Bitcoin and gold are two of the most valuable commodities in the world. They both have intrinsic value, but they differ in many ways outside of their physical attributes. Gold is a tangible asset that you can hold in your hand, whereas Bitcoin is an intangible digital asset that exists only on computers.
There is a lot of debate on whether Bitcoin will ever be viewed as an equal to Gold in terms of investing. For a lot of people, the idea of cryptocurrency including trading pairs such as BTC USDT and ETHW USDT is still very new and scary. Especially when they compare it to the gold standard that we’ve been using for centuries.
But this fear may be unwarranted—Bitcoin is quickly becoming a solid alternative to stocks and bonds. In fact, it might even outshine gold in some ways.
What is Bitcoin?
Bitcoin is a digital currency that can be used to purchase things electronically, and it was the first decentralized digital currency.
In 2009, an unknown individual or group created Bitcoin under the name Satoshi Nakamoto. The identity of Nakamoto has never been revealed, but he or she is estimated to have mined 1 million bitcoins out of a total of 21 million—about 5%—and transferred them to several people on the Bitcoin network before disappearing from public view in 2010.
What is Gold?
Gold is a commodity. It can be used in jewelry, electronics, and even dental fillings. But it’s also considered a hedge against inflation and is used as a store of value in times of economic uncertainty (like now).
Key Difference Between Bitcoin and Gold
The key difference between Bitcoin and gold is that one is a tangible asset, while the other is a digital asset. It’s important to remember this distinction when comparing the two. Gold has no fixed supply—it can be mined cheaply in any country or region on earth, making it an inflation-protected store of wealth over time.
Regulations
Another difference between bitcoin and gold is that bitcoin is decentralized, but gold isn’t.
Bitcoin is a digital currency that can be used to send and receive money worldwide. It’s also known as a cryptocurrency because it uses cryptography (encryption) to generate tokens, verify transactions and ensure users’ privacy. This means that no central authority controls the generation of bitcoins or their trading on exchanges through which they’re traded like stocks or commodities.
Utility
Bitcoin, as a digital currency, has the ability to be used for many different purposes. You can buy things with it and exchange it for other currencies on exchanges. Gold is not designed to be used in such a way. While the gold market does have some utility, it’s primarily used as an investment vehicle or jewelry (and those use cases are pretty limited).
That difference goes beyond just how they’re used though: Bitcoin has a lot of utility while gold has limited utility. Because its transactions are tracked on a public ledger called the blockchain (also known as distributed ledger technology), bitcoin can be easily transferred between people through their phone or computer without any middleman needed like banks.
Liquidity
Bitcoin is more liquid than gold.
It’s easier to buy, sell, and store bitcoin than it is to buy and sell gold. For example:
- Bitcoin can be used anywhere in the world with no restrictions on its use or transfer. You don’t have to worry about whether your country will accept payments in bitcoin; if you want to send money abroad using bitcoin, all you need is internet access and a phone number—no bank account required.
- It’s also faster for sending money abroad because there are no intermediary banks involved in processing transactions (and taking a cut). It takes around 10 minutes for one confirmation of a transaction on the blockchain network.
Volatility
While gold is (generally) a stable investment, Bitcoin’s price fluctuates wildly. This isn’t an inherent feature of either currency—it’s largely down to their respective trading volumes and market caps.
Gold has been around for thousands of years and remains popular as an asset class because it typically performs well during economic downturns, when people tend to buy more safe assets like cash or bonds.
Rarity
Why is gold a better store of value than Bitcoin? For starters, it’s rare. Unlike cryptocurrencies like Bitcoin that can be created by anyone with a computer or smartphone, gold is naturally scarce. There are only so many grams of gold on Earth. This means that if you have some gold in your possession, it has inherent value because of its rarity and usefulness as a metal for jewelry and industrial purposes (e.g., electronics).
Bitcoin isn’t scarce like this—its supply can increase by orders of magnitude overnight—but unlike gold it’s not just something to keep locked up in your vault if you own it; you can use bitcoin as currency to buy things online and offline too.
Inflation Hedge
The key difference between Bitcoin and gold is that while the latter is a better inflation hedge, Bitcoin is a more efficient store of value.
Bitcoin’s scarcity makes it an attractive store of value. As new Bitcoins are mined from the blockchain, their supply decreases over time. Thus, its price will tend to rise as demand for them increases. Gold on the other hand has been mined for thousands of years and there is no known supply limit for how much will be available in future.
Which is a Better Investment?
For all of the reasons listed above, Bitcoin is a better investment than gold.
It has a better track record, more utility and acceptance, more potential for growth in value, more liquidity and lower volatility than gold.
Another important consideration when evaluating which of these two assets is most suitable for you to hold long term is how well each protects against inflation. While neither of them can protect you completely from inflationary pressures over time.
After all, they’re both valuable because they’re scarce . Their relative performance in this area still matters quite a bit when it comes to selecting one over another as an investment vehicle.
