Gold is a precious metal (chemical element AU) used by humans as an exchange medium for thousands of years. It has been used as money since 700 BC. It is estimated that 12,780 tonnes of gold have been mined to date. Bitcoin, on the contrary, is around since 2009. One BTC was worth 0.0001 dollars in June 2009. Fast forward today, October 2017, that one bitcoin is worth more than 6,000 dollars. What happened? JustCryptoNews.com investigates.
Many hardcore Bitcoin supporters often make parallels between the de facto leader of cryptocurrencies and gold. In fact, some in the Bitcoin Core side of the famous bitcoin scaling debate might even like the idea that Bitcoin is the "new gold". Nevertheless, Gold and Bitcoin are different things. Gold is a physical, tangible material, with numerous applications besides use as currency – think jewelry, art, tech gadgets, manufacturing, etc.
On the other hand, Bitcoin… well, it's digital. It is a new form of currency, using cryptography on blockchains to solve the double-spending problem while remaining decentralized. Bitcoin is not tangible, nor can it be used in everyday applications like gold.
Due to its many uses, gold is regarded as a long-term investment and a safe harbor against market volatility. And that’s where similarities with Bitcoin arise. Bitcoins are “mined” as gold (in that bitcoin “miners” work hard to collect bitcoins as a reward) and they are scarce by default (only 21 million of BTC will be ever “mined”).
Given its resemblance with actual gold mining, its fixed supply and increasing adoption by merchants, Bitcoin has had a tremendous growth in recent years. Some question this fast growth hinting Bitcoin is a bubble, but others believe that it could replace gold as a long-term investment. We don’t know for sure whether this will ever happen, and established figures in commodity research believe otherwise. For instance, Goldman Sachs' Jeff Currie is certain that Bitcoin is not a risk to gold.
Nevertheless, one thing is sure: bitcoin is by far the most profitable asset in 2017. And it has been the world’s most performing currency for three consecutive years, despite the very uneven distribution of bitcoins. See below why.
A brief history of Bitcoin vs Gold
Almost six years ago, on February 2011, one bitcoin worth $1. Two years later, in March 2013, one bitcoin had the same value in dollars as one gram of gold. Near the end of 2013, as the bitcoin craze heightened, one bitcoin reached parity with one ounce of gold. But that did not last. When the Mt. Gox filed for bankruptcy on February 2014, bitcoin entered in a turmoil period. During the next year, 2015, bears prevailed in Bitcoin markets, with the cryptocurrency fluctuating between $280 and $600.
The tides for bitcoin were reversed this year, as we witnessed bitcoin rising to the stars. In March, one bitcoin was again on parity with one ounce of gold. In April, the cryptocurrency markets exploded, reaching a market capitalization of 80 billion dollars. Two months later, one bitcoin was worth as two ounces of gold, more than $2,400.
At the moment of writing, one bitcoin worth 5,971 dollars while one ounce of gold $1,273. That’s 1 BTC = 4.69 ounces of gold. No wonder why many believe bitcoin is the gold...
Here’s a very informative diagram that attempts to picture the history of gold vs. bitcoin.