Could bitcoin replace gold as the go-to storage of Value
Since the dawn of time man has been fascinated by shiny things, we worshipped the sun, the moon, fought over diamonds and of course gold. Fast forward to the 21st century we’re still fighting over gold, and we’re still fascinated by its shininess, but to be fair we seem to hold it in such high regard for more than just superficial reasons these days. Gold seems to be used as the go to storage of value, seen as a “safe haven” for investors, but some are speculating that Bitcoin could challenge gold for its top spot as the top go-to safe haven.
Bitcoin has taken the world by storm in the relatively short time of its existence, Satoshi Nakamoto’s idea for a peer to peer cash system has grown in popularity and proven that people see the value in the technology behind it.
There are some key differences between Gold and Bitcoin as financial assets, I think it’s important that we look at what adds value to each by looking at their uses and applications.
Gold
Properties: malleable, great conductor of heat and electricity, resistant to environmental impact (doesn’t rust), physically tangible, finite, irreplaceable.
Uses:
• electronics (good conductor of electricity) used in phones, computers, GPS devices. Used for components that need to transfer information quickly within a device.
• Medicine and dentistry (false teeth, radiation treatments).
• Aerospace, gold is used to protect astronauts from infrared radiation.
• Jewellery & Fashion (it’s shiny!!)
Bitcoin
Properties: immutable, fixed amount, easily sold (especially large amounts when compared to gold) easily transferred, can be used to buy goods, irreplaceable, cryptography
Uses:
• Peer to Peer decentralized cash exchange.
• Nothing else
Bitcoin itself is clearly limited in use cases, however, blockchain technology (the technology behind bitcoin) is proving to be limitless. Bitcoin has one advantage over gold, in that both are limited in their supply, but it is impossible to know exactly how much gold there is in the world in total, we will always know how many bitcoins have been mined and the exact total supply.
Another barrier bitcoin would have to overcome in order to take golds top spot is all the complicated processes involved in purchasing, and safely storing bitcoin, it’s a lot easier to secure gold. You could keep your gold in a safe or keep it locked up somewhere, when compared to bitcoins storage options and all the convoluted things that come with them, e.g. private keys (a long alpha-numeric string of characters),paper wallets, software wallets, hardware wallets, most people don’t even know what these things are. Gold is obviously the easier option when it comes to being handled.
I’m Wrapping this up now
In the end I believe there is definitely room for them both to be used as assets to store value. However, I personally don’t think that bitcoin will knock gold from its top spot and besides bitcoin was never meant to be a gold type asset used to store value, it was designed to be a “peer-to-peer electronic cash system”, as stated in bitcoins’ whitepaper by Satoshi Nakamoto. But I suppose things change.
