Plenty of people are calling Bitcoin a new form of gold. There are certainly similarities between these two valuable objects. There are also some differences between Bitcoin and gold. Let’s take a look at how what they have in common and how they differ.
How Bitcoin and Gold are Similar: Respected and Legitimate Forms of Value
Bitcoin and gold are both used as a form of value. Each is durable. Though Bitcoins require the internet and software, there is little chance the internet will be inaccessible for an extended period of time. Bitcoin miners are almost certainly going to be available as time progresses.
Though gold wears slightly if it isn’t handled with care, it is generally revered as quite the durable precious metal. Bitcoins are also quite formidable in composition.
Gold and Bitcoin are quite scarce. The number of Bitcoins is inherently limited to 21,000,000 units. Nearly 15,000,000 Bitcoins have already been created. Gold is especially scarce. Though traces of gold are found in many places on the planet, it is difficult to find a considerable amount of the precious metal.
Both Bitcoin and gold are quite recognizable. Bitcoins have signature characteristics and cannot be counterfeited. Gold is also quite recognizable. However, it is sometimes tested for purity to ensure the buyer is not purchasing fool’s gold.
Comparability to Commodity Assets
Both gold and Bitcoin have properties that are common to typical commodity assets. Each can be exchanged and stored as value. Both can be acquired through the internet. Gold is bought and sold online every single day. Bitcoin is also traded online. Though gold has a more robust network of exchanges, Bitcoin exchanges are rapidly growing as time progresses.
Differences Between Bitcoin and Gold: Portability
Gold can’t be transferred as easily as Bitcoin. It takes some time to transport gold as it is quite bulky and heavy compared to Bitcoin. Bitcoin can be transmitted from one address to another in a near-instantaneous manner.
Bitcoin can be divided in a highly precise manner. Though gold can be divided, it can’t be broken down as easily as Bitcoin.
Some argue gold has more intrinsic value than Bitcoin due to its utility. While gold is used in everything from spacecrafts to jewellery and medical equipment, Bitcoins are limited to their functionality as a cryptocurrency. However, it can also be argued that Bitcoin has intrinsic value due to the effort involved in producing it and its scarcity. Though Bitcoins can be divided into smaller units, no more than 21 million will ever exist.
The Manner of Creation
Another important difference between the two is the source of their creation. Bitcoins are created by computers and software while gold is a precious metal naturally found across the planet.
Bitcoin is more difficult to track than gold. Gold is tracked through a worldwide tracking system that preserves its value as an investment. This system makes it difficult to sell fake gold or steal it. Bitcoin is slightly easier to counterfeit. Consider the MT.GOX exchange in Tokyo that crashed due to a software issue that let hackers temporarily steal millions of dollars’ worth of the popular cryptocurrency. Furthermore, tracing Bitcoins is quite difficult as it was originally created to serve as an alternative to conventional currency and evade government oversight.
Bitcoin has more utility in the context of serving as a currency. One can carry Bitcoin with him for purchases. One cannot carry fractions of gold around to make purchases.
Use as a Legitimate Currency
Bitcoin is growing in popular as a cryptocurrency that suffices as a form of money. Some merchants accept Bitcoin along with other more traditional currencies. Gold is not accepted as a form of currency. Though some have used gold for bartering purposes, gold is not commonly used to purchase items.