generally to sell gold you either need to ship it to somebody, which poses the risk of it being stolen, lost in transit, or interdicted when crossing a border, or you need to have previously deposited it in a warehouse approved by the commodities exchange that you are trading it on, which involved shipping it to the warehouse. lme has 465 of them https://www.lme.com/Sustainability-and-Physical-Markets/Ware...
commodity metals like gold can change hands many times before ever leaving the warehouse, and so some fraction of the metals purportedly in those warehouses don't actually exist, having been stolen years earlier—an eventuality normally handled by insurance
consequently a very large fraction of the world's non-british central bank gold reserves are actually physically located in london
what's not covered by insurance is having your assets frozen by a foreign court that has jurisdiction over the warehouse 'your' metals happen to be in; historically this was not considered a plausible scenario in reliable countries, but then it happened, and now, as i understand it, nobody knows what to do. keeping your reserves in warehouses under your own jurisdiction doesn't solve the problem; it just transfers the risk to whoever you're trading with
with bitcoin, no shipping or warehousing is needed, so these risks are replaced with subtler risks related to information security
commodity metals like gold can change hands many times before ever leaving the warehouse, and so some fraction of the metals purportedly in those warehouses don't actually exist, having been stolen years earlier—an eventuality normally handled by insurance
consequently a very large fraction of the world's non-british central bank gold reserves are actually physically located in london
what's not covered by insurance is having your assets frozen by a foreign court that has jurisdiction over the warehouse 'your' metals happen to be in; historically this was not considered a plausible scenario in reliable countries, but then it happened, and now, as i understand it, nobody knows what to do. keeping your reserves in warehouses under your own jurisdiction doesn't solve the problem; it just transfers the risk to whoever you're trading with
with bitcoin, no shipping or warehousing is needed, so these risks are replaced with subtler risks related to information security
in this imf note from january https://www.imf.org/-/media/Files/Publications/IMF-Notes/202... the possibility of adopting cryptocurrencies as a new class of international reserve assets is discussed, though that's not really the main point of the note. in general central bankers are extremely skeptical of cryptocurrencies, especially decentralized ones. the world bank helpfully issued a communiqué on its blog last week, entitled, 'crypto-assets: unfit for central bank reserves today' https://blogs.worldbank.org/en/allaboutfinance/crypto-assets... which mostly echoes what i've said earlier in this thread
so i would be surprised if there was any adoption of cryptocurencies as international reserve assets yet