Crypto enthusiasts compare Bitcoin, a new crypto asset, with gold, and this made the general public think, “are these assets really comparable”? It raises lots of questions, and people want to know points of similarities between gold and bitcoin. So we will discuss two different assets and their aspects in this article. You can trade bitcoin through crypto-superstar.io as it is a great bitcoin trading platform.
People Trust GOLD
It has been thousands of years since gold coins are valued from ancient times, people used gold in temple rituals, and now gold is used in jewelry. Gold is rare due to its rarity, and it has performed many roles in the entire economy. In 1971, there was an end to the rule where a fixed amount of gold was used to determine the value of a dollar.
After 1971, when regular money was introduced, gold wasn’t used to determine the value of money. There are three main criteria that money has to fulfill: money as a unit of account, as a store of value, and as a medium of exchange. In today’s time, gold is no longer used as a medium of exchange and instead used as jewelry and a store of value. Gold can also be used in many other areas like aerospace, electronics, and more.
Today, the amount and price of gold are used to indicate the country’s health or economy. At the time of recessions in the market, there is always an increase in the price of gold, whereas, at times of expansion, the price of gold either remains lower or stable. For quite a long time, gold has been in existence, and it has remained an asset that is not likely to disappear any soon. That is why people prefer to invest in gold bars and coins more than any other asset.
Is Bitcoin Trustworthy?
Bitcoin was designed to provide people a decentralized currency. In 2008, the whitepaper of Bitcoin was released that described “Bitcoin is a peer-to-peer electronic cash system.” The main goal of Bitcoin was to be independent of the involvement of banks and governments. Satoshi Nakamoto is the name under the foundation of Bitcoin, and he came up with the idea of a decentralized currency when he observed too much centralization in the economy. The general public never believes that anyone could develop a currency that did not include government or banks but got astonished when Bitcoin came into existence.
In the early days of Bitcoin, there was a negligible value of bitcoin, but when people showed interest in it, its value started to increase. In the period of 4 years, from 2011 to 2015, there was a dramatic increase in bitcoin price as its price rises from $4.60 to $426, which is around 9000%. It was shocking and unbelievable to governments and individuals. After 2015, there was a sudden downfall in Bitcoin’s price, but in 2017, Bitcoin’s price skyrocketed. No one has ever seen that kind of growth of any digital currency, and that was when investors and traders were attracted to investing in Bitcoin to earn high returns on their investments.
But along with its decentralized nature and other exclusive features, there was a significant flaw in the Bitcoin system that was its volatile nature. Its volatile nature traumatized people as many investors lost all their funds after investing in Bitcoin. Despite its volatile market, the profitability of bitcoin was irrefutable. There have been around twelve years since bitcoin’s existence, and the crypto analysts believe bitcoin will stay for quite a long time.
The Final Judgment
If Bitcoin is considered digital gold, it is required to have the same properties and features as gold, and the main property of gold is its rarity. Yes, bitcoin can be considered digital gold by viewing the rarity as it also has a limited supply like gold. Despite being a currency, Bitcoin follows all the criteria discussed earlier that include the medium of exchange, store of value, and unit of account.
Both gold and bitcoin are a good store of value as people invest in them to get higher returns or benefits in the future; both can be used as a medium of exchange and can be used as a payment method for the sale and purchase of goods and services. Last but not least, both gold and bitcoin can be divided further into small fractions.
