Why Bitcoin is better than gold? Explain the four examples
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Many economists and analysts often compare Bitcoin with gold. They reflect on the advantages of assets as a means of savings, liquidity and payment of goods and services. Understand what the similarities and differences from the first cryptocurrency to precious metal, which was the main store of value in the last two thousand years. Also try to answer the question — what asset is best.
theStandard
Gold is probably the first decentralized currency asset which has value, but does not fall under the control of state authorities. This precious metal was a sign of wealth and one of the most popular means of payment for two thousand years. Gold has its value because of its mining efforts, and gold supplies are limited. At the same time, Fiat money can be printed quickly and without significant cost.
theLimited production
The Assets are similar in that they both produced. However, the number of bitcoins in circulation is strictly limited to 21 million coins. As accurately assess the reserves of gold is quite hard — if one day geologists discover new large deposits, its price will be significantly reduced. Even the presence of one so far unknown deposits will lead to a sharp depreciation of the gold — but it can't happen with Bitcoin.
thesafe and Easy transfers
Although gold is globally recognized currency, it is almost impossible to use for international transfers and trade. Measure the weight of the gold ounce, which at the time of this writing, costs about 1,2 thousand dollars. But imagine that you need to send to another country a billion dollars in gold is about 0.25 tons of the precious metal, which need to be transported and to ensure their safety on the road. This operation will require enormous efforts and costs for customs, shipping and security. In addition, you will need a lot of time to gold crossed international borders.
Compare that to where a billion dollars can be transmitted in digital form anywhere in the world instantly for a small fee and without any additional cost. Such transactions are not constrained by the rules and laws in force in a certain jurisdiction cannot be stolen on the way to the recipient.
In addition, Bitcoin is protected by cryptography and have never been hacked, despite thousands of attempts of hackers. Such safety standards do not allow to compromise the wallet of the recipient or sender, even using the most powerful supercomputer. Bitcoin transactions are completed instantly and leave no trace, except for the information about it in the blockchain. At the same time, transaction in gold is very noticeable, as the precious metal is physically transferred from the sender to the receiver.
theLiquidity
Finally, gold has a huge paper market on the COMEX where the paper equivalent can be purchased for subsequent exchange of the physical commodity. However, COMEX sold by less than one percent of the amount of all the securities tied to gold — and the more they release the exchange, the lower the price of the precious metal.
Bitcoin can't be in this situation — due to its digital nature the first cryptocurrency doesn't need the papers. The only reason why financiers issue securities to gold, is that physically trade them is difficult and inconvenient.
Bitcoin, unlike gold, it is easy to convert into the currency of the country in which is the owner of the coins. In addition, buyer for digital currency is much easier to find than a buyer for the precious metal.
Assume that people will ever abandon the calculations in Fiat currencies and will face a choice — to use for calculations, Bitcoin or gold. Given the above, it becomes clear that Bitcoin is in a much better position for international trade and Finance in comparison with gold.
What do you think? Waiting on the discussion .
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