Bitcoin and Gold. They have many things in common.
Bitcoin the Digital Gold. Table of Contents
Bitcoin is more like a commodity
Bitcoin is sometimes called digital gold.
In fact, Bitcoin, which has been called a virtual currency, has a stronger commodity nature such as gold than currency.
This is because, like gold, silver, and rice, Bitcoin is different in nature from securities-based assets issued by a particular organization.
In addition, currencies such as dollars and yen issued by the state have monetary policy according to the economic situation, but Bitcoin does not have a monetary policy and is different from currency.
Among them, I will explain in this column why Bitcoin is especially similar to gold and is called digital gold.
What do Gold and Bitcoin have in common?
The main common points between Bitcoin and Gold are as follows.
1. Both Gold and Bitcoin have Rare value
Both gold and bitcoin have limited reserves.
It is said to be, Gold is about two 50 m long pools, even if you collect everything that has been mined all over the world, and about four pools, including the amount of gold that is supposed to be still buried in the mine.
The total number of Bitcoins issued is fixed at 21 million, and it is programmed so that no new Bitcoins will be issued after his 21 millionths Bitcoin has been mined.
2. Both Gold and Bitcoin cannot be forged
Gold cannot be made artificially, and although fake products are on the market, it can be confirmed that they are genuine.
Similarly, Bitcoin cannot be duplicated.
Even if you try to forge it, it is impossible because the information on the blockchain will tell you that it is a forgery.
Also, even if you can make a similar coin as an altcoin, if you say it is a bitcoin and try to sell it to someone, it will be immediately revealed.
3. Both Gold and Bitcoin can be divided
Gold is valuable as gold, whether in large chunks or in small pieces.
Bitcoin can also be divided into 8 digits after the decimal point (0.00000001 BTC), and its value as Bitcoin does not change.
Also, both can be split and used for value exchange.
4. Both Gold and Bitcoin have mining costs
Mining gold is costly.
Similarly, for Bitcoin, it cannot get a newly issued Bitcoin unless people mine it with an algorithm called PoW (Proof of Work) at the expense of electricity and capital investment.
You can’t get gold or bitcoin at no cost.
5. Both Gold and Bitcoin do not deteriorate and is durable
Of course, the price fluctuates, but it does not rot or deteriorate during storage.
Gold and Bitcoin are effective means of storing value because they have a rare value and there is no concern about deterioration.
Differences between Bitcoin and Gold
Now that we’ve sorted out what they have in common, let’s sort out what makes Bitcoin different from gold.
1. Gold is also used as a decoration
Gold has long been used as an ornament such as jewelry because of its beauty and brilliance as a substance.
Bitcoin has value as an asset, but it does not have the value of arts and crafts or ornaments like gold.
2. Ease of copying
Gold cannot be copied and artificially made, and it is very difficult to do because it is too costly.
On the other hand, the code of Bitcoin is open to the public and it is not possible to forge the Bitcoin itself, but it is possible to copy the code from Bitcoin and try to develop similar coins such as Altcoin or improved versions.
3. Bitcoin is programmable
Unlike the substance gold, Bitcoin continues to evolve with new features by programming, such as the Lightning Network, which allows you to send Bitcoin faster and cheaper.
The program may also be changed if the miners participating in the mining agree.
4. History
Of course, there is a big difference in the weight of history.
Although Bitcoin has a history of just over a decade, gold dates back to 6000 BC, and it is said that humankind has treated gold as a rarity since then.
Today, pension funds and central banks also own gold, but only because of the history of gold.
Is Bitcoin Digital Gold?
Whether Bitcoin is digital gold is a controversial topic, with some agreeing and denying it, but if you compare the two in this way, there is no doubt that they have similar properties. ..
When Bitcoin becomes widespread and gains trust as an asset in the future, it will be interesting to see if traditional financial institutions actually treat it as close to gold.
Comment by Hans
April 24, 2024
as I am trading here various assets, for me it's the most important feature. i mean, flexibility in tradable markets. i alternate trading styles, meaning that sometimes I trad...