Coinbase, one of the top cryptocurrency exchanges in the world, is reminding investors and Bitcoiners across the world to gear up for an awesome year as the halving continues to draw nearer.
Late last week, the top exchange published a blog post, titled “Digital Gold, Scarcity, and Bitcoin Halvings.” In it, the firm explained that the upcoming halving will cement the link between Bitcoin and the “Digital Gold” narrative that the top cryptocurrency has been linked with for the better part of a decade now.
Scarcity and Technological Advancements Push Bitcoin Ahead of Gold
In the piece, Coinbase gave a little bit of history on gold and its value as a hedge asset pointing out that ever since the gold standard was broken back in 1971, the value of the asset relative to the dollar has risen by about $4,000. However, the asset has enjoyed relative scarcity to other precious metals (such as silver, copper, nickel, etc.), and as such, has been able to stay more valuable than them.
Comparing this phenomenon to Bitcoin, Coinbase pointed out that the top cryptocurrency was built to mimic the same level of relative scarcity that gold has, with Proof-of-Work (PoW) mining making it difficult for it to be acquired. However, Bitcoin is even more valuable than gold since it is more divisible and can be sent between parties over a secure and reliable channel.
These benefits aren’t particularly novel. The “Bitcoin vs. Gold” argument has dominated public discourse for the past few years, with proponents of Bitcoin always pointing out the fact that the top cryptocurrency is still able to provide higher returns on investment than gold due to higher levels of technological advancement and increasing global relevance.
Coinbase is simply drumming up the same sentiment, while also pointing out that Bitcoin provides a myriad of technical benefits that the original gold simply doesn’t have.
Get Ready for a Halving-Inspired Surge
Then, the exchange drove home its major point- the fact that the Bitcoin halving is coming, and investors who hold Bitcoin now are poised to hit it big when it does arrive. The halving will essentially cut the rewards given to Bitcoin miners in half, with the next one seeing those rewards going from 12.5 BTC to 6.25 BTC.
Opinions concerning whether the halving will be sufficient to see Bitcoin’s price surge significantly have been divided over the past year. Historical data shows that Bitcoin goes on a rally immediately after a halving, and several individuals and firms within the industry are desperately counting on this to hold true this time.
However, several people also believe that things will be much different this time around. The most notable of them has been Meltem Demirors, the Chief Strategy Officer at crypto asset management firm CoinShares. Last month, Demirors made a compelling argument, claiming that institutions will drive the market this time, and when the halving does come, they will be heavily invested in Bitcoin-denominated derivatives. This, as she explains, will see the actual Bitcoin price essentially remain the same.
Coinbase, however, is of a different opinion. Regardless of the arguments going back and forth, May is sure to be an interesting month for everyone in the crypto space.