Bitcoin Versus Gold

Why Bitcoin?  Bitcoin Versus Gold

The most trusted form of real money has been found over the centuries in the form of gold; a metal that does not corrode, is naturally scarce, and succeeds in meeting all the needs of real money, being a medium of exchange and a unit of account, as well as being portable, durable, divisible, and fungible.
Because gold enjoys all of these attributes, it needs no approval from any authority for it to be recognized as being worth something. This, of course, is precisely why it really is worth something. The key quality of gold that made it such an excellent economic standard is its freedom to have value regardless of what authorities decide it should be worth. Gold has always been able to find its own value via the free market and thus has remained sound money through the ages.
Historically, the requirement to remain on a gold standard successfully restrained spending due to the natural scarcity of the metal, much to the chagrin of economists like Keynes and numerous other parties who instead proposed unfettered spending behavior in hopes of “stimulating” the economy.
The gold standard’s system of monetary restraint endured throughout much of Europe and the United States from the mid-1800’s until the 1930’s, when it was abandoned as the world went to war, encouraging a huge spending influx that a gold standard, had it remained, would have rendered impossible.
Essentially, the gold standard meant that a nation’s currency was worth a price relative to gold, which had to be held in reserve in equivalent proportions to the given currency. So if the United States set the price of an ounce of gold at $500, for example, each dollar would be equivalent to 1/500th of an ounce of gold. This meant that a country could not simply print their way to spending money since they had to have an equivalent quantity of gold in reserve. Taxes would instead have to be levied to raise necessary funds, which wouldn’t go over so well if the citizenry felt the taxes were spent on wasteful activities.
Of course, this really put a damper on the ability to spend beyond the means of a nation’s budget, which is a big part of why the standard was abandoned.
The enormous monetary paradigm shift away from the gold standard to fiat currencies allowed for massively greater spending on wars and perpetual deficit spending for government programs. Since this pivotal change in global economic policy, countries now rely strictly on fiat currency and its relative value as decreed by governing powers, along with numerous meetings and manipulative tools designed to keep currencies somewhat in balance relative to each other.
To this day, gold is still held in reserve by many countries, despite the lack of a gold standard. So even though countries do not adhere to a gold standard, they remain aware of its obvious value and necessity for maintaining some sort of economic safety net for the world’s economies.

Is Bitcoin really a better store of value than gold?
During a recent gold spike, a huge amount of money was infused into the trusty yellow metal. The price of gold climbed just a few percent, but this seemingly small advance required more money to enter the gold market than the collective value of the entire crypto market.
So while Bitcoin might enjoy fantastic rallies of its own, mathematically, more money gets moved into gold than Bitcoin during a rally — by a long shot — due to its much larger market capitalization.
Gold is a huge market, holding around 8 trillion dollars in value globally. Tons of people trust their money to be stored safely in gold, more so than just about any other asset. So what makes crypto believers think Bitcoin could possibly compete as a better store of value?
First, let’s consider a few problems with gold, beginning with a big one: fake gold.
Gold has been faked on a number of occasions, and it isn’t easy to spot a fake either. Tungsten fakes have put a serious dent in the trustworthiness of long-respected gold mints such as the Royal Canadian Mint. William Rentz, a professor and expert on the topic of equity and investments, points out the greater implications of the discovery of fake gold wafers, “A currency counterfeiter doesn’t make just one fake $50 bill,” he said. “They make a whole lot of them. So I would suspect this might just be the tip of the iceberg.”