With the increasingly frequent comparisons of Bitcoin to gold, both as a store of value and a means of transferring value as a form of payment, traditional investors are now weighing in on the advantages of the world’s most popular cryptocurrency.
Is Bitcoin superior to gold for use as a currency?
The standard
Gold is perhaps the first decentralized currency, defined as a thing that has value but not under the centralized control of any governing body. It has been a sign of wealth and one of the most popular currencies for thousands of years. Physical gold holds its value since it can only be slowly mined over time, rather than printed rapidly like fiat.
Scarcity
Both assets are similar in that they are mined. However, Bitcoin has a limit on how much it can be mined – there will only be a maximum supply of 21 million Bitcoins. While gold has been determined to be finite, its total supply is unknown and only estimated. Should new, large deposits be suddenly discovered one day, its price would be significantly affected. Even a large unknown deposit on Earth can cause a big price crash.
Ease of transfer and security
Although physical gold is globally recognized as a currency, it is arduous to use for international commerce and finance. The metal is highly valued by the ounce, currently USD 1,200, but when dealing with large amounts of money, it can be very heavy. To send USD 1 billion to another country would require 52,000 pounds (approximately 0.25 tons) of gold. This would require a tremendous amount of effort and costs for customs, shipping and security. Additionally, it would take many days for gold to cross international borders, with multiple points of risk at en route.
Compare this to Bitcoin, where USD 1 billion can be digitally transferred anywhere in the world instantaneously, at a fee of only a few cents, with no additional costs. This digital transaction isn’t exposed to compliance with any jurisdiction’s regulations wither and cannot be intercepted nor hijacked once broadcast to the network.
Additionally, Bitcoin is cryptographically secure and has yet to be hacked despite years of attempts. Gold can be physically secured, but at great cost. Bitcoin’s cryptographic security can’t be compromised by even the most powerful supercomputer. Bitcoin transactions can be done instantly and leave no trace besides a note in the blockchain ledger that they occurred, while a gold transaction is very visible since it has to be moved physically, and a tremendous amount of traceable activity occurs when being moved.
Liquidity
Finally, gold has a huge paper market on COMEX, where its paper issuances can supposedly be redeemed for physical equivalents in a vault. However, COMEX’s vault contains less than 1% of the amount needed for all the paper gold issued. More is being printed too, saturating the market and keeping the price of the precious metal far lower than it should be. There is no equivalent situation for Bitcoin, since Bitcoins are highly liquid and there is no need for paper Bitcoin. The only reason paper gold exists is because its physical counterpart is difficult to transact.
Bitcoin can also be easily converted to local currency via peer-to-peer exchanges. Localbitcoins, for example, lists traders willing to buy or sell Bitcoin online at any one time in over 248 countries. It would be significantly more difficult to liquidate gold as it is likelier to find a buyer for Bitcoin than it is for the precious metal.
Ultimately, if fiat currency collapses it is clear that Bitcoin is in a much better position to become the top global currency, due to Bitcoin’s advantageous characteristics. This makes Bitcoin much more ideal for international commerce and finance than gold.
Follow BitcoinNews.com on Twitter at https://twitter.com/bitcoinnewscom
Telegram Alerts from BitcoinNews.com at https://t.me/bconews
Image Courtesy: Pixabay
The post Bitcoin Is Better Than Gold appeared first on BitcoinNews.com.