The World Gold Council (WGC) has hit back as the recent #DropGold campaign launched by investment fund Grayscale, which aims to convince investors to diversify some of their gold holdings into Bitcoin. The campaign, aided by an advert, went live Wednesday and has already caused quite a stir and brought the WGC out fighting, saying that “cryptocurrencies are no replacement for gold”.
sound ON! pic.twitter.com/SEGAmMItsE
— Grayscale (@GrayscaleInvest) May 1, 2019
Gold Good, Bitcoin Better
Grayscale accompanied their advert with a marketing push explaining the rationale behind #DropGold, with the core of the message being that gold, a physically demanding entity to ship and store, is irrelevant in a world where millions of dollars can be sent in cryptocurrency through a text message. Gold is good, they say, but Bitcoin is better. The campaign also promotes Bitcoin’s scarcity, verifiability, durability, divisibility, and more, with Michael Sonnenshein, Grayscale Investments Managing Director, stating that they are actively targeting the older generation who tend to view Bitcoin and cryptocurrencies skeptically. Bitcoin advocates such as Apple co-founder Steve Wozniak have in the past labelled Bitcoin “pure digital gold”.
WGC Hits Back
The WGC’s response was cordial but strongly worded, with Adam Perlaky, Manager of Investment Research, promoting gold’s reduced volatility (which Bitcoin supporters would argue is due to decades of price manipulation), greater liquidity, and it’s better suitability as a safe-haven investment. The response also criticizes numerous aspects of Bitcoin, such as its lack of regulation, potential for government interference, and real-world demand. Some of the arguments are valid, such as the security and regulatory aspects of Bitcoin, but others don’t hold water – Perlaky uses gold’s age over Bitcoin (600 years vs 10 years) as a selling point, says that “there is little proof of its (Bitcoin’s) use as a medium of exchange”, and raises concerns that Bitcoin’s finite supply could be undermined by a better cryptocurrency coming along to replace it. These are clearly erroneous or irrelevant observations, and shows something of a lack of understanding from the WGC’s point of view. Perlaky does at least recognize something that many in the world of traditional finance and politics fail to see:
We continue to acknowledge the innovation taking place in the cryptocurrency and blockchain spaces and believe there will be a role for this technology in the future.
We can all agree on that.