Can Bitcoin be considered digital gold?

Bitcoin is often referred to as “digital gold,” but is that a fair comparison? Let’s explore why gold might be a safer choice than Bitcoin.

Similarities between Bitcoin and gold

Both Bitcoin and gold have limited supply; there are only 21 million bitcoins, just like gold’s limited natural resources. Both are seen as stores of value during economic uncertainty and inflation. They are also decentralized: gold is a natural resource, while Bitcoin is powered by a network of computers. Both are used as alternatives to traditional investments like stocks and bonds.

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What offers more stability and security – bitcoin or gold?

Gold has long been a stable investment during economic crises. For example, during the financial crisis in 2008, the price of gold steadily increased. Bitcoin, on the other hand, launched the following year, has proven to be much more volatile. On August 5, 2024, Bitcoin dropped by 20% in a single day, while the price of gold remained stable.

Here are more examples where Bitcoin plummeted while gold maintained its value:

• 2013: Bitcoin fell from $1,150 to $500 in a matter of days.
• 2017: After reaching $19,783, Bitcoin dropped to below $7,000 within a few months.
• 2021: Bitcoin fell from $64,000 to $30,000 in just six weeks.

Usability and acceptance

Gold has been used as currency and a store of value for thousands of years and is a globally liquid asset, making it easy to buy and sell. Bitcoin, despite its popularity, still has limited usability and is not universally accepted.

Regulation and stability

The gold market is safeguarded by regulations from governments and central banks, providing security. Bitcoin, however, is more volatile due to regulatory uncertainty.

Why choose physical gold over Bitcoin?

Gold has a long history of stability and global acceptance, while Bitcoin is relatively new and highly volatile. For investors seeking a safe haven during uncertain times, gold remains the reliable choice.

• Stability: Gold has proven to be stable over the long term.
• History: Gold has a long, proven track record as a store of value.
• Regulation: A well-regulated market provides security.
• Global Acceptance: Gold is accepted worldwide.
• Physical Asset: Gold can be stored and safeguarded.

3 other practical uses for gold

In addition to being a currency and store of value, gold has several practical applications:

• Electronics: Small amounts of gold are used in electronics such as mobile phones and computers due to its excellent conductivity.
• Dentistry: Gold is used in dental fillings for its durability and biocompatibility.
• Space Technology: Gold plays an important role in space technology, where its reflective properties protect spacecraft from radiation.

Gold, therefore, has many practical uses, while Bitcoin is limited to digital transactions. 

For those seeking a reliable and stable investment, gold is still the safer option compared to Bitcoin.