DBS’s Chief Investment Bureau recently released a note to investors that argues for Bitcoin as a more efficient store of value asset than US-based fiat.
DBS argues that as global central banks continue to inject fiat supplies into the economy, Bitcoin could offer an alternative for investors who do not wish to be at the mercy of the depreciating dollar.
“Indeed, the exponential rise in Bitcoin prices is matched only by the meteoric expansion of the balance sheets of the world’s largest central banks – the US Federal Reserve, the European Central Bank (ECB), the Bank of Japan (BOJ), as well as the People’s Bank of China (PBOC).
Such trends would unequivocally stimulate demand for alternative currencies, even unorthodox digital forms that potentially represent a store of value more faithfully than physical dollars.
In its assessment, DBS notes that the decentralized nature of Bitcoin and its limited supply work together to make Bitcoin a solid store of value option for investors. The team points out that due to its limited supply, Bitcoin is more aptly described as a crypto-product, and one that is easily transferable.
“Even the best quality diamonds wouldn’t hold a candle to the portability value of Bitcoin.”
The bank adds that Bitcoin appears to have a low correlation with other assets, which means it could help investors diversify their portfolios.
However, DBS recognizes that Bitcoin has scaling issues, due to its reliance on the Proof of Work (PoW) consensus mechanism which requires an exorbitant amount of energy to confirm transactions.
In addition, the energy the network uses for transactions and for mining Bitcoin, notes DBS, could be of concern.
Recently, Tesla CEO Elon Musk announced that Tesla will no longer accept Bitcoin as payment due to environmental concerns regarding the Bitcoin mining process.
DBS also warns that Bitcoin is a volatile asset that could face regulatory risks in the future. The bank also suggests that if Bitcoin gains the status of a trusted asset outside state control, “it is unlikely that these same central authorities would sit idly by without defending the monopoly control of the various currencies that Bitcoin threatens to supplant. . “
Despite its relatively uncertain future, Bitcoin could be at the forefront of a “currency revolution”, concludes DBS, which is “an opportunity (fiat) that money cannot buy.”
Don’t Miss a Beat – Subscribe to receive crypto alerts via email straight to your inbox
follow us on Twitter, Facebook et Telegram
Surf the Daily Hodl Mix
Disclaimer: The opinions expressed in Daily Hodl are not investment advice. Investors should do their due diligence before making high risk investments in Bitcoin, cryptocurrency, or digital assets. Please note that your transfers and transactions are at your own risk and that any losses you may suffer are your responsibility. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in Affiliate Marketing.
Image en vedette: Shutterstock / IM_VISUALS