Will Pi replace some gold demand?
About 2500-3000 tons of gold are mined each year. Although the gold supply is not as stable and predictable as Bitcoin, the impact of the gold supply is so small and its volatility almost has no effect on the price of gold. The price of gold is almost entirely determined by demand. Demand for gold depends on income, interest rates, inflation and a number of macroeconomic and geopolitical factors. A good rule of thumb is when people are frustrated in the stock market, they will seek refuge in a safe haven like gold.
Demand for Pi money in e-commerce?
So is there a chance for Pi in the legitimate e-commerce market? Every day more and more e-commerce is accepting Bitcoin payments, which is interesting. However, what fundamental problem does Bitcoin have for traders?
Yes, e-commerce merchants can find companies that process Bitcoin payments (converting Bitcoin from customer wallets to merchants' wallets) for a discounted trade discount than credit card payments (usually from 1.5% to 3%). But due to the volatility of Bitcoin today, savvy traders will not want Bitcoin to appear on their balance sheets. This is a hidden cost. In order to exchange Bitcoin received for money, sellers often need to withdraw Bitcoin to an exchange (charged a certain fee), then exchange them for cash (additional fees), then withdraw from the exchange to account. bank account. Even if this limit is set aside, current Bitcoin cannot be used for large-scale commercial applications. You must know that Visa can process an average of 1700 transactions per second, a maximum of 24,000 transactions per second, and the Alipay system can handle more than 250,000 transactions. In general, Bitcoin has not been able to make a meaningful impact on the e-commerce industry yet.
Pi needs to address many of these issues to play a role in e-commerce.
Digital gold pi
Even if we consider the Pi, the first expectation of Pi is digital gold. Very few people will admit this. Most people today are speculating and they want to profit big from their capital in the short or long term. They certainly are not looking for something simply store of value. At current valuations, the total value of all gold mined is about $ 9,000 billion.
To be honest, the analogy of digital gold is simply not convincing. Bitcoin is not currently a digital replacement for gold, nor is it likely to happen in the near future. Gold, as an asset that can maintain value and withstand universal service, has no undue volatility, its best digital alternative is an ETF exchange traded fund backed by gold and stability. Yes, you have to rely on intermediaries. An independent audit is needed to verify the authenticity of gold reserves, but it has provided what people all over the world have always wanted to make a safe investment in gold. These "digital gold" also offer the same level of seriousness as Bitcoin, which you can easily buy and sell some shares of ETF gold.
If you still don't believe it, just look at what happened in the past few days and you will know. The S&P 500 index fell 8% as concerns about the Coronavirus virus increased. Investors flocked to safe-haven assets like gold and government bonds. What happened to the price of Bitcoin? A decline of more than 9% - there is no feature of digital gold. Yes, the analogy of digital gold is very helpful. It makes people understand that even digital assets are scarce. However, this literal interpretation of digital gold is very misleading.