The relative stability of Bitcoin during periods of geopolitical uncertainties has allowed the digital currency to be considered by investors as a safe haven for the preservation of their wealth.
Two major events in 2016 that quickly come to mind when considering the geopolitical risks borne by holders of fiat currencies, stocks, commodities and other financial elements are Brexit and the US elections. The fallout from these events saw the nations’ currencies and stocks plummet within very short periods of time.
One of the most critical factors that investors consider is the safety of their investment. During periods of anticipated volatility, holders of local investments usually seek a safe haven for their wealth and value preservation.
Recent events have shown that, like gold, Bitcoin is gradually assuming the role of a run-to hideout for value preservation.
Michael Vogel, CEO of Netcoins, says:
“In some circles Bitcoin is still considered a high-risk investment vehicle, while others consider Bitcoin to be the ultimate safe haven investment.”
Digital currencies like Bitcoin were built from the ground up and designed for the era of information. Bitcoin allows value to be transacted directly, peer to peer, without an intermediary, hence it is not bound by any particular political jurisdiction.
This versatile characteristic seems to have fueled the recent rise in confidence shown by holders of such digital currencies. The relative stability shown during the aforementioned events further boosts the trust and reliability held within cryptocurrencies like Bitcoin.
There’s still work to be done
However, Vogel thinks that all work is not done yet in declaring Bitcoin as a safe haven for investors, with the implication that it is still a work in progress.
Vogel says, “I think at the moment Bitcoin is somewhere in between a high-risk investment and a safe haven, but as we continue a trend towards price stabilization, even the most risk-averse investors will become more comfortable with Bitcoin.”
Vogel continues by explaining that avid followers of Bitcoin already know that its value as a geopolitical safe haven has already been proven. In addition to Brexit, other examples have been seen in Greece, China, Argentina and many other countries, where political events and unstable political climates have resulted in increased Bitcoin adoption.
Vogel concludes by pointing out an observed trend by many customers of Netcoins who treat Bitcoins the same way they treat gold bullion.
He says, “In my conversations with Netcoins' Virtual ATM customers I've learned that some customers who actively buy Bitcoin are also active gold bullion investors. These customers tell me that they invest in Bitcoin for the same reasons that they invest in gold bullion - Bitcoin and gold are both alternative, safe-haven investments compared to fiat currency.”