Bitcoin is better than Gold 👑
💡 Daily Reminder: Stay humble, stack sats
Bitcoiners,
For thousands of years, gold was considered the ultimate form of sound money until a new competitor emerged: Bitcoin.
Here is a comparative analysis of bitcoin and gold so you can better understand the two asset classes and make predictions about which will win out as the premiere sound money asset in the future.
Sound Money Characteristics
There are 6 key characteristics of sound money:
Durability - the ability of a good to retain its original state over time.
Portability - the ability to be easily moved around.
Divisibility - the ability to be broken into smaller amounts without losing value.
Fungibility - the ability to be substituted or interchanged with anything identical in type, nature, form, value, or function.
Scarcity - a limited supply to ensure that its purchasing power will remain stable.
Acceptability - any good that is widely accepted as final payment.
Gold as Sound Money
Gold's characteristics resemble that of sound money compared to any other metal or commodity in general.
Gold is chemically inert, meaning that it cannot be tarnished or subjected to rust and retains its state over time. Smaller amounts can be easily moved around but there is a high price in both moving and storing large amounts of gold. Gold is divisible into smaller pieces, although there is an economic cost to producing smaller amounts. Gold is highly fungible because a pure bar of gold is equal to another pure bar equal to the same weight. Gold's inflation rate fluctuates as more is mined but it typically stays below 2% per year. Lastly, gold is universally accepted as a means of payment across the world.
Bitcoin as Sound Money
Bitcoin's characteristics as sound money eclipse that of gold.
Bitcoin is purely information, so as long as its blockchain is saved on at least one computer in the world, it will remain durable. Bitcoin travels across the world at the speed of light without a transportation cost making it highly portable. Bitcoin can be broken into 100,000,000 smaller pieces called Satoshis without compromising its value. Bitcoin's fungibility is strong, however, there is a case where certain bitcoin UTXOs can be blacklisted by governments and not accepted by some exchanges. There will only ever be 21 million bitcoin, making it the scarcest asset on the planet. Lastly, bitcoin is not universally accepted, however, is growing in exponential adoption every day as the asset class matures.
Bitcoin's sound money characteristics are better than gold in every single aspect besides acceptability today. If Bitcoin continues universal adoption growth over this decade, expect it to replace gold as sound money and take a large portion of gold's $11 trillion dollar market capitalization. If bitcoin were to take half of the gold market, a single bitcoin would be worth more than $300,000.
Happy Tuesday,
-Pod
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Eric Podwojski
Founder, Bitcoin EDU
Twitter: @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.
