Bitcoin and Gold: China’s Central Bank Highlights Comparative Shortages

Digital assets, such as Bitcoin, ushered in a new era of the cryptocurrency industry by dramatically changing the financial and technological landscape. Recently, the world’s largest bank by total assets, the Industrial and Commercial Bank of China (ICBC), applauded the phenomenal growth and emergence of digital currencies, emphasizing their potential to transform the financial landscape. In particular, the bank is focused Bitcoinlikening its limited abundance and rare availability to gold.

Shortage of Bitcoin Compared to Gold

ICBC Bank praised digital currencies for their importance in the ever-changing financial environment in its In-depth Economic Analysis. VanEck’s head of digital asset research is Matthew Sigel shared report on the X platform (formerly Twitter), calling it a love letter to Bitcoin and Ethereum.

The analysis highlights the explosive growth of digital currencies and usage as a result of people’s power of mental belief. According to the report, the ongoing evolution of digital currencies is driven by market demand, as shown by the introduction of Bitcoin, the creation of Ethereum, and the ongoing investigation of legal digital currencies by various central banks.

In addition, the bank made a comparison between Bitcoin and gold, saying that the crypto asset maintains the same scarcity as gold. Given the statistical consistency of BTC, which faces its problems of being difficult to distinguish, difficult to verify, and difficult to carry, this comparison is made. “Its financial qualities are weakening, while its asset qualities continue to strengthen,” the report added.

ICBC’s outstanding analysis Limited supply of Bitcoin of 21 million coins according to the standard gold coinage, which has supported its historical value. With only 21 million coins to be produced, BTC, sometimes known as digital gold, has long been praised for its scarcity. Specifically, the rapid increase in value and popularity of crypto assets over time may be attributed to its scarcity.

This analogy emphasizes how BTC it is quickly becoming gold’s modern counterpart as a digital store of value. In addition, the fact that one of the most powerful financial institutions in the world has admitted that the scarcity of Bitcoin makes the cryptocurrency even more reliable and attractive to both institutional and private investors.

Ethereum Is Digital Oil

The report also explored the uniqueness and role of Ethereum in the digital currency space. It referred to Ethereum as “digital oil” because of its key role in enabling decentralized applications and smart contracts on the blockchain network. According to ICBC, Ethereum presents Turing perfection, unlike Bitcoin, with its unique machine (EVM) and programming language (firmness).

Due to its Turing completeness, ETH can execute any programming instruction as long as the instructions are correct and have enough resources. Therefore, developers can have the ability to create and organize a number of smart contracts and complex applications, which is why they provide strong support for the blockchain technology platform.

ETH’s adaptability has attracted widespread recognition in the domains of Non-Fledgeable Tokens (NFT) and Decentralized Finance (DeFi), and is growing steadily in the virtual infrastructure network (DePin).

Featured image from Adobe Stock, chart from Tradingview.com