Many people over the years have referred to Bitcoin as being digital gold. This is an interesting concept, but it’s important to actually compare it to gold and its storage value. It’s also important to take into account the risk of inflation so that a solid overall picture can be obtained.
Majority Value
An asset cannot be seen as a way to store wealth if people do not think that it is valuable. 10 years ago, people didn’t think that Bitcoin had much potential, and they also did not see it being a currency that would be around for years to come. Now, however, the general opinion is changing, and people who have not yet invested in cryptocurrency are now starting to see the benefits it has to offer. This is a real turning point, showing that it could be an excellent way to store wealth over long periods of time.
Inflation Protection
People tend to buy gold as it gives them a strong hedge against inflation. Some fear the fiat currency they are currently investing in, so they convert it into gold. This gives them some degree of protection against inflationary charges. Bitcoin, although does fluctuate more than gold, has way more potential for future stability and is not likely to be impacted by economic downturns as much as gold.
Portability
Bitcoin has a clear advantage over gold in this instance. Bitcoin is not a physical asset. It can be sent or received from anywhere in the world. The only thing you need is an internet connection. It is also disconnected from the banking system, so it is easy to send, receive and convert. Gold has to be stored somewhere, physically. If you do not hold the gold you have, you cannot use it at will. Historically, governments have attempted to confiscate gold that is privately owned. At one point, private citizens in the US were not legally allowed to hold and own gold for more than 41 years. To block Bitcoin, the government would need to block internet access, which is not a likely scenario.
Potential Growth
In the last 20 years alone, gold has gone from being worth $430 per ounce in 1999 to being worth $1800 in 2022. If you invested in gold during this time, your money would have tripled. Bitcoin has shown an unbelievable amount of growth in its short time. It appeared on the market in 2009 and it was worth a fraction of a cent. With every halving, the price exploded. Between 2015 and 2017, it experienced a growth rate of 9,000%. It then peaked at $20,000. Although Bitcoin dropped after every high, it’s important to know that the new low was always higher than the previous. This just goes to show that Bitcoin has the potential to be worth way more than gold in terms of store value, especially over the long term.
All in all, Bitcoin has shown a tremendous amount of growth when compared to gold. It is more portable, is now seen as having a majority value and it has inflation protection, which gives it a strong case for stored value.
