As bitcoin flies from record to record again, the question of its integration into a diversified portfolio arises for more and more investors. While no scenario can be completely ruled out, bitcoin is certainly not a safe haven right now.

The finery of gold Store of value How much is a bitcoin worth? Not a safe haven Gold or fleas?

Forty thousand dollars! This is the new milestone reached by bitcoin at the beginning of 2021, more than double the previous peak reached three years earlier. If it continues its trend of recent months, bitcoin could quickly be worth as much as a one-kilo gold bar that is currently trading for just under $60,000 on the markets. Bitcoin is thus more and more regularly flanked by the title of "new gold".

There are indeed many similarities. First of all, there is the vocabulary. Bitcoin researchers have to mine them like gold miners. When the price of bitcoin panics, we also talk about a digital gold rush.

The maximum number of bitcoins is limited to 20,999,999.9769 to be precise, of which 18,600,125 have been mined at the time of writing. Similarly, the amount of gold that can be produced is limited by the amount available on Earth. According to the World Gold Council, the global resources are about 251,000 tons of which more than 200,000 tons have already been extracted. In both cases, production costs increase as resources run out. Gold must be searched deeper and deeper to find minerals that are less and less rich. In the case of bitcoin, it is the computing power needed for mining that increases, slowing down "production". According to estimates, the last bitcoin should not be mined until 2140.

Like gold, bitcoin has become a real underlying on the financial markets with dedicated investment funds, futures contracts and even the first ETFs (index funds) that could go public soon. In particular, the asset manager VanEck has submitted an application to this effect to the SEC, the US stock market watchdog.

On this basis, it would be tempting to conclude that bitcoin is indeed the gold of the 21st century, computing power having somehow replaced arm strength and steam horses in the image of the digitization of the economy. Bitcoin, however, does not have the long history of gold, nor any concrete application like the yellow metal (jewelry, central bank monetary reserve, technology). This further complicates its valuation.

One of the commonly used references is the marginal cost of production, i.e. the cost of an additional unit. In the case of gold, investors can rely on the cost of listed gold mines. The two largest gold groups, Newmont Goldcorp and Barrick Gold, have a production cost of just over $1,000 per ounce. In the case of bitcoin, this cost is much more difficult to estimate with significant differences depending on the material and location (cost of electricity). One of the few references is Bit Digital, an American listed company that turned to bitcoin mining in early 2020. It does not publish a direct production cost per bitcoin, but in the third quarter it produced 739.51 bitcoins for total costs (direct costs, depreciation, administrative costs) of $7.79 million, or $10,530 per bitcoin. Which is obviously quite far from justifying a price of more than 40,000 dollars.

The other option used for currencies, what bitcoin is supposed to be, is purchasing power. For example, the Big Mac Index compares the cost of the famous hamburger in different countries of the world. This is not possible with bitcoin, little used for payments. And when it is, it does not serve as a reference value, the price in dollar or euro being simply converted into bitcoin according to the course of the day.

There remains the option to rely on analysts. But it is clear that opinions are divergent to say the least. On the side of the optimists, Cathie Wood, CEO of the innovative fund manager ARK Invest, evokes a long-term price target of $ 500,000 and Scott Minerd, head of investments of Guggenheim Investments, of $ 400,000.

Overall, these analysts are based on the fact that bitcoin will rise to the level of gold among asset classes. All the gold (mined) in the world is worth about $12 trillion, 16 times more than all the bitcoins currently mined. If we apply the same valuation to cryptocurrency, we get a price of $ 571,000 per bitcoin.

Others are moderately enthusiastic, such as analysts at JP Morgan Chase. They also see bitcoin evolving as a new safe haven in the long term but, compared to gold, exclude other outlets (jewelry, central banks, etc.). They thus take into account only the value of coins and bars as well as ETFs held by private investors, a market valued at just over $ 3,000 billion, or a theoretical long-term price of $ 146,000.

But there are also many skeptics from all walks of life. Peter Schiff, president of Euro Pacific Capital and a gold fan, continues to predict a relapse of bitcoin. A fervent critic of the yellow metal, Warren Buffett believes that "cryptocurrencies are inherently worthless". Finally, Calvin Ayre, entrepreneur and active in the cryptocurrency community, has repeatedly stated that the price of bitcoin could fall to zero without a real breakthrough in its use.

The adoption of bitcoin as a currency remains limited and is hampered by the confirmation time of transactions which is still about 10 minutes according to CoinMarketCap. Bitcoin is also under the threat of further regulation, desired in particular by Christine Lagarde, president of the European Central Bank (ECB), who evokes the use of cryptocurrency in the context of money laundering operations.

Calvin Ayre promotes Bitcoin SV, a cryptocurrency that claims to return to the principles of Satoshi Nakamoto, the person or group of people behind bitcoin. With a fairly moderate success however. With its appeal to investors, bitcoin has indeed won the bet, representing more than 69% of the value of the more than 4,000 cryptocurrencies listed. Only ethereum seems to follow bitcoin but at a good distance with an overall capitalization five times smaller.

Moreover, these decentralized cryptocurrencies are far from being the only ones in the race. The major central banks are also working on digital currencies such as the ECB, which has indicated that it aims to launch a digital euro within five years. The aim would be to replace essentially payments in coins and notes.

In this context, the extreme volatility experienced by bitcoin, with already three relapses of more than 80% in 10 years of existence, is also a handicap. Each time, cryptocurrency has bounced back, but this roller coaster is not reconcilable with the traditional idea of a safe haven.

Comparatively, gold is a little less volatile and therefore remains undoubtedly the safe haven par excellence, especially in the face of the risk of inflation. Any (limited) investment in bitcoin and other cryptocurrencies is currently tantamount to short-term speculation or a bet on the future for the most patient.

Over time, the outlook for cryptocurrencies is indeed favorable. The ECB stresses that a "digital euro would make daily payments faster, easier and safer" and would contribute "to mitigating the repercussions of extreme events (natural disaster, pandemic, etc.) that may prevent the proper functioning of traditional payment services". Digital currencies could also greatly facilitate international transactions.

But at the moment, it remains extremely perilous to predict which cryptocurrencies will prevail: centralized currencies (such as the digital euro), decentralized currencies – (such as bitcoin) or both? And in these last two cases, will bitcoin remain the reference or will it be overtaken by a more efficient cryptocurrency, especially at the level of transactions, and / or more convenient? Think in particular of the diem (ex-libra) developed by Facebook and a network of companies and NGOs.

In this context, the digital gold rush could benefit others than cryptocurrency miners like the gold rush in the 19th century. At the time, it was the sellers of shovels and pickaxes who amassed the greatest fortunes. Similarly, Nvidia, the specialist in graphics cards (used in particular to mine bitcoins), has earned nearly $ 2 billion in revenue from cryptocurrencies between April 2017 and July 2018 according to Mitch Steves, analyst at RBC Capital Markets. AMD, a competitor of Nvidia, has for its part experienced a real resurrection since the summer of 2017 with a sevenfold increase in its price. It will be pointed out that sites specializing in video games are worried about a shortage of graphics cards with the rise of bitcoin ...

More broadly, the evolution of digital currencies illustrates the development of the blockchain technology on which they are based. In addition to suppliers of computer components (semiconductors, chips), this could benefit a group like IBM that develops applications for companies based on this technology.