Bitcoin vs Gold: Which is a Better Long-Term Bet? Set coin vs bitcoin mining one over the other as a long-term bet isn’t easy, according to a suite of analysts. How Can I Buy Bitcoin? How Does Bitcoin Mining Work?
How Do Bitcoin Transactions Work? How Can I Sell Bitcoin? How Does Blockchain Technology Work? What Can a Blockchain Do? What is a Distributed Ledger? How Do I Use Ethereum?
What is a Decentralized Application? How Do Smart Contracts Work? Which option would you choose? Sure, you might argue bitcoin is newer and flashier, and that it has arguably more utility in the digital era than gold. But, gold has the indisputable track record, having been a cherished store of value for thousands of years across human civilizations. However, bitcoin’s traits have led to those backing the cryptocurrency to believe it could potentially unseat gold over the long haul.
If we think about the qualities that make gold a respected ‘money’ or store of value, bitcoin is actually superior in many regards. A well-known characteristic about bitcoin is that it’s on a disinflationary supply schedule. While many people think of gold as being the same, gold is actually a sneakily inflationary asset,” said Chris Burniske, blockchain products lead with ARK Investment Management. If you were to ask people what gold’s supply schedule looks like over time, they probably wouldn’t draw you something that looks like an exponential curve. With gold being sneakily inflationary, it’s not set up to preserve value in the way that bitcoin is. Such characteristics, in theory, serve to increase bitcoin’s future utility as a means of account, exchange and storing value. They also suggest that bitcoin’s value, usefulness and importance to society will only continue to grow as commerce becomes more digitized.
The clear advantages that gold has over bitcoin are trust and reliability, according to those surveyed for this article. However, a change in consumer preferences, new technological disruption or a crackdown by a government could easily kick bitcoin to the end of the bench. Gold has something very important that bitcoin lacks: a more than 1,000-year history of being a decent store of value. This is very important for trust and people’s willingness to store value in that particular asset,” said Bogart. Gold has also proven itself to be of value even when governments attempt to restrict its usage or outlaw it completely.
This happened in 1933, when President Franklin D Roosevelt implemented measures to prohibit and criminalize its possession in the US. For more than 5,000 years gold and silver have been tried-and-true money. They’ve lasted basically the duration of organized civilization,” said Dave Kranzler of Investment Research Dynamics. In this light, Kranzler was keen to highlight bitcoin’s ‘counterparty risk’.
Gold’s advantage over bitcoin is that it’s not dependent on the operation of the internet, thus affording it a degree of protection from heavy-handed regimes, he said. We’ve seen democracies come and go, but totalitarianism always seems to creep back in. And when that happens, the government controls everything. Gold has also proven itself immune to technological disruption. According to Burniske, while bitcoin has generated significant cultural cachet, it remains at the bleeding edge and could still be dethroned relatively easily.