Bitcoin vs Gold (and Silver)
Bitcoin vs Gold (and Silver)
Bitcoin is sold as both an alternative to the dollar and as digital gold. Like gold, it has a limited supply but has the added security of not being able to be stolen from your pocket. It also does not have the fees associated with storage in a vault.
However, it is more correct to compare crypto currencies generally with gold and to compare bitcoin with a gold dollar, gold franc, or any other gold coin. This is because bitcoin is a particular brand of cryptocurrency.
A gold coin, such as the gold dollar, is gold that is branded by a mint. The potential supply of a gold dollar coin (the brand) is limited by the available supply of gold. Gold dollars are a limited brand of a limited supply of gold. The coin is valuable because gold is valuable.
Bitcoin is a limited brand of an unlimited supply of crypto currencies. The algorithm for a particular brand of cryptocurrency can be copied or imitated. Hence, like there are gold Swiss francs, gold French francs, gold US dollars, gold Australian dollars, et cetera, there exists bitcoin, bitcoin cash, etherem, et cetera.
Bitcoin is valuable because it is digital gold. It is even marketed as a gold coin. Beyond being a crypto currency, bitcoin cannot be used for much else. Gold has use in jewelry, dentistry, and the electronics necessary to use bitcoin.
Bitcoin is literally backed by gold because bitcoin is just dopamine digits on a gold backed computer screen. Anyone trading bitcoin on a smart phone is holding gold in their hand.
Without gold bitcoin would not exist.
Without bitcoin, there exists an unlimited supply of potential crypto currencies.
Even with that being said, one may hear that argument that value is subjective and, as of Sept 12, 2019, gold is worth ~$1,492 and bitcoin is worth ~$10,000 so bitcoin is more valuable. Actually, gold is worth $48,000 per kilogram and $48 per gram. $1,492 is how much gold is worth per troy ounce (31.1 g).
There are potentially only 21,000,000 bitcoins in existence (limited supply) but 1 bitcoin (21,000,000/21,000,000= 1/1= 1) has the same use as 1/21,000,000 bitcoin. Bitcoin is just a number on a gold backed computer screen; so, comparing bitcoin to gold at any weight is arbitrary. Whether one receives 1/21,000,000 bitcoin or 21,000,000/21,000,000 bitcoin, one simply receives a number on a screen with gold behind it. Gold has material uses so how much gold one receives matters.
Why not have gold backed crypto currencies, such as how personal cheques are backed by paper dollars stored in a bank or like paper dollars used to be backed by gold dollars stored in a bank, but with the additional security of trading with crypto currencies and potentially stored outside of a bank?
Finally, the whole purpose of bitcoin is as an alternative to the dollar. If the dollar is no longer the world’s reserve currency, and is thusly not the standard to value goods and services, why would bitcoin be the metric of value as opposed to gold (and silver), which have historically been money for most of history all over the world and is owned in the form of jewelry or electronics by a significant portion of the world?
