Is Bitcoin Digital Gold?
You may hear Bitcoin being referred to as Digital Gold and a Store of Value comparable to Gold. In order to understand why this may be the case, the best way is to compare the Traits of Money. Let’s understand how the properties of Bitcoin compare to Gold and also to Fiat Currency.
Value Propositions of Bitcoin
From the Traits listed above, you can conclude that Bitcoin has a similar profile to Gold, but yet, it improves upon Gold’s strengths. Bitcoin was created on the Blockchain, programmed as superior money running on a decentralized computer network. As there is no entity in charge of Bitcoin, it follows the original rules of the network protocol. With a set maximum supply of 21 Million coins, it is scarce, with a slow and steady issuance. One Bitcoin can be easily divided into Satoshis, and can be exchanged very cheaply. Being a digital money, it is easily portable and can be taken across borders and around the globe. Bitcoin can be safely self custodied, unlike Gold, which needs a secure physical space to be stored.
The Bitcoin Blockchain network used to store and transfer coins is regarded as the most secure payment network in the World. The network has tens of thousands of nodes spread around the World which constantly check transactions. There are millions of mining machines providing an impassable computational line of defense. To date, Bitcoin has proven to be impossible to forge or hack. It does not have competition that comes close because no other cryptocurrency can provide this level of security and the store of value.
The Current Pitfalls of Bitcoin
If there were pitfalls with Bitcoin, it would be that it was only invented in the 21st Century and has yet to be time tested. Another barrier is that in order to scale, to support the use of the World's population, Layer 2 solutions must be developed to process transactions at appropriate speeds.
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