Goldman Sachs: Bitcoin is high risk and high volatility, and is not the "new gold"

According to CNBC news in the early morning of the 20th Beijing time, Goldman Sachs said in a report that encrypted digital currencies such as Bitcoin face multiple risks and are not the "new gold". Precious metals are still an important asset class in the investment portfolio.

In a note to clients earlier this week, Goldman Sachs detailed the benefits of holding gold in a portfolio. “The use of precious metals is not an accident of history and remains the best store of value among known elements over the long term,” the investment bank said.

Many commentators have called Bitcoin "digital gold" because of its limited supply and the fact that its price sometimes rises like gold during times of geopolitical tension. The Goldman Sachs report concluded that Bitcoin is not a better store of value than gold. "Gold outperforms cryptocurrencies on most key properties of money."

Goldman Sachs analysts believe that digital wallets used to store encrypted digital currencies are vulnerable to hacker attacks, and there are also significant regulatory risks. Some countries have banned the trading of cryptocurrencies. Although countries such as Japan have begun to allow Bitcoin as a payment method, and Bitcoin seems to be a better medium of exchange than gold, Bitcoin transaction fees have risen sharply this year. Data from bitinfocharts shows that the average Bitcoin transaction fee has reached a peak of nearly $9 in mid-July.

In addition, gold does not face competition from substitutes, but Bitcoin faces competition from more than a thousand cryptocurrencies such as Dash and Monero.

Goldman Sachs finally said that gold can obviously better maintain its purchasing power, but the average daily volatility is much lower. In 2017, the average volatility of Bitcoin was almost 7 times that of gold. "Despite the recent popularity of encrypted digital currency, it is not the new gold." (Cong)