*As always, this post is purely my own opinion — not financial advice*
We need to talk about Bitcoin.
~~ Let’s Dive In ~~
OK, there are about 21 million ways I could tackle this one, so today I’m going to focus on just one of the main concepts that I’m fixated on: The case for Bitcoin supplanting gold as the world’s go-to store of value.
What do I mean by this?
First, we need to understand what has made gold the pinnacle store of value asset for literally thousands of years. Let’s review a brilliant video by one of the most well-respected gold proponents alive today: Mike Maloney:
Gold is valuable because it holds the following 6 characteristics:
You can trade it for valuable things.
You can carry it around as a bar, a coin, a gold chain, etc.
It’s incredibly strong.
You can split it into different sizes of bars, coins, etc.
Two gold bars of the same size hold the same amount of value.
#6. (Most importantly): Store of value
Its scarcity makes people want to hold onto it, since there is a finite supply. It can’t be devalued from jacking up the supply (COUGHeverygovernmentcurrencyontheplanetCOUGH).
OK, so now we understand why gold has been deeply valued by humans for over 5,000 years…but how does Bitcoin compare?
Let’s pit our two gladiators against each other, using the 6 characteristics from above as our measuring stick:
GOLD vs. BITCOIN
Can you name a single retailer you’ve been to in the last year that would accept a bar of gold as payment? I can give you a dozen off the top of my head that will happily exchange their goods or services for Bitcoin, not to mention entire countries like El Salvador which are declaring BTC as legal tender.
And this is all while Bitcoin is still in its layer 1, rapid-value-growth phase, where peer-to-peer transactions aren’t even a primary use case yet.
A great video that EVERY curious observer must watch, covering this multi-layer process and many others in Bitcoin’s future:
Who the hell wants to carry a bar of gold around to buy things? And even if they did, which vendors would accept it as payment? Almost nobody. (And don’t get me started on the cost of transport if you’re a large financial institution trying to move your stash between states or internationally–total nightmare).
Bitcoin, in comparison, lives on your phone, computer, or other wallet-supporting device. No armored truck, bodyguards, or paranoia required.
Gold is pretty damn durable, but so is Bitcoin. It’s been going strong for 11 years now, and all thwarting attempts by governments, hackers, etc. have been comically futile. I’m going to give BTC the edge here, because once your private keys are secured (or in unfortunate cases, lost), those coins are as good as untouchable.
Just ask this poor soul how hard it is to retrieve your BTC without the private keys…
Gold can only be split up into so many tiny flakes, which obviously get very difficult to measure in a reliable way. Bitcoin is digital, and can therefore be divided perfectly by math, all the way down to a single satoshi (one one hundred millionth of a bitcoin) with perfect precision.
Gold has been debased throughout history by bureaucrats & greedy governments looking to stretch out their power over the financial system. Take ancient Athens for example, who back in 434 BC, simply poured copper (a cheap metal) into their big stirry pot of gold to artificially expand their supply, so they could build a bigger military. (See 5:42 on this video)
This issue of two different chunks of gold having different levels of purity creates all kinds of problems. Of course, this purity can always be tested in a dispute, but this is an additional hoop to jump through that Bitcoin will never have to worry about. Bitcoin is legitimized by the very blockchain network it operates on, since every transaction in history is recorded for the world to see.
#6. Store of value
Long-term value is guided by supply and demand. Gold‘s supply will increase as mining technology improves on earth, and just wait until interplanetary space travel becomes a thing (asteroids are packed with gold, which could jack up supply once tapped).
Bitcoin on the other hand, has an undisputable hard cap of 21 million coins, and this is set in stone. If you’ve ever taken an economics class, you know that fixed supply + increasing demand = increasing price over the long term. You can’t get any safer than bitcoin from an investment standpoint–it’s the hardest money ever created.
And there you have it!
A bang-up crash course on why Bitcoin is primed to step up as the new and improved Gold 2.0, which has been developed from the ground up to integrate seamlessly with a world that’s clearly going digital.
If you’re wondering why I included 2 videos above from Mike Maloney (one of the most well known gold supporters alive today, who actually likes gold more than bitcoin), I’ll give you 2 reasons:
- To provide a fair argument for both sides
- Because Mike does a better job than anyone articulating the most important point of all: our current financial system of fiat money-printing is trash, and we need to start having these conversations of alternative assets right. now.
Gold investors and Bitcoin investors generally agree on the problems with the garbage fiat system, they simply disagree with the best solution. And if you look at Bitcoin’s performance vs. gold in the last few years…let’s just say I’m happy I supplemented Mike’s videos with my own research on the crypto space
Alright folks, that’s all I’m going to dump on you today!
I strongly encourage you to take some time to isolate your brainpower onto this Gold vs. Bitcoin discussion, and use it as a foundation to tiptoe into the rabbit hole of how Bitcoin is flipping the whole world on its head.
If you’re interested in learning more, I highly recommend you go check out the motherlode due diligence compilation: WhyBitcoinOnly.com.
That should give you enough to chew on for a while!