Why Bitcoin is More Useful Than Gold
Bitcoin is regularly compared with gold. ‘Digital Gold’, ‘Store of Value’ and ‘Hard Money’ are three terms used by people comparing the two hard assets.
Many gold buffs ridicule the idea of Bitcoin having any resemblance to gold, however. Gold has undoubtedly stood the test of time, whereas Bitcoin is relatively new.
Gold has always been the hedge against government printing, and many will store more value in gold as government printing presses continues to go brrrrr.
But in this day and age, I argue that Bitcoin is more useful and valuable than gold.
The Gold Standard
Gold has been the go to asset for any person or government wanting to store value.
It is a safe hedge against all the money printing, and has always been a dependable store of value as fiat currencies lose their purchasing power.
Governments have always held gold as a sign of wealth and all currencies used to be backed with gold.
Gold and other metals were used as currencies before paper representations made it easier to divide and spend the value of gold.
And this seemed to work, until the US defaulted on their gold obligations in 1971. That’s when President Nixon “temporarily” took the US dollar off the gold standard because it couldn’t pay France the gold it requested.
The impact meant that every other government had to come off the gold standard, and since then all global fiat currencies have been backed by faith and tanks.
The US defaulted on its payment to France because it had spent far more than it had gold reserves, and when it was requested, Washington had to take immediate action.
The US could overspend because nobody truly knew how much gold the government claimed to have, and still to this day, nobody knows how much gold governments really have.
That lack of transparency allowed governments to basically rip each other off until they were exposed. And it’s partly why we will never go back to a gold standard again.
It’s a New World Now – The Digital Age
We live in the Digital Age now, and everything is moving online and digitized, but the problem with digital things is they can simply be duplicated.
Almost anything can be reproduced and added to a centralized database, making it impossible to keep unique work unique.
With Bitcoin, however, nothing can be copied and all data on the blockchain is provably unique.
This is because the network is secured with over 800,000 petaFLOPS of processing power, which is distributed on hundreds of thousands of devices on all corners of the world.
Bitcoin is the most secure network ever created, and it has never been hacked. And to change anything in the Bitcoin protocol, you have to get the majority consensus from all the network of miners and nodes.
This alone makes Bitcoin more useful, but let’s take a deeper look into what makes Bitcoin more useful than gold.
Bitcoin Is Smart Money
Bitcoin has been around 11 years, so is it fair to compare it with gold? Bitcoin doesn’t compare with gold, it’s better than gold and much more useful.
With 4.7 billion people, the Internet is by far the biggest society in the world, and all people on the Internet can connect with each other.
The Internet might be restricted in places, but with a VPN it has no borders. And Bitcoin is money built on the Internet for the Internet.
Money that can move across the Internet, much quicker, cheaper and safer than even digital money can move today.
And as the Internet of Things (IoT) rolls out and our smart meters are all connected to everything, we will need a currency that can automatically transact.
The smart meters might need gold to work, but the precious metal is useless as spendable currency, never mind one that needs to travel across networks.
No doubt, a digital fiat currency token will be able to do this, but this will need a trusted third party, which makes it expensive and slow to transact.
Not good enough for a smart meter looking to make a microtransaction. Bitcoin covers this.
Bitcoin Is Provably Scarce
People liken Bitcoin to gold, because of the scarcity of the two assets, and how both are mined into existence.
But the fact is, nobody knows for sure how much gold there is on earth, or in space. In fact, it’s gold’s unprovable scarcity that helped governments rip each other off in the first place.
No doubt gold is scarce, but how much is there really? And how much new gold might be discovered at any time.
There could be a huge discovery tomorrow, diluting the value of the gold on earth today. An unlikely event, but you just never know.
Bitcoin is provably scarce, and the open source code, and decentralized security ensures there will never be more than 21 million bitcoins.
Definiteness of scarcity has never been known in any asset ever, and along with the transparency of the network, this feature makes Bitcoin a perfect store of value.
Bitcoin Is Uncensorable, Gold isn’t
Have you ever tried to take a few thousand dollars worth of gold out of a country? Most probably not, but if you try, you will be stopped at the airport, questioned and have your gold confiscated.
Governments don’t want gold to leave their shores, so they do everything in their power to make sure it stays.
Or imagine a wealthy gold bug storing or wanting to transport their gold. The cost of securing it is huge. And when they want their gold in times of crisis, they have to hope the company looking after it has the gold it claims to have.
And if they do honour it and send the gold to the owner, how long will it take to send and how much will the logistics and security cost for sending it? A lot. With Bitcoin you have none of these worries.
Bitcoin is The Best and Safest Way to Transact
As we know, sending gold around the world is painstakingly slow and very expensive if you are rich enough to do so.
With Bitcoin, you can send a transaction to anybody, anywhere, and at any time. There is no down time for Bitcoin, it never closes, and the Bitcoin protocol and network ensures every single transaction arrives at its intended destination.
Your transaction will be completed without the need of trusted third parties, such as banks and payment transmitting companies, as it’s all in the Bitcoin code.
This means that two people or companies who want to do business can send each other value very quickly, and at a fraction of the cost banks will charge, no matter where they are in the world.
There’s no authority that can censor this operation, and we don’t need to question its authenticity, and there’s no way that the Bitcoin will not arrive in the receiver’s Bitcoin address.
In fact, Bitcoin cannot not arrive at the Bitcoin address you send it to. Think about that, your transaction will definitely go to the intended address and cannot go astray.
Even if one was to transact with gold, the length of time it will take if it gets to its destination is worrying.
And there’s no authority that can certify the authenticity of the gold until it’s received anyway. With Bitcoin its all open and done in minutes.
Bitcoin Is More Useful Than Gold
Gold is and always will be a store of value. Its properties are without question, mostly.
It’s slow and heavy, can’t easily be divided, and we don’t really know how much there is or will be in the future.
This makes gold useless as a payment system, especially as we spend more money online every year.
Bitcoin is light, quick, every Bitcoin is divisible by 100 million, and we know there will never be more than 21 million.
Bitcoin is a secure network, with a currency as its main application. That currency can be sent anywhere at anytime, and the transaction cannot be stopped.
Bitcoin might not be used much as a peer-to-peer currency yet, but neither is gold.
And as Bitcoin matures and stabilizes in price, the security and transparency of it ensures Bitcoin will become the base layer for the Internet of Things.
Gold is useful for many things, but Bitcoin is more useful than gold.
Author: Tommy Limpitlaw