Bitcoin vs Gold: Pros and cons
Gold Cons
Gold is expensive to store securely. Bitcoin is not.
Gold is very expensive and risky to transport securely in significant amounts. Bitcoin is not.
Gold can be detected and confiscated. Bitcoin cannot.
Gold's supply is flexible. It increases when prices increase, as more miners mine. Bitcoin's supply is not.
Gold's supply is theoretically infinite. Asteroids contain gold. Bitcoin's is not.
Gold is subject to counterfeiting. There is a lot of gold-coated tungsten in circulation; it requires special equipment and knowledge to be able to detect it. Bitcoin is not subject to counterfeiting.
Gold’s Elastic Supply Growth
Gold has been a realiable store of value because of its scarcity and historically low annual supply growth of 1-2% a year.
However. Gold’s supply is not impervious to its demand.
If, hypothetically, gold went to $100,000/oz tomorrow (up more than 50x overnight), we can be sure enormous resources would immediately shift to gold mining, and the miners would find some way, somehow, to accelerate its supply growth, driving its value down.
Bitcoin’s Inelastic Supply
In contrast, there will only ever be 21 million Bitcoin. Bitcoin’s annual supply growth, which asymptotically approaches zero over time, is now down to about 1%, on par with the historical annual growth in the supply of gold.
Unlike gold, even amidst periods of surging demand for Bitcoin, Bitcoin miners have no ability to mine Bitcoin faster, making unexpected inflation impossible. Forever…
Bitcoin Pros
Bitcoin can be sent over the Internet. Gold cannot.
Bitcoin can be spent cheaply, instantly and freely over the internet in a borderless way. Gold cannot.
Gold as Storage
It sounds silly, but realistically looking at it gold is mostly used to be stored away and left for long periods of time.
The price of gold therefore mostly depends on the reasons people want something to be stored away. (absent its niche uses in industry, jewellery, etc.)
Bitcoin is great for storing it, but it critically has the added functionality of being easily spendable in a borderless way. The world has never experienced such an asset before.
Gold is a rock – it never changes. Bitcoin is programmable - it can improve on all dimensions.
This means that it can change, new things can be developed on top that further give it value and network effect.
Bitcoin has unlimited upside.
