Many people liken Bitcoin to gold. The common narrative being: ‘Bitcoin is digital gold,’ ‘They’re both a store of value.’
Many gold buffs ridicule the idea, however, denying Bitcoin has any resemblance to history’s soundest money and safest store of value.
Gold has been around since time began. We’ve used it as a form of money, currency and as a store of value for as long as history tells us.
Bitcoin, however, has been around 11 years. So, is it really fair to say it’s more useful than gold?
Money in The Digital Age
In the digital age, almost anything can be reproduced and added to an Internet database, making it almost impossible to keep unique work unique.
All data, whether an original piece of writing or a copy of an image, is easily duplicated and added to the central entity it’s stored on.
This doesn’t only affect information, however. Most money in the Fiat system is digital, and since becoming so, it has become much easier and cheaper for governments to “print”.
Central banks and governments around the world are creating more money than ever, and it’s all done pretty much at the press of a few buttons. The effect of this is a dilution of stored wealth, and a growth in inequality, which is leading to impoverished communities even in first world countries.
So, as our societies move more towards digitization, the more we will make financial transactions over the Internet. It’s only a matter of time before physical cash becomes a thing of the past and all financial transactions are done digitally.
Middlemen Are Expensive and Slow
The main problem with the monetary system of today is that we depend on trusted third parties. All transactions require the verification from a financial entity of some sort.
In today’s system, peer-to-peer transactions are impossible. The banking institutions control the issue and, even worse they decide the rules of the game.
It works for many people, but it doesn’t wok for the few billion underprivileged. And the worrying thing is that as we head towards full digitization of currencies, those that decide the rules, will have full control over our finances.
That’s a big problem, especially as political correctness goes from petty to ridicule, and how the ‘Thought Police’ are censoring our opinions. Once they have full control of our wealth, they will have absolute control of us.
Bitcoin is More Scarce Than Gold
Bitcoin is sometimes labelled digital gold because of its scarcity, and the way it’s created through a mining process, albeit different to how gold is mined.
Given that there can only ever be 21 million bitcoins, however, ensures that its scarcity is much more finite than gold’s. The scarcity is coded into the program and given that it’s decentralized and virtually unhackable, that code will not change.
Gold is scarce, but nobody truly knows how much there is, and a huge discovery could be made at any given time, which would debase the value of history’s favourite store of value.
The definiteness of scarcity in Bitcoin has never been known in any asset, and this will make it a much safer store of wealth, once the volatility tapers off.
Bitcoin an Uncensorable Currency That Needs No Trust
Try sending gold around the world, or taking a lot of it when you’re flying off somewhere. If you don’t have governmental approval, the authorities will question you and likely confiscate it from you.
Bitcoin is a digitally native asset, made for and on the Internet, and is built on the most secure network ever created. Transactions are done peer-to-peer and without the need of a middleman, and they never leave the blockchain.
Bitcoin will become the Internet of money. As 5G and the Internet of Things (IoT) roll out, our smart devices will automatically make all our payments for us.
Once the IoT gains traction, automated payments will become the norm, and there will be a need for micro-transactions. To carry these tasks out, we’ll need a currency that can transact securely, with no friction and with minimal cost.
Bitcoin is The Best and Safest Way to Transact
If you want to send a transaction to somebody anywhere in the world, you can do so without any government approval, and with the safety in mind that it will get to its destination in the matter of minutes. And it will all be done without the need of trusted third parties, such as banks and payment transmitting companies.
This means that two people, who want to do business but are in different parts of the world, can now transact quickly, securely and without the need for trust.
There’s no authority that can censor this operation, and there’s no way that it will not arrive in the receiver’s Bitcoin address. This is a highly complex and lengthy operation of one was to use gold, or the Fiat system.
Even if one was to transact with gold, there’s no authority that can certify the authenticity of the gold until it’s received.
The scarcity of gold is unknown. With Bitcoin we know exactly how many there are now, how many there will be tomorrow and how many there will be at any point in the future.
As a payments system, Bitcoin wins hands down. Sure, not many people want to spend their bitcoins, but that’s because they see it as an investment for now.
But as more transactions are done on the Internet, Bitcoin will be programmed to automatically transact. It will be done without friction, without trust, and without the need of costly middlemen.
Bitcoin is a digital currency, not controlled by a government. This makes it difficult to confiscate, impossible to inflate, and because anybody can send it anywhere it’s difficult to control citizens’ wealth.
Given Bitcoin’s shared characteristics with gold, I believe more users will eventually realize its value. The digital scarcity, programmability and uncensorability makes it potentially the most valuable asset ever created.
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