“And yes, bitcoin could potentially become the digital gold of the 21st century. Let’s not forget that gold has also been volatile historically,” Laboure said, pointing to the limit of bitcoin’s supply, below 21 million, as an important factor perceived by many as protection against inflation.
At the same time, he warned that it is important to keep in mind that bitcoin is a risky investment. “It’s too volatile to be a reliable store of value today, and I think it will remain ultra-volatile for the foreseeable future”said the expert.
As reasons for this high volatility, the analyst first mentioned that approximately two-thirds of bitcoins are used for investment and speculation; second, that due to its limited tradability, just a few additional large purchases or exits from the market can significantly affect the balance between supply and demand.
Third, the value of bitcoin will continue to rise and fall based on what people think it’s worth. “Small changes in investors’ general perception of bitcoin can have a big impact on its price,” he stated. If bitcoin is digital gold for being the pioneer of the market, and the most traded cryptocurrency, as well as having a huge capitalization, Laboure confers the status of silver to Ethereum.
The second coin by market value “enables many applications and use cases, such as decentralized finance and non-fungible tokens.” “If bitcoin is sometimes called ‘digital gold,’ then Ethereum will be ‘digital silver,’” she asserted.
Laboure indicates that the main problem of the crypto market is the lack of regulation. “Although it was a very important advantage for early adopters, today it prevents many investors or companies from entering the market,” he explains.
In addition, he described as “disastrous” the ecological footprint left by cryptocurrencies. At the beginning of 2021, the annual electricity consumption due to bitcoin mining was equivalent to the consumption of Pakistan, with a population of over 220 million people.
The economist assures that technological advances will help make the technology of cryptocurrencies cleaner. Regarding regulatory measures, Laboure expects that the year 2021 represents “a turning point” and that in 2022 many economies adopt a strong regulatory framework for crypto assets.
In this regard, he mentioned that most of the G20 countries plan to tighten regulations on cryptocurrencies, while world governments are promoting their centralized digital currency projects. Therefore, The analyst forecasts the coexistence of cryptocurrencies and central bank digital currencies with the reduction of the proportion of cash as a means of payment.
