by Marin Katusa, Katusa Research:

Bitcoin has rallied 175% in the past five months.

Should you jump on board for the ride?

Early this week, I offered my take on the subject in a Twitter post. It garnered a lot of interest and comments from Bitcoin fanatics.

My take on Bitcoin and cryptocurrencies in general? It might make you angry… but hear me out.

Bitcoin was initially designed to be a digital currency and a store of value. It was going to be a key component in the global commerce system, seen to many as owning Bitcoin was a way to reserve a slot on the Internet’s ledger. Many people believed it would revolutionize the online financial world.

Guess what?

It didn’t happen.

Right now, there is no meaningful amount of global commerce being transacted with Bitcoin. There’s some niche retail, but that’s about it.

Computers have advanced so much that cryptocurrency engineers are creating alternatives to Bitcoin, and the whole argument of “reserving a slot on the Internet’s ledger” has proven to be false by the rise of the many competing cryptocurrencies.

In addition to facing competition from other cryptocurrencies, Bitcoin is at risk of being diluted. The core Bitcoin community is debating the current reality. The debate is on, and it’s only a matter of time before human greed destroys the designed store of value factor. A quick Google search shows these discussions are ongoing in real time—dilution will be coming to Bitcoin.

My team knows of and tracks about 700 crypto and digital currencies. The top three by market cap are Bitcoin ($28.7B), Ethereum ($7.9B) and Ripple ($6.8B). Bitcoin is by far the behemoth of the industry… for now. (To put things in perspective, the world’s largest gold producer, Barrick has a smaller market capitalization than Bitcoin.)

The original intentions of Bitcoin were great, I’ll give them that (but then again, so were communism’s, and we all know how that turned out). For example, Bitcoin and Blockchain were supposed to destroy credit cards such as Visa. But guess what, they’re still here. Blockchain didn’t destroy Visa. Visa has already created its own technology to handle the issues. With trillions of dollars on the line in transactions, large companies that have the majority of market share will make big waves into this arena and maintain control.

The global financial biosphere has evolved and solved its own issues with in-house applications. The desperate need for Bitcoin’s blockchain came and went.

The social media and commerce platform WeChat in China is a great example. It doesn’t use Bitcoin’s blockchain. The whole Bitcoin blockchain revolution didn’t happen. Competitors to Bitcoin, all promising better features than Bitcoin, arose from this “coming need.” There are numerous amounts of blockchains (such as Ethereum blockchain trying to gain traction), and frankly, the Bitcoin blockchain missed its window of integration.

But let me get back to the flawed basic logic of the Bitcoin argument.

Counter to what many people believe, Bitcoin is NOT an irrefutable store of value.

Gold is.

So, if you’re sitting on big Bitcoin profits, sell some Bitcoin and buy gold with it. And if you’re thinking about jumping on the Bitcoin train, don’t do it. Buy gold instead for a store of value.

For the record, I support the spirt of cryptocurrencies, as I believe in the free markets. My issue with the Bitcoin crowd is the BS theory that Bitcoin is a “store of value.” Because of the incredible growth in computing power, what was once a “complex” algorithm is no longer complex. So, the rarity of Bitcoin fundamentally is flawed because the design rule of one block every ten minutes will eventually be changed to perhaps nine minutes… then seven… then five… and you get the point. If people can find a way to debase a currency, they will debase it.

On the other hand, I do see gold as money. Thanks to its unique physical properties, gold has been used for money for thousands of years.

Folks have used everything from butter to seashells, stones, livestock, salt, and cigarettes to transfer wealth and trade for goods. Yet, gold is the undisputed tangible king of the “store of value” argument for six fundamental reasons…that of which Bitcoin cannot meet.

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