Calling Bitcoin Gold has become an everyday occurrence. Since the appearance of this digital currency, its enthusiasts on one hand and the traditionalists who defend Gold on the other, affirm and deny the premise. Therefore, it’s important to evaluate where the true value of Bitcoin lies.
But how is it possible that a coin, which at first seemed like a game of so-called cypherpunks, is now equated with Gold? The answer is that Bitcoin Billionaire was born with a clear purpose. It is to remove the old forms of finance from their foundations.
The development of Bitcoin is such that, in a few years, from a limited 300-person chat room, it moved to the world stage. The rapid development of this electronic currency opened an important debate that, until now, has not been exhausted.
What is the intrinsic quality of Bitcoin’s value that makes it so valuable?
Although it sounds difficult to assimilate, that quality of Bitcoin is that it has all the premises to replace the existing financial regime. Or, at least, to force it to adapt to its parameters. The latter seems to be happening with the development of the Central Bank Digital Currency (CBDC).
The qualities that an asset must have in order to be money are various according to classical economics. Among them, to be a means of payment, a reserve of value and a unit of account, among others.
This article focuses on one of them, value reserve. Bitcoin is daily compared to Gold because of the advantages it has to be treasured, such as its quantitative limitation (only 21 million coins).
During a recent interview at Kitko News, Michael Casey, CCO of CoinDesk, stated that the true value of Bitcoin is that it is „Digital Gold“. But, more importantly, Casey thinks it’s not just a matter of replacing one stock of value with another. „It’s a depoliticized reserve of value whose economic policy operates outside the traditional one.“
But he thinks that, at the moment, Bitcoin is not comfortable as a means of payment because of its volatility. On the other hand, as a safe haven, it is already consolidated. In a world full of uncertainties, he points out, having a form of digital gold means having higher levels of security.
The value of Bitcoin is that neither the most important fiat currency nor gold itself can surpass it.
The value of Bitcoin is higher compared to the most prominent of the fiat coins and the most important reserve value. Source: Coin ATM Radar.
Will Bitcoin and Gold be refuge assets in the coming years?
Bitcoin and Gold mining also have great similarities
The similarity between Gold and Bitcoin doesn’t stop at the storage capacity (where Bitcoin has great advantages) or the comparative value. There is also a curious similarity in the production of the same.
In his book „Bitcoin Technology and Cryptcoins,“ Arvind Narayanan explains that the difficulty in obtaining both has increased. Therefore, it requires more power in the media to find it.
„There is a clear parallel between the evolution of Bitcoin mining and gold mining. In the beginning, both were friendly to particular individuals. But, as time goes by, only large companies are able to extract them,“ he says.
Narayanan chronologically compares the seasons in the evolution of the ways of mining both assets. 1) CPU= Gold Pan, 2) GPU= Sluice Box, 3) FPGA= Placer Mining and 4) ASIC= Pit Mining. In each of the four stages, the processors for mining Bitcoin, have their equivalents in gold mining.