Is Bitcoin set to become the new safe haven?
A
t the time of writing, Russia has invaded Ukraine. Cryptocurrencies and in particular Bitcoin has found itself the centre of attention for a variety of reasons related to the conflict. It has also raised the subject again as to whether Bitcoin is the new safe haven.
In this guide:
Disclaimer: All of the information written on Coin Crop is without influence and based on our analysis. No guarantee is offered concerning the accuracy of this information and therefore, any individual following up on it does as such completely at their own risk. Rates are correct at time of publication.
Background
As a result of almost global sanctions against Russia, discussions have turned to whether Russia will use cryptocurrencies to evade sanctions. It has been speculated that the recent spike in the price of Bitcoin has come about as a result of Russians and Ukrainians looking to move their funds out of the traditional banking system.
Russian oligarchs have been hit very hard by western sanctions as their assets are ceased and bank accounts are frozen. If they are able to move cash into cryptocurrencies, it will allow them to evade the sanctions.
Ukraine has been publicly raising funds to defend itself against the Russian attack by publishing several wallet addresses to which donations can be sent. At the time of writing, Ukraine has raised in excess of $35 million through more than 35,000 donations.
For the first time on a significant scale, cryptocurrencies are giving people an alternative to traditional banking systems. Traditional banks in Russia and the Ukraine cannot be relied upon leading individuals to seek systems where assets cannot be frozen, censored and used without identification.
Why Bitcoin is set to increase in value
It’s useful to look again at some of the reasons why it is accepted by most cryptocurrency commentators as to why Bitcoin is likely to increase in value. Gold is a useful asset from which we can compare Bitcoin against.
Limited supply
If is estimated that there is 50,000 tonnes of gold below-ground that is yet to be mined. To put this figure into context, approximately 190,000 tonnes have been mined in total. These figures don’t include gold outside of the Earth – is has been suggested that in the future gold will be mined from asteroids. The point here is that these figures are estimates and it is impossible to produce accurate figures.
If we contrast the unknowns around gold with Bitcoin, we know that there will only ever be 21 million Bitcoins. Thus, as the demand for Bitcoin rises, so too does the value of each coin.
Duration
As a physical asset, gold has the disadvantage that it has a greater chance of being stolen from you than Bitcoin. It is only possible for Bitcoin to be stolen if another party discovers your private key.
Consider also that whilst gold can be damaged and lose value, Bitcoin cannot be damaged.
Global acceptance
As an exchange of monetary value for goods or services, Bitcoin is now accepted in more countries than gold. El Salvador is a good example where the country has made the cryptocurrency legal tender. Whilst you can go into a restaurant to pay for food using Bitcoin, the same cannot be said for trying to pay for a meal with gold.
Security
Gold is at much greater risk of being forged or stolen than Bitcoin. Every transaction is verified by the blockchain nodes and once added to the blockchain, they cannot be changed.
Increasing utility
Every day as more people discover Bitcoin and the use cases increase (e.g. donations to Ukraine or attempts by Russians to evade sanctions), the usefulness and applications of Bitcoin are growing.
Efficiency
It goes without saying that transacting in Bitcoin is much cheaper than doing the same in gold. The advent of the Bitcoin lightning network means transactions are near instantaneous and with minimal fees.
Globalisation
As the reach of the Internet moves further into less developed countries and the world becomes more connected, the demand for Bitcoin will increase as a globally accepted means of payment.
Fungibility
Gold is a poor means of payment for goods or services. Its very difficult to to make it divisible. Bitcoin is much better suited for this purpose.
Analyst pricing forecasts
There have been no shortage of experts who have an opinion as to the future price of Bitcoin.
• Financial analyst Ronnie Moas from Standpoint Research stated that in the long-term, the bitcoin price will likely reach $400,000. This would give Bitcoin a market capitalisation value of $8.4 trillion.
• The late John McAfee famously predicted a future Bitcoin price of $1 million.
• Ian Balina, Bitcoin investor and founder of crypto research and media company Token Metrics, predicted Bitcoin can go to $100,000-$150,000, but the timeline is unclear.
• Matthew Hyland, Technical analysis and blockchain data analyst, predicted $100,000 during 2022.
• The Winklevoss Twins - $500,000 by 2030.
Given the recent war on Russia by Ukraine, and the associated sanctions and fundraising efforts, it is conceivable that Bitcoin will surpass $100,000 in 2022.
Earn rewards by saving
It’s possible to earn rewards from lending your Bitcoin to institutions. If you’re willing to lock your Bitcoin away for a minimum duration, below are some of the interest rates that can be earned:
| Organization | Terms | Rating | APY Rate |
|---|---|---|---|
| OKEx | Fixed (7 days) | 52.0% | |
| AAX | Fixed (360 days) | 9.00% | |
| AAX | Fixed (180 days) | 8.00% | |
| Binance | Fixed (90 days) | 7.00% | |
| AAX | Fixed (90 days) | 7.00% | |
| Haru | Fixed (15 days) | 6.90% | |
| Vauld | Fixed (30 days) | 6.70% | |
| AAX | Fixed (60 days) | 6.50% | |
| Hi | Fixed (365 days) | 6.00% | |
| AAX | Fixed (30 days) | 5.50% |
If you want the flexibility of being able to withdraw your Bitcoin whenever you want, the following are some of the rates on offer:
| Organization | Terms | Rating | APY Rate |
|---|---|---|---|
| Nexo | Flexible | 8.00% | |
| Hodlnaut | Flexible | 7.46% | |
| CoinLoan | Flexible | 7.20% | |
| MyConstant | Flexible | 7.00% | |
| Hodlnaut | Flexible | 6.71% | |
| Ledn | Flexible | 6.25% | |
| Haru | Flexible | 6.10% | |
| Nexo | Flexible | 6.00% | |
| Voyager | Flexible | 5.75% | |
| Binance | Flexible | 5.00% |
