World Gold Council Hits Back at #DropGold Campaign: Crypto Can’t Replace Gold

Siamak Masnavi

On Thursday (May 2), Adam Perlaky, Manager of Investment Research at the World Gold Council, hit back at Grayscale Investments' recent #DropGold campaign by explaining why his organization believes that "cryptocurrencies are no replacement for gold."

As CryptoGlobe reported earlier, on Wednesday (May 1), New York-based cryptoasset investment firm Grayscale Investments ("Grayscale"), a subsidiary of Barry Silbert's incubator and venture capital firm Digital Currency Group (DCG), launched a #DropGold campaign that features a funny TV commercial, which tells investors that "in a digital world" they should not allow their portfolios to be "weighed down" by gold and "digital currencies, like Bitcoin, are the future":

 

 

Grayscale's commercial says that cryptocurrencies are better than gold because "they are secure, borderless, and unlike gold, they actually have utility."

Michael Sonnenshein, Grayscale's Managing Director, told The Block that "Barry Silbert, CEO of the fund's parent company DCG, had the idea for the campaign, hoping to target the older generation in particular":

 

"We're going after a narrative around gold being where investors should go when markets turn south or as a hedge against inflation...We're highlighting the absurdity of gold."

 

Well, today, the Wold Gold Council hit back at the #DropGold campaign by publishing a blog post titled "Cryptocurrencies are no replacement for gold". In this post, Perlaky, who is the Manager of Investment Research at the World Gold Council, tries to explain that "although cryptocurrencies and blockchain technology look promising as a whole, they clearly do not represent a substitute for gold either in theory or in practice."

Perlaky argues that gold is better than cryptocurrencies for the following reasons:

  • "is less volatile"
    • "Cryptocurrencies extreme daily and intraday volatility disrupts its use as a medium of exchange and discourages strategic investments"
    • "Gold’s volatility is slightly above the stock market as a whole, in line with most fiat currencies over time."
  • "has a more liquid market"
    • "Gold trades $150bn a day, nearly 100x that of bitcoin"
    • "Gold pricing is consistent across exchanges in all forms "
  • "trades in an established regulatory framework"
    • "We have seen how lack of regulation has led to multiple crypto exchange defaults and fraudulent activity, resulting in losses amounting to billions"
    • "... gold trades in a widely authorised and regulated market with transparency"
  • "has a well understood role in an investment portfolio"
    • "has been a source of returns rivaling the stock market over the long-term"
    • "protects against inflation"
    • "is a portfolio diversifier, useful during downturns in the market"
  • "has little overlap with cryptocurrencies on many sources of demand and supply"
    • "Gold demand is diverse, coming from jewellery, investment, technology and central banks"
    • "Cryptocurrency demand is highly speculative or investment related, as there is little proof of its use as a medium of exchange"
    • "Gold has a track record dating back to 600 BC, whereas bitcoin has only a 10-year track record."
  • "is a safe-haven investment"
    • "Gold has a track record dating back to 600 BC, whereas bitcoin has only a 10-year track record."
    • "Cryptocurrency performance has been remarkable over the long-term but has seen massive haircuts during some periods and has failed during periods when it should have thrived"
    • "... there is nothing to prevent an enhanced cryptocurrency from being launched, devaluing those already in existence."

Perlaky concludes his post by saying that although "they continue to acknowledge the innovation taking place in the cryptocurrency and blockchain spaces and believe there will be a role for this technology in the future," they believe that "cryptocurrencies are not a replacement for gold and gold should remain a component in all investment portfolios."

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Hackers Hijack Major UK Supermarket’s Twitter Account to Promote Bitcoin Scam

Hackers have recently hijacked the Twitter account of a major supermarket in the UK, Tesco, and used their access to promote a bitcoin scam that saw them pose as Bill Gates to try and get users to send them BTC.

According to Bleeping Computer, the hackers compromised Tesco’s official Twitter account, which has over 540,000 followers. The hackers started urging users to send them over BTC, purportedly to celebrate the cryptocurrency’s price rise, claiming they’d double their money.

Later on, they changed the handle to @Billgatesmsc and replaced its profile picture with one of the Microsoft co-founder, before continuing their bitcoin scam attempt. While no customers appear to have fallen for the scam, Tesco briefly lost its verified status on the microblogging platform over the ordeal.

The hackers notably also replied to some Tesco customers, requesting personal information such as full names, addresses, postcodes, and more. This, while still impersonating Bill Gates. Tesco’s customers realized something was amiss, and it’s believed no one fell for the requests.

At press time, Tesco has regained control of its Twitter account, which has gotten its verified badge back. It’s unclear how the hackers managed to compromise the supermarket’s account, and the firm hasn’t issued any statements on it.

Notably, scammers trying to get cryptocurrencies on Twitter with these schemes have been around since last year. As CryptoGlobe covered, the scammers kept on hijacking verified Twitter accounts, and then used them to promote fake cryptocurrency giveaway links.

In a famous case they impersonated Tesla founder Elon Musk, and managed to rake in over $39,000 from unsuspecting victims.