Bitcoin vs gold. For centuries, gold has been regarded as the most reliable form of currency. This kind of metal, which is not easy to corrode, has natural scarcity, portability, durability, and separability, and meets all the requirements of becoming a currency, that is, means of payment, but also a measure of value. Gold is a huge market with a global market value of about $8 trillion. Many people think it's safer to spend money on the gold than on other assets. So what makes cryptocurrency believers believe that bitcoin is a better way to store value than gold?
First of all, gold, the first problem to be solved is a fraud. Gold counterfeiting occurs from time to time, and counterfeits are not easy to identify. The decentralization and distributed ledger design of bitcoin make bitcoin avoid being counterfeited. Anyone with a basic knowledge of currencies and trading methods can easily distinguish between bitcoin and bifurcated currency. Although Bitcoin can be bifurcated to create a new kind of bifurcated coin, it will not be forged. The split new coin and the original coin can be distinguished quickly, and the new split coin will have a new name, such as Bitcoin Cash, Bitcoin diamond and so on.
Unlike gold, Bitcoin is very portable. Bitcoin assets can be stored in hardware wallets or hot money packets on mobile devices for daily frequent and immediate use. With the mobile device's hot wallet, you can easily trade with anyone around the world. Using the gold you couldn't do this at all. You think if you want to take a piece of a gold bar across the border to another country and report it to the customs at the time of transit, you have brought thousands of dollars worth of gold. Imagine how they will react. Moreover, gold cannot be used for online or long-distance transactions, and Bitcoin has no such restrictions.
There are also many problems with the transport of gold. It takes a lot of costs to transport tons of gold across the country. We should consider the safety of assets and the long transportation distance. As for bitcoin, no matter how much the transfer amount is, it can get to the account quickly, and the transaction fee is not much. Although there is also a threat of hacker attacks, the money holder only needs to keep his private key. Click here to visit BTCMEX.com.
Bitcoin is scarce. According to the halving agreement, the total mining volume of bitcoin is about 21 million. The block incentive plan is halved every four years, or more precisely, every time 210000 blocks are mined, miners' earnings will decrease over time.
We don't know how much gold there is in the global market. We may find gold within miles underground or on other planets one day, which leads to market saturation and gold price depreciation. Bitcoin, on the other hand, has a constant circulation and won't find another trillion dollars worth of bitcoin one day.
Although gold conforms to the function of exchange means, its use in daily life is still limited. In general, even in the era of the gold standard, gold is only used for currency settlement between countries, not for daily transactions.
Even now, with the rising price of gold, it is unrealistic and ridiculous to use gold for daily trading.
Imagine that you take a gold bar or gold card to the store to buy things, or use the gold bar to buy goods online. Unlike gold bars or certificates, Bitcoin can actually be used to buy goods. In addition, it can meet the efficiency and accountability requirements of global monetary settlement better than gold.
Bitcoin has significant advantages in transparency and accountability. Anyone can view the distributed ledger publicly and pursue responsibility. Although gold used to be the best monetary standard, it still lacks transparency.
Bitcoin has objectives and opens distributed ledgers, so there is no need to trust it, because no matter the small daily consumption or billions of dollars of inter-country settlement, anyone can verify the accuracy of the transaction.
Since Bitcoin was first converted into French currency in 2009, the free market has determined that bitcoin is as valuable as gold. And, like gold, bitcoin's value does not need to be proven by an authority, but is determined by the needs of both buyers and sellers.
The intrinsic value of Bitcoin is about equal to the cost of mining because mining needs a certain cost, which also becomes the valued support of Bitcoin. But around the world, there are many factors that affect the value of bitcoin, such as power cost, mining efficiency, and currency price.
Like gold, the price of Bitcoin is also determined by trading. The price can be seen in the exchange. Because the current trading volume is small, the price of Bitcoin is very unstable. But now Bitcoin has shown its advantages and high return on investment, which can be said to be the most suitable asset for investment in the past 10 years. If you compare the huge market value difference between gold and Bitcoin, you will know how to choose and who will have greater value-added space in the future.
It can't be ignored that gold is already an $8 trillion market, and the market value of Bitcoin is less than $300 billion. For a long time, the market value of gold has been growing slowly. Historically, gold has been a tool of value storage, which can avoid the impact of inflation. Bitcoin, by contrast, has a lot of room for improvement and potential value.
Compared with bitcoin, the gold market has a larger scale and utilization rate, less volatility, and higher market stability. This is a little bit of gold, but also a disadvantage because it means its growth potential will be much smaller than Bitcoin.
Bitcoin and gold have a lot in common, but to be a "real" currency, bitcoin is better. In particular, Bitcoin's unique programmability is something gold does not have. Gold can be used to make electronics and jewelry, but it can't be used in smart contracts and some digital applications. With the gradual development and innovation of Bitcoin technology, the functional limitations of gold will gradually increase.
This is the objective fact that Bitcoin will be replacing all other forms of money soon: in essence, it comes from mathematics, which is objective and will always exist. The essence of mathematics is discovery rather than invention, so Bitcoin is more irrevocable than gold. Therefore, it is also said that the innovation of Bitcoin is more discovery than invention. It has the function of digital storage and transmission while maintaining uniqueness and scarcity through objective and verifiable mathematical tools. Click here to visit BTCMEX.com.
Please note, that the article is a part of BTCMEX Blog, the views and opinions expressed here are the contributing author’s only, and do not necessarily represent the views of the company.
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