The current pandemic has called millions of people to rethink their investment and finances especially in terms of the purchase and sale of gold and other valuable assets. Gold is now often compared with Bitcoin but Bitcoin still stands very different from such material assets.
Before the covid-19 pandemic happened and the financial recession that the world is encountering several experts have considered putting gold and Bitcoin in the same basket. The primary reason behind this consideration is that more than Bitcoin shares the same reputation and they are supposed to be anti-cyclic in the equity markets.
Even previously, Bitcoin has been compared to digital gold since that was the most feasible explanation that could be given when cryptocurrencies were first introduced. Although Bitcoin and gold have received similar value from spectators, experts beg to differ on the following grounds.
Why are Bitcoin and gold not comparable?
According to experts, Bitcoin and gold comparison is difficult to perceive for the following reasons:
For a long time, most people have considered gold to be the ultimate asset and have either stocked up the same in banks or have made direct investments in gold.
In reality, depending upon the gravity of the crisis it is difficult to access your gold or you can be under the impression that the government can seize all your gold if a severe crisis arises. On the other hand, this is not the case with Bitcoin even if exchanges of the coins are made in a digital market.
Also, Investment in gold requires trust in the financial system which is not the case for investment in Bitcoin. Your gold is with your trusting intermediaries and the financial system becomes you why investing in Bitcoin the only protocol to be trusted is your memory and the cryptographic system.
- As a tool of exchange
Bitcoin and Gold were considered similar in the beginning since they were mostly used as a medium or a tool of exchange. Gold was primarily used for the creation of coins while initially, Bitcoin was used to make transactions on the dark web.
Nowadays usage of gold is extremely static and mostly considered as a storage value cal when compared to gold coins are less static. It must also be noticed that people do not use gold as a medium of exchange for daily expenses although Bitcoin can be used to do this.
It must also be noted that you can give access or login to your Bitcoin account using software such as the bitcoin-buyer.app although you cannot do the same with gold.
Furthermore, today the internet generation no longer accepts gold as the most feasible method of transaction since merchants have started accepting digital currencies or Bitcoins for products and services rather than gold. This is mostly because transactions in Bitcoin are easier than transactions made in gold.
The digital characteristic of Bitcoin also makes it cheaper and easier for companies to make transactions with their clients.
- Finite and infinite supply
Previously Bitcoin and gold were often compared with each other due to the similar characteristic that is their finite supply.
The ultimate supply of Bitcoin is coded in the blockchain and is estimated to be around 21 million. Let the numbers not fool you! The number of Bitcoins available is much smaller in number and around 3 million Bitcoins have been estimated to be lost.
Even though the supply of gold is limited on our planet infinite universe and gold is extracted from the soil and asteroids. This is not the case with points since there will only be as many coins as it will be programmed.
Thus, comparing gold and Bitcoin is not an appropriate comparison, since Gold is just making a new setup with lower or higher value why Bitcoin is seeming to only increase its value in the future