Bitcoin is referred to as “digital gold” because it has all the benefits of gold without any of its downsides. Bitcoin thus becomes more of a crypto asset than a cryptocurrency. This chart compares gold and bitcoin. Hopefully, this comparison also helps explain bitcoin a little further:
Scarcity:
Scarcity is one of the biggest factors in determining if something will make a good form of money. Gold has always done well as a scarce asset but it still has an inflation rate of around 2% each year due to gold mining. Bitcoin has solved the issue of inflation and scarcity by limiting the number of Bitcoins in the network. There can only ever be 21 million Bitcoins created. Once that number is reached, that’s it, forever. There is no way to create any more new bitcoins. This feature alone solves the ongoing issue of inflation. *Remember inflation is one of the key reasons for currency collapse*
Transactable:
One of the biggest issues with Gold is that it is not easily transacted. Gold needs to be melted down or shaved off into smaller pieces to transact with, while on the other hand, you can make a transaction of any size from anywhere in the world with just a click of a button when using Bitcoin.
Secure:
Contrary to popular belief, Bitcoin is extremely secure. Many of the horror stories you might see on the News about crypto hacks or scams largely involve human error. The Bitcoin network itself is unhackable. There is a popular saying in the crypto space: “Crypto doesn’t get hacked, people do.” Anyone can fall victim to a scam if they don’t navigate the crypto space safely. However, our current financial system also struggles with phishing attacks and hacks on a much larger scale. I’m sure some of you know someone personally that has struggled with this.
Portable:
Gold or metal coins are very heavy, making them difficult to transport. This is one reason for the creation of paper money, like the dollar. Bitcoin is very portable because it is digital and can be stored directly on a smartphone.
Divisible:
Gold is moderately divisible. It can be broken down into grams and ounces for trade. Bitcoin on the other hand is highly divisible. You don’t have to trade Bitcoin in increments of 1 whole Bitcoin; it can be broken down into 100 million smaller units called a Satoshi. This is similar to how a dollar can be broken down into cents.
Bitcoin is still trying to find its way in this ever-changing world. This young technology still has some growing pains to go through before it can reach its goal of worldwide adoption. Cryptocurrencies as a whole have the capability to revolutionize the financial system as we know it. Will you be ready when that time comes? If you are reading this, you are already ahead of the curve. It all starts with education.