My biggest issue with BTC is that it's subject to how the market feels about it. There's no cash flow. When I buy USD, I can by 2yr treasuries yielding ~2.5%.
It's obviously an assumption, not a sure thing. But the only thing that needs to happen is people sharing the belief that it is and/or can become digital gold, which is quite peculiar.
If large stable investors buy in (pension funds, endowments, etc) that will help massively to support price levels, after a period of value growth.
Gold also has non-monetary use (i.e. jewellery) which I imagine is a substantial portion of demand.
5+ years ago, I used to be really into gold when I used to read Zerohedge. I feel like I'm hearing similar arguments for crypto currencies vs. fiat as back then when I read up on gold vs. fiat. People were fanatical about gold (me included) and weren't objective.
I owned shares in gold miners. I got burnt and lost a whole bunch of money. So personally I'm sticking to investments which produce cash flow.
As they say, "History doesn't repeat itself, but it does rhyme." I had better learn from my mistakes.
The giant saddle does seem to support the idea that gold is hard to value.
Then the next search phrase to look up is "inflation adjusted price of gold since 2011". It's not a pretty chart. I would not use the words "steady upward trend" to describe it. "Steady downward trend", maybe.
Fundamentals supporting cryptocurrencies: 1. Criminals need a way to do business online. Of course it works for normal people too, but with the transaction fees and inconveniences inherent in current systems, cryptocurrencies are most attractive for people who can't do business through traditional channels. 2. But Blockchain is the future...
You can see a lot of parallels here, but note the differences: 1. Industry may use more gold plating as prices fall, but falling bitcoin prices won't make criminals switch from cash to crypto, so the price cushion is weaker. 2. People have been attracted to shiny objects for all of human history, so this is likely a part of human nature. (Regular) people have been attracted to blockchain for like 10 months, so this is probably a fad. Additionally, while bitcoin may be scarce within its own ecosystem, cryptocurrencies are not scarce in a global sense...a new crapcoin is minted everday. Unless BTC is the one true coin (and it can't support the transaction load), there is no real scarcity here.
By the way, if the fundamentals I listed for gold sound a little shaky, it's because they are. A responsible financial adviser might tell you to put 80% of your money in stocks, but he'd never tell you to hold 80% in gold.
One BTC is exactly as useful as one "MyBTC" as a store of value. You can fork infinitely. Can't do that with gold.
The main question is: are people ready for a digital store of wealth? If yes, it'll likely be Bitcoin. If not, it'll falter. I don't know the correct answer.