Goldman Sachs Doubts Bitcoin as Store of Value Citing Environmental Problems and ‘Lack of Real Use’ – Markets and Prices Bitcoin News
Global investment bank Goldman Sachs questions whether bitcoin can be a long-term store of value and digital gold. The firm’s analysts cited several problems with cryptocurrencies, including. B. Environmental problems, lack of real use, and competition from other cryptocurrencies.
Goldman Sachs sees problems with bitcoin as long-term value
Goldman Sachs released a note Wednesday outlining some of the problems with bitcoin as digital gold. The firm’s analysts, led by Jeffrey Curry, its chief commodities strategist, have expressed concern that cryptocurrencies could become a store of value in the long run.
Analysts said: While bitcoin benefits from greater liquidity, it suffers from a lack of real use and a low ESG score in environmental, social and governance terms due to its high energy consumption. They also pointed to competition from other cryptocurrencies as a factor keeping bitcoin from becoming digital gold:
Traditional long-term assets such as gold, art, diamonds, wine and collectibles have value and utility beyond preservation.
Goldman Sachs explains that real usage is important because it smooths price volatility as real demand adjusts to accommodate fluctuations in investment demand. It also means that the asset is unlikely to fall to zero.
Analysts have argued that bitcoins lack of real use and its environmental problems make it vulnerable to losing demand in the store for another, better cryptocurrency. They claim: Bitcoin has lost ground to other cryptocurrencies such as Ether and Altcoins. In our view, this underscores the fact that competition among cryptocurrencies for the status of the dominant long-term store of value remains and is an additional source of risk for bitcoin stores.
As for bitcoin’s impact on the environment, analysts write that there are concerns about the energy consumption of the cryptocurrency used in the mining process, citing a University of Cambridge study showing that the currency consumes more energy each year than Argentina. However, many claim that renewable energy sources are increasingly being used in the extraction of bitumen.
However, a growing number of people believe that bitcoin is an excellent store of value that can be used as a hedge against inflation, including pro-bitcoin US Senator Cynthia Lummis. Some even say that bitcoin will replace gold as the store of value par excellence. However, analysts at Goldman Sachs believe that it is still too early for bitcoin to compete with gold in terms of demand for safe mining and that the two can coexist.
Meanwhile, Goldman Sachs has brought back its bitcoin trading division and plans to launch a range of cryptocurrency investment products. In March, the company reported significant institutional demand for BTC. Earlier this month, CEO David Solomon said he expects a major shift in the regulation of crypto-currencies.
What do you think of Goldman Sachs’ comments on bitcoin? Let us know your comments in the section below.
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