Similarities between Paper Gold and Altcoins : Bitcoin
Due primarily to how difficult it is to take possession of gold, unallocated expansion of gold derivatives created gold liabilities that could be cash settled if everyone tried to redeem it at once, led to the creation of the paper gold market that effectively neutered the price discovery of gold. Note: I’m not talking about the futures market here but the unallocated gold market. People often conflate the two. People buy unallocated gold but this doesn’t contribute to gold scarcity.
Bitcoin doesn’t have this problem as it is very easy to “take possession” of. However, im wondering if altcoins have basically taken up this mantle. People buy altcoins thinking it is the same thing as Bitcoin (that or “omg my coin has so many use cases and great team wgmi! Merge!”) and effectively harm the true price discovery of Bitcoin.
As I am writing this I do feel that not withdrawing from exchanges is a bigger problem. But I feel shitcoinery is up there as well. Both are akin to the paper gold market in my opinion.
