Cryptocurrency, specifically Bitcoin, is revolutionizing the landscape - to the advantage of the common person
In the realm of digital currency and traditional assets, a fascinating comparison emerges when comparing Bitcoin, gold, and Treasury bonds.
According to a chart from gold.org, governments hold a mere 1.4% of Bitcoin, a stark contrast to the 17% of available gold that central banks control. The distribution of gold, however, is more diverse. Bars and coins account for around 22% of gold, with nearly 10% held by Exchange-Traded Funds (ETFs).
However, the shares of companies and institutions in gold holdings should not be underestimated. Jewelry retailers and institutions like churches are significant players in the gold market. Interestingly, the chart from the Peter G. Peterson Foundation suggests that individuals holding Treasury bonds directly in their portfolio could only appear in the "Other Domestic" bar, which also encompasses companies, foundations, and so on.
Sovereign wealth funds, not accounted for in these charts, are believed to hold several thousand tons more gold than what is shown, further complicating the comparison.
If Bitcoin were to become the store of value for the future, it could potentially shift wealth from institutions and companies to individuals, contrasting the current distribution of gold and Treasury bonds. This shift is predicated on the assumption that individuals would have direct control over Bitcoin, as opposed to institutions managing large portions of gold and Treasury bonds.
By the end of 2024, after approximately 500,000 Bitcoins were transferred to funds and ETFs, the share of individual holders in the Bitcoin market decreased proportionally. The market saw strong institutional demand, particularly from ETFs absorbing significant Bitcoin quantities, indicating individuals' reduced direct holding share.
Gold in the form of jewelry is likely the most decentralized, with 45% tied up in rings, chains, and bracelets. The roughly 6.2 trillion dollars in Treasury bonds held directly by individuals would be the upper limit, with the actual share likely to be significantly lower.
This comparative analysis sheds light on the distribution of wealth in digital currency and traditional assets, offering insights into potential shifts and the role of institutions and individuals in these markets.
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