For the first time ever, the price of one bitcoin has surpassed the price of used 1990 Honda Ballade sedans.
While today’s swap can be attributed to a good day for bitcoin (up ~3%) and a bad day aging Japanese car owners, the big picture is that bitcoin has more than doubled in the last year (up ~185% from a year ago) while Hondas are essentially trading exactly at the price you would expect them to.
Big South African crypto news! #Bitcoin finally reached parity with (and is now worth more than) this 1990 Honda Ballade sedan ? pic.twitter.com/QTyrUVtE2y
— Werner van Rooyen ? (@werneravr) March 3, 2017
OK, if not clear by now, it’s a reference to all the news about Bitcoin now surpassing the price of gold. Which is true, but also absolutely meaningless. The price of Bitcoin has surpassed many other things: a bottle of still water, a 5kg bag of potatoes and the price of a Google share. It doesn’t mean it’s “worth more” than water or Google or potatoes.
Whereas there are certain similarities between gold and bitcoin (scarcity, store of value, alternative asset class), the comparison is completely arbitrary. The instruments aren’t correlated in any way.
I’ll concede that gold is the most common alternative asset class and that many Bitcoiners hope and believe that Bitcoin will at some stage in future replace it or, at the very least, take just 5% of the global share gold currently holds.
Quick maths: Gold currently has a market cap of around $7,411,895,583,305 USD at a price of $1,234 USD. There are currently 16,195,638 BTC in circulation, exchanging hands at $1,260 USD so it has a market cap of $20,406,503,880. If it held 5% of gold’s market cap, each coin would have traded at $22,882 USD right now.
Anyway, all of this is arbitrary. I’m 100% bullish on Bitcoin in the long term, but not due to the current news hype cycle. Bitcoin isn’t “worth more” than gold in dollar terms (look at the market capitalisation links above). At least: not yet.
Bitcoin’s price has been rising a little too fast recently. Each and every time that happens, people go crazy and put all their money into it, it drives the price up too fast, the market corrects (with a sudden plummet) and everyone pronounces it dead (again).
It has been argued well by many others, but Bitcoin needs to become boring, stable and grow at a slow and steady pace to really disrupt the market, strictly speaking of it as an alternative asset class. It has already done that as a technology.