Is Bitcoin Better Than Gold?

Time”digital gold” is often used to describe Bitcoin because of its similar properties to gold, namely limited supply, mineral hardness, and inflation protection (inflation) However, Bitcoin and gold have differences such as natural assets, liquidity, and history as an investment instrument. Bitcoin has emerged as a popular digital asset and has attracted the interest of many as a form of investment. Some argue that Bitcoin has the potential to act as a hedge against inflation, similar to gold’s traditional role.

Will Bitcoin Replace Gold as a Shield Against Inflation?

One of the arguments supporting the view that Bitcoin can act as a hedge against inflation is its limited supply. Bitcoin is designed in such a way that only a maximum of 21 million coins will exist in the world. This means that there can be no inflation in terms of adding to the unlimited supply of Bitcoins. On the other hand, gold is also considered a hedge against inflation because the supply of gold in the world is also limited. Demand for gold tends to increase over time, but the supply of newly mined gold is stable. However, it should be noted that Bitcoin is still considered a new and volatile asset. The value of Bitcoin can experience large swings in a short period of time, which can be a challenge for those looking for stability as a hedge against inflation.

In addition, gold’s role as a hedge has been established for centuries and is still widely recognized in financial markets. Gold also has physical uses in the industry and jewelry, which provides additional value that is different from Bitcoin.

Let’s consider the possible benefits and risks of using Bitcoin in a situation where the stability of the government is disturbed and there is inflation of the currency in an effort to maintain power. Gold, which is more liquid when traded in large quantities, can actually be less practical in smaller transactions. And even if you sell a large amount of gold directly for fiat, what you get is inflated fiat. Let’s compare it to Bitcoin:

Bitcoins can be divided into smaller parts easily.

There is no third party risk. The private key is the key to accessing your money. You will always have access to your funds as long as you have access to your private key and an internet connection. When buying gold bars, the transaction will be recorded by the government financial institution, so that the government can know the amount of your gold. The government can take your property.

Bitcoins are easy to store. There is no need to pay a safe deposit fee.

Bitcoins are easy to transfer. Bitcoin allows its users to make transactions around the world very quickly and with very low or almost no fees. In addition, there is no capital control policy as in some countries, for example in China.

Here are some arguments often made by skeptics (skeptics):

1. The price of Bitcoin is very volatile. Generally, for property to be considered as “store of value“, the value of these assets must be stable or tend to stabilize over time. The high volatility of Bitcoin makes it difficult for the head of risk management in a bank or corporate fund to authorize the adoption of Bitcoin in banking operations. With current capital of the Bitcoin market, this argument is valid. The market capitalization of gold ($13.155 trillion) is now 2380% greater than that of Bitcoin ($552.65 billion). However, as the market cap of Bitcoin grows this volatility will decrease.