Although gold and Bitcoin are very different assets (one is physical and the other is digital), the truth is that they have certain similarities, especially when compared with FIAT money. In this article we will know some similarities between Bitcoin and gold:
They have a limited number of units
Bitcoin has a limitation as far as the number of units is concerned since the number of units that will circulate is limited to 21 million, it is expected that by the year 2140 it will have finished mining and no more Bitcoins will be generated, this characteristic is very similar to gold, which also has a limited number of units on the planet, for example, various studies indicate that gold production could be decreasing and that its extraction will be economically unsustainable by approximately 2050 (this is because by that date, the human being will have practically already extracted all the gold that is found on the ground or in the upper layers, so to obtain more gold, it will be necessary to make deeper excavations), all these factors make the existence of gold limited just like Bitcoin.
On the other hand, Fiat money can be created in an unlimited way without any type of support, this last characteristic is what makes said money lose more and more its value (due to inflation), hurting savers and rewarding debtors, while on the other hand, gold and Bitcoin maintain their value because there is only a limited number of units, which ends up rewarding savers.
They are independent of the government or financial system
As we saw in our previous article titled Why did the US go off the gold standard? Currently, many countries can create Fiat money (through different methods) without having the obligation that this new money is backed by gold, for example in the case of the US before 1971 each dollar had a gold backing, But today each dollar no longer has a backing of that type, becoming simply a “government promise” which guarantees to pay that amount to the bearer.
As Robert Kiyosaki mentions in his book “False: False money, false teachers and false assets”, gold is considered as “God’s money” since its origin dates back thousands of years before man, then he mentions that cryptocurrencies ( of prestige) such as Bitcoin or Ethereum are the “money of the people” and these are backed and managed by blockchain technology and finally there is Fiat money, which is considered as the “money of the government or the financial system” which is controlled by these organisms and can be created in an unlimited way.
They have tried to be copied or controlled
Although gold and Bitcoin are in demand for their good reputation and a limited number of units, many governments, agencies and entities have tried to create “copies” or “less transparent” versions of them in order to control said environment or remove some kind of benefit from your good reputation. In the case of Bitcoin, we have other cryptocurrencies that do not follow the essence of blockchain technology or that can create an unlimited number of units, in the case of gold something similar happens with “gold paper certificates” in which something is applied Similar to the fractional reserve system used with Fiat money, where a large number of paper certificates can be created with one unit of gold (a process similar to Fiat money occurs).
They have a great acceptance in their sector
Although there are various precious metals and resources in the world, gold is the most in-demand and valued (followed very far by silver), due to the great acceptance and reputation it has had over the years. On the other hand, although there are several cryptocurrencies currently, Bitcoin is the one with the highest value (followed very far by Ethereum), due to its good reputation and its great acceptance in the market, this value is assigned by the same people based on supply and demand in the global market.
What do you think about this topic? Do you know of any other similarities between Bitcoin and gold?
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