In recent years, the ability of bitcoin (BTC) to act as a hedge against inflation has been one of the main arguments used to promote cryptocurrency. The latter’s performance in the middle of the global economic crisis related to the coronavirus is also indicative of this story.
However, some voices are raised to assert that bitcoin is still not a safe haven in the same way as gold. Brian Armstrong, CEO of the cryptocurrency exchange Coinbase, believes that it will take another ten years for cryptocurrency to fully fulfill this function.
Bitcoin’s market capitalization is only a small percentage of global GDP
On the 38th episode of Coinbase’s Around the Block podcast, Brian Armstrong talked about the adoption of cryptocurrencies, including bitcoin. He said it is still too early to consider the latter a safe haven at the moment. He explained that the total capitalization of the bitcoin market, and even the capitalization of cryptocurrencies in general, is still insufficient to fulfill this function.
“Frankly, I have to admit that I overestimated the chances of bitcoin being that inflation hedge in this macro environment. I thought this might bring more attention to bitcoin in this kind of environment, but it seems a bit premature. “, he said.
However, Coinbase’s CEO believes bitcoin has the potential to become a safe haven alongside gold given the cryptocurrency’s adoption curve. He also claimed that this could happen within the next 10 years.
“I think we’ll see that probably change over time. I see this happening over the next five to ten years, when cryptocurrency market capitalization becomes a larger percentage of global GDP, people will turn to bitcoin, which will be the “new gold” in a way. »
Also read: 2023 is approaching: What bet can you make on bitcoin?
Adoption curve similar to e-commerce
To illustrate his point and evaluate his prediction, Brian Armstrong cited the example of e-commerce. He recalled how the influence and potential of the latter was reduced at the beginning, before it imposed itself on the economy 20 years later.
“We saw something similar happen with e-commerce 20 years ago when it started in 1999-2000. People were treating it like a scam, they were like, “Ah, I wouldn’t put my credit card on a website. It could get stolen or whatever.” And now, 20 years later, e-commerce represents 15 to 20% of global GDP. So I think cryptocurrencies will follow a similar trajectory. »