Bitcoin and Gold are often compared as investment assets due to their perceived store of value and potential to act as a hedge against economic uncertainties.
Even though Gold did not directly bring about the inception of Bitcoin, I’d like to think that Satoshi Nakamoto took into consideration the fixed supply and scarcity of Gold in the creation of Bitcoin.
Bitcoin’s fixed supply and scarcity, similar to Gold’s limited supply, have led some to refer to Bitcoin as “Digital Gold.”
Gold is a naturally occurring finite resource with a limited supply. According to the World Gold Council, as of 2020, it is estimated that approximately 197,576 tonnes (or 6.34 billion troy ounces) of gold have been mined throughout history. This estimate includes both above-ground stocks (gold that has been refined and is available for commercial use) and underground reserves.
Bitcoin has a total supply cap of 21 million. According to buybitcoinworldwide 19,403,056.25 million Bitcoins have been mined and are currently in circulation with over 1,596,943.8 million Bitcoins left to be mined. This makes you wonder what happens when there are no Bitcoins left to be mined.
When there are no more bitcoins left to be mined, it means that the maximum supply of 21 million bitcoins has been reached. This event is known as “Bitcoin’s final supply issuance” or “Bitcoin’s 21 million supply cap.”
Bitcoin is often referred to as “Digital Gold” due to certain similarities it shares with gold as a store of value. Here are some reasons why Bitcoin is considered by some as the new digital gold:
Similar to gold, Bitcoin has a limited supply. There will only ever be 21 million bitcoins in existence. This scarcity is built into the Bitcoin protocol and provides a potential hedge against inflationary pressures that affect traditional fiat currencies.
Both Gold and Bitcoin are decentralized assets. Gold is physically decentralized, as it can be found and held by individuals all over the world. Bitcoin, on the other hand, is decentralized through Blockchain technology, which is maintained by a distributed network of computers around the globe. This decentralization removes the reliance on a central authority, such as a government or bank.
Store of Value
Gold has been valued for centuries due to its durability, fungibility, and perceived intrinsic worth. Similarly, Bitcoin is valued for its properties, such as its scarcity, divisibility, and security. Bitcoin’s digital nature allows for easy transferability and storage, making it a potential store of value in the digital age.
Both gold and Bitcoin are globally accessible assets. Gold can be bought, sold, and traded across various markets worldwide. Bitcoin, being a digital currency, can be sent and received globally, providing individuals with the ability to transact and store value across borders without relying on traditional banking systems.
Some investors see Bitcoin as a potential investment opportunity, similar to Gold. Bitcoin has demonstrated significant price appreciation over its relatively short existence, attracting the attention of investors seeking potential returns. However, it’s important to note that Bitcoin’s price volatility is higher compared to Gold, which can present both opportunities and risks.
While there are similarities between Bitcoin and Gold, it’s essential to recognize that they are different assets with distinct characteristics. The comparison of Bitcoin to digital Gold is a metaphorical one, highlighting Bitcoin’s potential as a digital store of value in the modern age rather than a direct equivalence to physical Gold. As with any investment, it’s crucial to conduct thorough research and consider personal circumstances and risk tolerance before making investment decisions.
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Caleb is a technical writer at AlteBlock with over 2 years of experience in covering DeFi-related content such as crypto news, exchange reviews, and guides. He is also a Civil engineering graduate who can be found on-site when not writing an article.