Bitcoin has no real backing, gold is the future of digital currency - World Gold Council Chair
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Editor's note: The article incorrectly used the wrong title for Randy Smallwood in his role with the World Gold Council. He is chair of the WGC.
(Kitco News) - While the cryptocurrency market struggles to gain broader adoption in global financial markets, gold could be uniquely positioned to succeed as an accepted digital asset, according to one executive in the precious metal sector.
In a recent interview with Kitco News, Randy Smallwood, CEO of Wheaton Precious Metals and the Chair of the World Gold Council, said that gold continues to establish itself as a global store of value, attracting a new generation of investors who have lived through unprecedented uncertainty and volatility.
Smallwood said that what gives gold its value is its rarity; he pointed out that despite a handful of leading digital coins, the sector has become inundated with products. He noted that there are tens of thousands of digital coins in the marketplace and just as many have failed in the last few years.
Smallwood added that Bitcoin's lackluster performance through 2023 could allow gold to shine in the digital marketplace. He noted that through 2023, the World Gold Council has seen significant interest from banks worldwide that are interested in digitizing physical gold.
"Bitcoin is the promise of something that doesn't have any backing. There is no real value there,” he said. "The world right now needs a gold-backed digital token that, through the blockchain, represents physical gold and can be freely traded. The world is ready for a digital currency that is backed up by the promise of real value,” he added.
The WGC is helping to develop gold's digital infrastructure and bring potential partners together through its Gold247 initiative, which was launched nearly one year ago.
Smallwood pointed out similar sentiments in the crypto and broader foreign exchange markets. He noted that central banks are buying record levels of gold because they need to back their currencies with more than just promises.
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Although there is growing competition to challenge the U.S. dollar as the world's reserve currency, Smallwood noted that nations like Brazil, Russia, India, China and South America, the original BRICS nations, have a long way to go to compete with the greenback.
"There's a reason the US dollar is the main reference currency here in the world is because it has the strongest gold backing of any currency in the world. And China knows that; that's one of the reasons China continues to build up gold reserves in its central bank,” he said. "If a currency wants to compete with the US dollar, it has to have strong gold backing. You can't have that happening without people, the youth, the millennials, understanding a bit more about gold.”