Comparing Bitcoin to Gold and other precious metals. Gold has been used as a store-of-value and means of payment for thousands of years. In contrast to fiat currencies, gold has kept its purchasing power, and beat inflation. But it has underperformed compared to the new digital gold: Bitcoin.
Gold used to be the money to pay with, or was the backing of the cash to pay with. Currencies used to be backed in full by gold. But this gold standard ended for the US Dollar in 1971.
Use cases for gold
- Store of value
- Jewelry
- Industry (electronics, aerospace, medicine)
Use cases for Bitcoin
- Store of value
- Payment system
In May 2022 gold has a market cap of $11.797 T (trillion) USD, while Bitcoin has a market cap of $556 B (billion) USD. All gold combined costs 21 times more than all Bitcoin, or from the other direction: Bitcoin sits at 4.71% in relation to gold.
Holding gold is challenging. Gold can be confiscated. Physical gold is hard to move. Physical gold can be stolen.
The possession of gold has previously been forbidden in the United States.
Some people hold gold for a case of extreme emergency, such as a war. In that situation the gold must be held physically, and in divisible quantities. Dividing gold is challenging.
Bitcoin is movable, has no physical existence. No one sees it, no one knows if your phone or laptop contains any. You can transport 0.001 BTC or 1000 BTC through country borders without anyone able to know. Dividing Bitcoin into parts of any size is simple.
Performance Bitcoin vs Gold
1st chart: 1 year (Jun 2021 – May 2022).
Gold lost 2.83%, Bitcoin lost 27.67%.
Gold performed better. Bitcoin has a higher volatility, and in the short term this can mean a big loss.
2nd chart: 2 years (Jun 2020 – May 2022).
Gold gained 6.36%, Bitcoin gained 192.98%.
3rd chart: 5 years (Jun 2017 – May 2022).
Gold gained 52.34%, Bitcoin gained 1,882.69%.
The blue line is the index price for gold, the yellow line is the price of Bitcoin.
Gold performed well to retain wealth, but has not done well to create wealth.
1-bitcoin-per-child.com
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