Is it Right to Compare Gold and Bitcoin?

There are certainly some similarities with gold, but it is arguable when it comes to any comparison between these two. In the very beginning, gold was used as a universal method of payment for goods and services provided for the customers. Globally, there is a finite amount of gold. We can see that it is for sure very similar to the gold, since there is maximum of Bitcoin and it is about 21 million of Bitcoin units.

Gold had few very big limitations, it is heavy and not very handy when it comes to the transaction – it is hard to return exact change in gold, for an example. That and the fact that there is a finite amount of gold, were the main reasons for the development of currencies issued by the states, which originally had gold standard. In 1971. things have changed, when Richard Nixon cancelled gold background of the United States Dollar, which granted real value. That was the turning point for global economy since the amount of money in flow became unlimited. Since then, there is more and more of fiat currency on the market which diminishes the actual value and is the reason why prices go up every year, although with the development of technology it is more logical to go down.

That is one of the ways in which we could compare Bitcoin and gold. One of the reasons for creating this currency was the way to again have an independent method of exchanging value without control of any government’s central institution. Still, the Bitcoin is in constant comparison to other crypto and fiat currencies which makes it difficult to determine the future and will all other currencies become obsolete. That would put Bitcoin in the position of gold as an only universal method of payment. Only in that situation we would be able to compare gold and Bitcoin.

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