Is Bitcoin The New Gold?

We get asked this question a lot — is Bitcoin the new gold — and we can’t provide a simple answer.

Over the years, the world’s first cryptocurrency has proven as a great storage of value with many people considering Bitcoin a “digital gold.”

So how does it compare to gold, and are there reasons behind these claims. Let’s take a look…

6 reasons why Bitcoin is the new gold

1. Limited supply
Like gold, Bitcoin has a limited supply, with the algorithm set to stop rewarding miners after 21 million bitcoins have been issued. There may be different coins produced thanks to some change in the system, like that was the case with Bitcoin Cash, but the “original” Bitcoin will remain in limited supply.

2. Not easy to produce/make
Long gone are the days when everyone could mine Bitcoins — bundle transactions in a block and be rewarded for the effort. This (original) digital gold rush is over and today, a ton of computing power is required to solve Bitcoin’s complex algorithms — dedicated machines are used for this, so called ASIC miners. Also, the more bitcoins are produced, the harder it will be to create new ones.

3. Not controlled by the government
Another similarity with gold comes from the fact that neither Bitcoin nor gold is controlled by any government. It’s not like a government can create more gold — and the same is true with Bitcoin. It is the algorithm that controls the supply, rather than any elected or unelected body.

4. Bitcoin goes up when gold goes up
It happens when some emergency strikes; that’s when both gold and Bitcoin appreciate in value. The bad news is that these sort of events are seemingly taking place more frequently than ever; the good news for Bitcoin holders is that their digital assets are gaining value as a result.

5. The digital gold standard
Even if you don’t agree that Bitcoin is similar to gold, you may agree that Bitcoin is a “digital gold standard.” It was the world’s first cryptocurrency, and is still considered the “default” option in the space. Also, it is by far the single most accepted cryptocurrency on the planet.

6. Similar terminology
Finally, the parallels with gold are used to define Bitcoin’s terminology; it is the reason why the “production” of bitcoins is referred to as mining, while computers designed to produce bitcoins are known as Bitcoin miners. A miner is also used to define a person that runs these machines.

But there are also a few differences…

3 reasons why Bitcoin is NOT the new gold

1. Volatility
When you say gold, you mean stability. In contrast, as of 2014 — Bitcoin had volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the U.S. dollar, according to risk management expert and faculty member in the Finance Department at Boston University, Mark T. Williams.

2. Acceptance
The number of places accepting Bitcoins has been growing like crazy, but still it’s nowhere close to reaching the par with regular, fiat currencies. There is no single government backing the cryptocurrency yet, even though many [governments] are just fine with people using it on their soil.

3. Bitcoin is still new
This is arguably the biggest “problem” — whereas gold has been established as a valuable commodity for over 5,000 years, Bitcoin has only been in existence for a couple of years. It takes time to prove value.

So, is Bitcoin the new gold?

We think yes, but at the end of the day — it doesn’t matter that much. The opportunity is here and we WON’T be ignoring it.

Watching this revolution unfolding before our eyes is hard to justify. We don’t want to provide any investment advice here, so it is up to you to decide whether you want to join it, as well. Just know that it could be too late afterwards.