Like the gold, the bitcoin can be classified as a commodity and in many cases as a currency, is set between two definitions; however, one of the most notable and comparable with the Gold aspects is that the rate of commercialization of the bitcoin is not controlled by the policy or any central bank. But it can provide investors the same potential benefits than the gold?

David Andolfatto’s VP Bank of Federal Reserve of St-Louis sees the Bitcoin become the next active insurance: “Bitcoin is a safe asset? He is probably thinking that Bitcoin no, of course not. The price of the Bitcoin can be very volatile. Someone can easily get or lose 50% in a very short period of time. So if we are talking about an asset that provides a stable profitability, Bitcoin is not it.”

However, it provides more details: “Except that this is not what I mean with a safe asset. In normal times, is an asset that remains despite having a relatively low efficiency, perhaps because of its use as barrier, or maybe ‘cause to its liquidity properties… I think that Bitcoin could be the next great asset safe in the world. At least, it certainly seems to have all the properties that are desired in an active insurance.”

What are the bitcoin properties that make it an active insurance?

First, bitcoin does not constitute any legal claim against anything of intrinsic value, is just a record-keeping technology, which means that it is not tied to the value of any monetary instrument. In second place, the bitcoin don’t pay any interest, so it can be stored for long periods of time. In addition, the possession corresponds to the property, so that the confiscation of the regulators organism is not a risk.

Likewise, the ledger has proven to be safe, so that Bitcoin is not at risk for traditional theft in the same way as gold and other precious metals in bullion is. Finally, the money supply has been set at 21 million of BTC, so it will not introduce with the pass of time.

Otherwise, recently an author of The Wall Street Journal blog, in his note said that bitcoin (digital gold) “is starting to be a bit more stable than its physical counterpart” alluding to gold. This is because that in the last days, the bitcoin prices have been less volatile than the gold prices. Suggesting to someone’s that the perception of investors of Bitcoin relates it as an active insurance.

An analysis by Matt R O’Connor author of the website Seeking Alpha, sets the main benefits that has the bitcoin with respect to gold, in his study explains that the Bitcoin is an accepted or even preferred form of payment and exchange. Currently, an estimated of 120-150 thousand businesses accept bitcoin, including such huge companies as Dell, DISH, Expedia, Overstock.com, and even nonprofits such as the Red Cross, with regard to gold, whose main function is to be a secure asset more than a method of exchange. He also says that it appears that Bitcoin is becoming quickly comparable to other currencies. Of course, the main drawback is that the Bitcoin history only extends for a handful of years, but taking this serious, trends indicate a continued use growth, as well as continuous suspicion of investors about paper currencies, and there are some arguments that will make that investors may be rewarded by additional risks associated with the Bitcoin.

And even he says that the Bitcoin has some areas of advantage over gold. This is because that in comparison with the physical gold, Bitcoin is much easier to buy and store, with much lower transaction costs in comparison with players to the retail in physical gold. Also, it is electronic in nature so Bitcoin is much easier, faster to use on purchases and transactions per day than physical gold.

Although O’Connor makes it clear that with its analysis does not intend to advocate on the bitcoin or influence to any investment of any type, in many aspects demonstrates the relevance that has winning the bitcoin in the short time of movement it have, what for enthusiasts of the crypto-currency and investors, shows a favorable panorama.

Sources: seekingalpha, cointelegraph

Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.