06

Dec 2014

Bitcoin vs Gold

The bitcoin vs gold debate has raged on in investment circles since bitcoin has entered mainstream discussion among increasingly interested investors. Gold has been used as a form of currency and trade for thousands of years, and certainly has a track record for reliability and preservation of wealth. However, as the newcomer onto the scene, bitcoin may be the kind of financial and technological breakthrough to to challenge gold as the monetary kingpin.

This Article Is Available To Insider Members Only

Author

Travis Patron

Travis Patron is the author of The Bitcoin Revolution: An Internet of Money, a seminal publication in the digital money space which outlines the basics of the bitcoin payment system. As a public speaking authority, he regularly speaks to audiences on the economics & industry trends of bitcoin.

Read More

  • Reply

    Robert Miller

    27 12 2014

    Gold and bitcoin are perfectly complementary, especially if you want to get out of the banking system

  • Reply

    Luke Parker

    27 12 2014

    I used to own gold, but after a lot of study on the subject, I couldn’t find one single trait, not even one, that gold had an advantage over bitcoin on.

    Fiat at least is more liquid and can be better secured than bitcoin can for the time being; but of all the other criteria that makes money good, bitcoin was specifically designed to be the best at them all. Here’s a full run-down of them all:

    https://www.quora.com/What-are-the-characteristics-of-a-good-currency-and-how-does-Bitcoin-compare-to-that/answer/Luke-Parker-8

  • Reply

    J Bradley Hall

    28 12 2014

    The entire BTC ecosystem is circa US$5 billion. Gold trades US$240 billion per day and is the deepest and most liquid asset class on the planet. Gold has been the most trusted store of value for 6000 years. BTC has been in existence for 6 years and in the last year alone, the price is down 70%. It is by default not viable as a store of value. In terms of destructability, the evidence of BTC’s existence can be erased in a nano-second. A solar flare will not destroy gold. Central banks hold reserves in gold for a reason, it underpins the entire financial system. It is the only asset that is no one else’s liability. To suggest that BTC has intrinsic value is simply naive or misleading. 99.9999% of the planets commerce excludes BTC. BTC is a claim check with nothing to claim. Gold is money.

    • Reply

      Travis Patron

      29 12 2014

      An interesting comment and welcomed counter-perspective Bradley. Gold has certainly held its own over the last few thousand years. It is widely seen as a viable store of value, that I cannot deny. Is bitcoin as valid a store of value? Currently, the comparison is not even close as the price is too volatile, yet as bitcoin stabilizes it increasingly becomes useful as a tool of commerce and store of value.

      You are correct bitcoin lost 70% of its value this year. As it did in 2013, again in 2011, and will likely do at least one more time. That’s the kind of situation you deal with in an entirely unregulated and experimental market, unlike gold.

      An interesting perspective to consider: Gold is money as a thing. Bitcoin is money as a system. The technological functions of that system allow us to do things with money we never previous have been able to do so. Therein lies the intrinsic value. Can bitcoin and gold coexist? Is it a zero-sum game? Bitcoin representing money as a system rather than a thing, coupled with the fact it is digital by nature, lead me to believe bitcoin will eventually replace gold.

    • Reply

      Joep Meloen

      11 02 2015

      Nice cherry picking numbers!
      My 2012 analog gold is WAY down while my 2013 digital gold is WAY up.

      The only thing which keep analog gold from crashing faster is a few billion analog people in the east which still value gold above bitcoin.
      A Solar flare will also fry everything else besides bitcoin. If it happens tomorrow, you’d much better have FIAT cash instead of gold. There is no place to buy bread and water with gold currently but there are millions of sheep where you can dump your FIAT cash in exchange for goods.

      Gold is a store of value for relatively foreseeable pandemic events. For every other problem bitcoin has a solution.
      Sometimes I almost think that traditional gold bugs want the world to collapse with death and destruction so that their gold coins will be worth millions and trillions.
      No, I rather motivate free global trade with bitcoin and help the world to become a better place instead…

      • Reply

        Travis Patron

        11 02 2015

        I never thought to put the existential threat of a solar flare into the analysis. If that were to happen, I couldn’t help but feel 99% of the population would be wiped out. If a solar flare were to permanently damage the electrical grid, good luck to you and yours!

Your email address will not be published. Required fields are marked *