While Bitcoin $BTC is doing is normal dancing in the charts today, in recent years, Russia has become the largest buyer of gold in the world. They’ve purchased 4x more gold in the last year then they held in their reserves. The country is attempting to perform a financial reset for their country.
Russia isn’t the only country buying up gold. China has started playing a game of catch up with the former Soviet Union’s largest country by brining in roughly 32.95 tons of gold in the first three months of the new year. By comparison, Russia’ Central Bank bought up 651.5 metric tons of gold in 2018.
The world is interested why two of the worlds super powers are focused on increasing their gold stores. Part of the reason it’s likely to drop the value of the United States dollar, making it less desirable as the reserve currency of the world. Another possible reason is that Russia may be preparing to use the gold to back a new digital currency.
Bruno Maçães of Portugal had his own viewpoint on why the gold buyup is happening,
“These moves come at a moment when gold has become as the anchor for new experiment in digital currencies, Gold and crypto are a marriage made in heaven, combining the stability of gold with the convenience and security of blockchain.”
The new coins would stop any interference from the state, mainly because they would be notes created by private companies and institutions. Using a peer-to-peer network would allow private institutions to control their own supply. The transactions would be strictly between the user and the banks or governments.
Even if the network works, it won’t happen overnight. There are too many security measures, transfer protocols and storage spaces that need to be set up.
Russia isn’t exactly a trusted economic power either. Mixed with the non-guarantee assurance on gold holding its price also adds some challenges. Sanctions held against Russia by the US, who is the main asset holder for gold makes for even more problems if Russia attempts to create a gold backed cryptocurrency.
And yet one more aspect to consider is the power of Bitcoin. Bitcoin has already proven itself as a strong digital currency. The coin has been used successfully for more than a decade, still economist Vladislav Ginko of the Kremlin believes a gold backed currency could be more successful than BTC.
Do you think a country run cryptocurrency would be able to beat out Bitcoin? Leave your answers in the comment section below.