In the context of the Bitcoin halving event approaching, Coinbase recently launched Bitcoin promotion as a story about "digital gold". In a storm tweet In order to promote an attached blog post published on February 7, the leading US crypto exchange highlighted the main reasons why halving and subsequent supply cuts will strengthen. for that story.
Scarcity creates value
Since the gold standard was broken in 1971, the dollar value has begun to decline and the value of gold - in USD terms, has increased by more than 4,000%. Gold has a higher value than other metals - such as copper, due to its relative scarcity and scarcity.
Bitcoin was originally designed to be as scarce as gold and it is difficult to earn BTC through a Proof-of-Work mining mechanism. However, BTC also has an advantage over gold when it can be transferred through a communication channel.
"Equipped with countless technological advantages, promoting the development and growth of the global market, Bitcoin is a store of rival value of gold in the digital age."
Halving increases scarcity
Bitcoin's design is a limited supply, with new coins being minted as rewards every time a transaction block is mined. The initial reward is 50 BTC per block, after two halving events, this level drops to 12.5 BTC.
After the halving in May 2020 coming, the mining reward for about every 10 minutes, will be reduced to 6.25 BTC. This will bring the issuance of Bitcoin supply at a rate of about 1.7% per year.
Stock-to-flow (S2F) is a measure of the ratio of new supply to total supply, and after halving, Bitcoin's S2F scarcity will be on par with gold.
"Gold's stock will rise higher than any other metal and Bitcoin will soon follow," emphasized Coinbase.
Without demand there is no value
S2F predicts prices will fail if there is no demand and this is true for fiat currencies, as much as any other commodity. When central banks increase the supply of money, the economy can sometimes prosper. However, if money supply predominates demand, hyperinflation events can occur.
Events like inflation will boost demand for safe havens like gold and Bitcoin, and recent economic fears are reaching all-time highs, follow Global Economic Policy index Uncertainty.
This, along with countless technological advances and accelerated development of Bitcoin has proven Bitcoin to be digital gold, according to Coinbase.
As Toiyeubitcoin reported, Coinbase and Ripple senior officials recently formed a working group to advise U.S. regulators on policies to encourage innovation in this area.
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According to CoinTelegraph
Translated by ToiYeuBitcoin