Cryptocurrencies are increasingly viewed by investors as a store of value.
Piyush Gupta, chief executive officer (CEO) of DBS Bank, believes cryptocurrencies such as Bitcoin will continue to gain acceptance as a store of value. He compared Bitcoin to gold and expects its status to strengthen in the coming years.
Gupta shared these views in an interview with Bloomberg. However, he does not think cryptocurrencies will replace government-issued fiat currencies. He said:
“Regulators and politicians will be reluctant to surrender control over monetary policy and tools for economic management, so they will be very cautious about allowing private money to grow. That said, I think private money (crypto) will continue to grow as a meaningful store of value, just as gold is today.”
The practical use case for Bitcoin has been debated in recent years. Some industry participants view Bitcoin as a currency, while others see the leading cryptocurrency primarily as a store of value.
Gupta added that he believes it will be very difficult for cryptocurrencies to displace traditional fiat currencies. He explained:
“The reason is that money needs three attributes: a unit of account, a medium of exchange, and a store of value. Private coins struggle to achieve the first two.”
According to Gupta, cryptocurrencies face challenges in becoming a unit of account and a medium of exchange because market-wide trust is still limited and because Bitcoin and other leading cryptocurrencies remain highly volatile.
Central banks around the world are developing central bank digital currencies (CBDCs), and Gupta expects these to become relevant in the coming years. He therefore advised industry participants to monitor CBDC developments closely.