Ugandan gold vs. Bitcoin
Last week, Uganda officially confirmed the discovery of huge gold deposits. The ore is estimated at 31 million tons, or approximately 320,000 tons of gross raw material. They are valued at $ 12.8 trillion. The fields were discovered during intensive oil exploration in the Alupe area of Busia and Karamoja, and the Kassanda district as well as the Tiira Bushenyi area. Most of them are located near the border with Kenya. There are plans to start mining and refining around 5,000 kilograms of gold a day by the end of this year.
To put it mildly, Uganda is a poor country, it has no access to drinking water and the lack of infrastructure hampers its development. The basis of the economy is agriculture and coffee production. But recently, it has found resources of very valuable elements: tin, tungsten, oil and gold, as it is now. The government decided to cooperate with foreign companies that will start mining gold. A Chinese mine is already operating in Busia and companies from the United States are also interested in cooperation with Uganda.
It is said that fear drives gold and every crisis makes its prices skyrocket. Recently, the same has been said about Bitcoin. Even comparing the price charts of these two products, you can see some similarity. Over the past five years, gold has risen in value against the dollar by 48%. This increase, however, turns out to be small compared to the price of Bitcoin. Of course, it could be argued that the scarcity of a given commodity drives its price. So we have a limited amount of Bitcoin coins, but also a limited amount of minerals in the core of the Earth, which, as you can see, have not all been discovered yet.
The question now is whether investors will be willing to trust a digital currency with a supply cap of 21 million coins? This makes it non-inflationary and a good security for funds. It is also not controlled by institutions in any way, so it encourages people to invest in it all the more. However, gold is a brand in itself that has earned trust over the centuries. Will the discovery in Uganda significantly lower the price of gold? Will Bitcoin and other cryptocurrencies gain in this case? We’ll find out soon.
Bitcoin supporters see only advantages in it — limited quantity, ease of storage, not controlled by any entity and subject to price fluctuations solely due to the market and trust in the issuer. As Bitcoin experts say, it has never existed in similar conditions, so it is primarily a test for the entire group of cryptocurrencies. Gold has earned its high position over the centuries. Although Bitcoin offers more possibilities than gold, it needs to increase the trust of users and its reach to the size of fiat currencies. Perhaps in the process of developing such trust, another cryptocurrency will appear that will be more efficient. It is possible that we will witness this.
