Bitwise Chief Investment Officer Matt Hougan challenged billionaire Chamath Palihapitiya‘s claim that Bitcoin (CRYPTO: BTC) is “structurally” flawed, pointing out that, in fact, that applies more to gold.

Bitcoin Or Gold: Which One Do Central Banks Prefer?

Palihapitiya had claimed Bitcoin is unsuitable for central bank reserves, arguing the real issue lies with gold's physical nature.

Gold must either be stored with third-party custodians. Alternatively, it must be physically transported, which introduces security risks and logistical challenges.

Hougan pushed back, saying central banks don't want to rely on such assets.

By contrast, Bitcoin can be digitally transferred globally, making it easier to settle international transactions.

Palihapitiya argues that Bitcoin's public blockchain transparency creates problems for reserve asset status and says Bitcoin will likely remain primarily within ETFs and private investors, rather than becoming a core central bank reserve asset.

Central banks prefer gold, where ownership and reserves remain opaque, the billionaire claimed.

Hougan instead argues the privacy concern is solvable, pointing out that it is far easier to make Bitcoin holdings quasi-private through custodial structures or wallet practices than it is to make gold securely non-physical.

According to Hougan, central banks will eventually hold both assets, not choose between them.

Why Bitcoin Is Outperforming Gold

The debate comes only a day after Ray Dalio argued, similar to Palihapitiya, that central banks will prefer gold for privacy and controllability reasons.

At the same time, Bitcoin has started reversing its downtrend against gold, pushing 12% higher in a week as gold remained stagnant.

Crypto proponents will watch for further sign of Bitcoin reclaiming some of its “digital gold” fairy dust that has been lost in recent months.

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