funds.

Here is the background to CZ's tweet. You see, earlier that day, Ron Karpovich, Global Head of eCommerce Solutions at JPMorgan Chase, had been asked during an interview (on "Squawk Box", CNBC's morning news and talk program) about competition from "disruptors" in the FinTech space, and had replied:

"Well, ultimately behind the scenes, they are going to have to use a bank to move funds. There’s more partnership instead of competition in that space."

And later in the interview, Karpovich had said:

"I think ultimately you will find that the technology behind the scenes will be blockchain. I don't know that you'll notice anything as a consumer in that space. I think you'll still continue to use your payment type that you prefer, be that a wallet, be that a card, be that your bank account, but behind-the-scenes, the instantaneous nature of using a blockchain or using that type of technology will make your payment faster or cheaper in that space."

Now that we have the context, let's take a look at CZ's tweet:

Let's break this down:

"Many (not so small) businesses already don't use banks, and they work just fine"

One of the biggest expenses for businesses is employee salaries, and banks have traditionally been used for making these salary payments. But will it always be this way? At least, in the crypto space, there are an increasing number of companies that pay salaries in crypto.

In fact, back in August 2018, at an event organized by the Liechtenstein Cryptoassets Exchange (LCX), Michael Arrington, the founder of Techcrunch and a partner at digital asset management firm Arrington XRP Capital, apparently was told by the Binance CEO that last year 90% of Binance employees received their salaries in Binance Coin (BNB).

Also, yesterday, Jack Dorsey, the CEO of both Twitter and Square, tweeted:

Shortly thereafter, CZ sent out a tweet which said that Binance is happy to pay salaries in both BTC and BNB:

When one lawyer replied to this tweet to ask if Binance was hiring attorneys/lawyers, CZ replied: 

"JPM just don't get it, yet. (also a reason they are not a threat to #XRP)"

The question is what is it that JP Morgan doesn't get. America's largest bank, like most other banks, has long been a believer in the mantra "Blockchain Not Bitcoin", and its Chairman and CEO, Jamie Dimon, has expressed his distaste for crypto on several occasions over the past few years.

However, JP Morgan did announce on February 14th its reluctant entry into the cryptocurrency space with JPM Coin, a stablecoin that will initially be used only for instant settlement of payments by its large institutional clients.

It seems that what CZ means is that until JP Morgan wholeheartedly starts believing in cryptocurrency, it will not be providing much competition for Ripple and its cross-border payments solution xRapid (which uses the digital asset XRP).

"Everyone will be in crypto. JPM will ultimately have to use #crypto."

Although widespead adoption of crypto has not happened yet—partly due to price volatility, partly due to the need for improvements to the underlying technologies (such as more efficient blockchains that can handle Visa or Mastercard scale transaction throughput), and partly due to regulatory obstacles— it does look like cryptocurrency adoption is growing day by day.

Here are a few signs:

  • Some of the world's largest retailers, such as Switzerland's largest online retailer, are beginning to accept crypto payments.
  • There are already quite a few stablecoins and many more are coming. According to the Winklevoss Twins, the price stability of stablecoins makes them much more suitable for payment for goods/services than other types of cryptocurrencies.
  • Facebook is reportedly launching its own cryptocurrency later this year, and if this project is successful, this move is likely to be followed by competitors from other tech giants such as Apple or Google.
  • Samsung supports through dedicated hardware and a partnership with blockchain startup Enjin the safe storage of private keys on its latest phone, the Galaxy S10.

And earlier today, CZ sent out this follow-up tweet to point out that he believes that crypto will eventually become the dominant form of payment and that resistance to this idea is futile:


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