There is a constant debate going on between the Bitcoin and the Gold community, over which asset is better.
Some make it a generational issue, as in "Gold is for Boomers and Bitcoin for Millennials", like this commercial below. A heavy, physical asset just doesn't fit the lifestyle of a young, digital and mobile generation.
Other people debate (in crazy ways) over Bitcoin's technology and whether it really is so useful and revolutionary or whether Gold actually has more utility.
The good news is, you don't have to choose. You can have both, in fact diversification is always a good idea, as you know.
At the end of the day, there are lots of different opinions and zero guarantees. Since I'm in the Bitcoin camp more than in the Gold camp, though, I wanted to share a couple things with you that do make Bitcoin better than Gold.
Bitcoin is often called "digital Gold" because people buy it as a long-term investment - as an insurance against a loss of value of their savings. However in addition to being a potential store of value like Gold, it is also a new technology unlike anything that's ever existed before. Let me give you two examples:
1. Venezuela doesn't get its Gold back from the Bank of England
Have you heard about this? A country that is crisis ridden in more ways than one and could really use its gold reserves right now, just won't get it back...
This could never happen with Bitcoin. If you store it in a non-custodial wallet and own your private keys, you can access it whenever you want, without needing permission from any authority.
2. 83 tonnes of fake Gold bars discovered in China
A few weeks ago, 83 tonnes of fake Gold bars worth $2 billion were discovered. That's about 20% of the annual Gold production in China. It turned out the bars were made of gilded copper.
Bitcoin can't be counterfeited. It's mathematically impossible. When someone sends you a Bitcoin on the blockchain you know it's a real Bitcoin because a) no other coins exist on the Bitcoin blockchain and b) thousands of computers around the world verify Bitcoins transactions according to a consensus mechanism that prevents the same Bitcoin from being spent twice.
Anyone can run the Bitcoin software and verify transactions. It's free and it's open source. But not everyone knows how to test whether Gold is pure or not. That takes specific knowledge and equipment. You can't know for sure whether your gold necklace or your Gold in Switzerland are truly pure Gold unless you hire and trust an expert.
It's all about trust.
One reason that drives people to Bitcoin is a loss of trust - in central authorities or "the system".
Venezuela learned it can't trust the Bank of England, and the Gold industry learned it can't trust that jewellery producer who made those fake Gold bars. In fact, they now have to contemplate the question How much of all the Gold in existence is actually fake?
Bitcoin is superior money in pretty much all aspects: durability, portability, divisibility, recognisability (=authenticity), fungibility and scarcity. But that doesn't give us any guarantees.
The best products don't always win. The ones with the most convincing story and marketing usually win, because they attract a community and form a culture that shares a belief about that "product".
Right now, the majority of people still believe different stories and they have no incentive or motivation yet to be open to hear a new one.
Gold has a limited supply. Gold has maintained its value over thousands of years. The US Dollar can never collapse as it is the world reserve currency. Up to €100,000 of your savings are protected in the bank. The bank notes in your pocket will be accepted everywhere as legal tender.
I'm not saying the above stories are true or false - I can't even verify some of them. But whichever stories we believe shapes our behavior; including our investment behavior.
Gold has no intrinsic value.
Fiat money has no intrinsic value.
Bitcoin has no intrinsic value.
All value is subjective and determined by our beliefs.
I happen to believe very much in Bitcoin and the kind of society decentralised technologies can create. At the same time I think it's worth holding (real ;)) Gold as well, especially since the whole world believes it has value.
What do you believe?
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About the author:
| Anja Schuetz helps absolute beginners to become confident crypto investors. She is the author of How To Stay Safe in the Crypto Space and offers Free Bitcoin Education For Beginners on her website. |  |
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