Author of 'The Bitcoin Standard' Predicts Future Gold-Beating Volatility Reduction
Vexoda Newsroom
Saifedean Ammous, author of 'The Bitcoin Standard,' argues Bitcoin's volatility will decrease as it matures, eventually surpassing gold in market capitalization and utility.
Saifedean Ammous, renowned author of the influential book "The Bitcoin Standard," has put forth a compelling argument regarding Bitcoin's future trajectory. He posits that the digital asset is already functioning effectively as a store of value, a key characteristic of money. Ammous believes that as Bitcoin continues to mature and its adoption grows, its inherent volatility will significantly diminish, enabling it to fulfill broader monetary roles more reliably. This perspective challenges some prevailing criticisms of Bitcoin's suitability as a widespread medium of exchange.
The core of Ammous's assertion centers on Bitcoin's potential to evolve into an asset larger and less volatile than gold. He contends that holding Bitcoin, even without extensive daily transactional use, constitutes utilizing it as money. This viewpoint directly addresses critiques, such as those from Professor Lawrence H. White, who highlighted Bitcoin's fixed supply as a driver of volatility that hinders its utility as a reliable medium for payments, citing stablecoins' transaction volume growth as evidence.
Historically, gold has served as a primary store of value and a hedge against inflation for centuries, boasting a market capitalization currently nearing $29 trillion. Bitcoin, with its capped supply of 21 million coins, offers a stark contrast in its monetary policy. While proponents see this scarcity as a strength, critics argue it leads to price swings that make it impractical for everyday transactions. Ammous suggests this volatility is a phase that will lessen as Bitcoin's network effect and adoption increase.
The market reaction to Ammous's statements, while not a direct price movement trigger, contributes to the ongoing narrative surrounding Bitcoin's potential. Industry figures like Bitwise's André Dragosch and Blockstream's Adam Back have also forecasted Bitcoin eventually rivaling or surpassing gold in market value and monetary functions. These predictions, ranging from a $1 million BTC price by 2029 to Bitcoin serving as a primary monetary hedge, underscore a growing conviction among some analysts about its long-term prospects.
Ammous's perspective holds significant implications for the digital asset space and traditional finance. If Bitcoin indeed becomes less volatile and surpasses gold, it could fundamentally alter global asset allocation strategies and perceptions of digital currencies. It suggests a potential shift where a decentralized, digital asset could displace a long-standing, tangible commodity as the preferred store of value and inflation hedge, reshaping the landscape of sound money.
For traders and investors, the key developments to monitor include Bitcoin's actual volatility metrics over time compared to gold, its ongoing adoption rate for both store of value and transactional purposes, and the evolution of regulatory frameworks. Observing whether Bitcoin's market capitalization continues its ascent towards gold's current valuation, alongside sustained network growth and development, will be crucial indicators in validating these long-term predictions.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.