Bitcoin vs Gold

Bitcoin is often called digital gold by its proponents to describe it as the gold standard store of value of this century. Gold has long been viewed as the ultimate financial asset by its fans – and never more so than during times of uncertainty, financial crisis and wars. Gold is respected as a safe haven and proven store of value.

Governments hold Gold in their reserves to reduce their country's reliance on the US dollar and neutralise their local currency depreciation risks. There was even a time (1800-1900s) when the global monetary standard was backed by gold. This era was known as the gold standard.

Credit: @Anilsaidso

The comparisons and claims that Bitcoin is the digital form of Gold are not farfetched. While Gold is not easily accessible, Bitcoin is easier to own and more divisible. For the past centuries, Gold has served as the panacea to hyperinflation and currency debasement, Bitcoin now exists as an alternative. This is why Bitcoin is referred to as digital gold by many.

Bitcoin is often compared to gold because it has similar characteristics; limited supply, rarity, durability. Beyond this, Bitcoin has a few other important features which improve upon gold's monetary properties like it is portable, easier to move around unlike Gold which is heavy (think moving $1m in Gold vs BTC). For example many countries choose to store their gold in the heavily fortified Bank of England vault, which is the second largest in the world after the New York Federal Reserve vault.

Think of a scenario where a big family has to flee a warzone and their savings are in Gold, it will be near-impossible to flee with their savings in such emergencies. With Bitcoin all they need is their private keys. During World War II, there was a rush to ship most of the gold held by European nations to New York and while that was largely successful, the Nazi's were able to seize some. Gold can be bulky and uneasy to transport especially in times of emergencies.

Another advantage of Bitcoin is, it is also easily verifiable as there is nothing like fake Bitcoin since every transaction is publicly authenticated and verified. Gold on the other hand can be counterfeited and needs lab tests to prove its authenticity

Gold undoubtedly is a more stable asset while Bitcoin can be quite volatile. However in contrast to Bitcoin, Gold has a limited growth potential, over the past ten years Gold has appreciated by over 150% while Bitcoin is up over 30,000%. Bitcoin appreciation in the last decade has dwarfed that of gold by a very large margin. While it is unlikely Bitcoin will see similar gains in the next decade, there is still a higher potential for returns holding bitcoin over gold.

Conclusion

Gold is a traditional safe-haven asset with thousands of years of history, while Bitcoin is just over a decade and a half old. Some of bitcoin core features like accessibility, portability and it being censorship-resistant make it a worthy comparative asset.

You can look at both assets as complimentary as opposed to being in direct competition, with Bitcoin being the digital upgrade of Gold in this ever increasing digital world we live in.