Bitcoin (BTC) is hailed as the new Gold and similarly, there are increasing number of investors who are looking towards Ethereum Classic (ETC) as the new Silver. According to Blackrock’s statistics, approx. $72 billion was invested in physically backed Gold products and $12 billion for Silver, Platinum and other precious metals. By extrapolating from the shares gold and these precious metals hold, ETC could amount to 5% – 15% of BTC’s increasing marketcap which at the time of writing comes down to $9 billion – $27 billion and a corresponding price range of $90 – $270 per ETC.
As you would have noticed, this kind of relation held true for quite some time and presently ETC has some catching up to do and there is lot of room for growth. However, that is beyond the scope of this post. What we are trying to explore here is how BTC and ETC have the potential to become such good stores of value or in other words, Gold 2.0 and Silver 2.0.
First things first, both of these coins are limited in supply which makes them inflation proof and there price is only going to go up. Both coins have a fairly small (relatively) and well defined supply. I know, you’re probably wondering Ethereum (ETH) also has a limited number of coins. Well, read up. It doesn’t! I also thought the same for a long time until I did some digging. Besides, Ethereum (ETH) has printed new coins on numerous occasions, recent ones are Parity hack and DAO hack which is no different than the Federal Reserve printing fiat currency! Vitalk Buterin is not concerned by it. On the very contrary, he is pissed off that people are more interested in the price of cryptocurrencies rather than the actual project. So, inflation or no inflation, he only cares about the technology not your investment.
As for ETC, it recently announced its monetary policy and there is growing talk of how investment banks and big investors like ETC for investing due to its inflation proof nature and immutable blockchain. BTC also has a tried and tested financial model. Both BTC and ETC are trustless blockchains which means you do not need to rely on somebody’s trust to transfer money. The same is not true of ETH and most altcoins. This problem will be more obvious in ETH after Callisto when ETH swtiches to Proof of Stake.
The challenge for Bitcoin is to address transaction cost and speed issues which I believe will be addressed with the Lightning Network. As for Ethereum Classic, the challenge is that it is also a utility token in addition to being a store of value, so it will have to get some Dapps on its platform (new ICOs) to gain recognition and respect in the cryptocurrency community. However, that being said, both of these coins have huge potential to achieve widespread adoption and recognition as well as an enormous increase in value. I understand there’s a lot of FUD and fear in the market right now but once big institutional investors get on board, it will be difficult to buy these store of value coins for such a low price.
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This article is published with some updates and contributed by Fakhan
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Disclaimer: Cryptocurrencies investments are full of speculative and market risks. This article is only for information purposes and not an investment advice. Please conduct your own thorough research before investing.