Over the last 4,000 years, world has recognized gold as a store of value. From being used to preserve the wealth of Egyptian Pharaohs through their afterlife, to lying in bars or coins in modern vaults, it has been the ‘sound money’ for centuries.
But there is a new asset in town – Bitcoin. Many even call it Digital Gold. But I think bitcoin is better than gold. Why? I have pointed out 8 main points.
Summary:
Dan Held in his newsletter shared a brilliant chart on Bitcoin, Gold and Fiat (₹, $)
1. Verifiable
Gold requires expensive machines to validate its purity. So you have to trust someone else with that and consider they aren’t lying. Gold is passed through many hands which makes it less trustable. As we regularly see even in India, fake gold is slowly entering the gold market. Even according to a Reuters report, % of fake gold in the market is continuously increasing.
To verify your bitcoin, you can just run a full node or even check your BTC transaction on bitcoin’s blockchain through any online block explorer like OXT.me.
2. Portable
Gold is extremely heavy which is hard to physically move. Germany recently repatriated & transferred their 743 ton gold reserves ($31 Billion at the time) from Paris and NYC which took 5 years at a cost of $9.3 Million. Literally, 1 large transaction of gold takes 5 years, while the same can be done in bitcoin in just 60 mins.
I can hold ₹12,000 crores worth of bitcoin in my pocket. Not at all possible in gold. (Check out the first picture at the top in this piece)
3. Divisible
Gold can be broken down into smaller pieces, but you can’t do it effectively without expensive machines and an experienced person in gold cutting. If you cut your 10g gold coin in your home, how you will know the worth of each piece.
1 Bitcoin = 100 million Satoshi. Basically, bitcoin is divisible down to 100,000,000 pieces which are called “Satoshis” or Sats. This can be easily verified by a bitcoin full node from your home. Also, I can send you 0.00000001 BTC through my Samourai Wallet in secs and you will receive it in any corner of the world with equal trust and security without a 3rd party/person.
4. Scarcity
For 1000s of years, people are mining gold. Though we can’t perfectly audit to know how much gold has been mined, and we don’t know how much gold will be mined in future. But we do know that there are massive amounts of gold in the ocean and on asteroids. Startups and Governments are actively working on trying Asteroid Mining. Just one asteroid Psyche 16, has $10,000 quadrillion worth of precious metals which is enough to crash the entire world gold market and NASA is trying to get there. Basically, gold’s predictable scarcity is very poor.
In Bitcoin, we have a fixed supply of 21,000,000 that anyone can audit anytime from their own computer. Though I believe that fixed supply is bad for bitcoin & a tail emission would be better but that discussion I will keep it for a different article. In short – if gold is scarce, bitcoin is extremely scarce. Below is the piece of code that limits total bitcoins to 21 million
5. Censorship
Storing gold in your home is extremely risky as it could be stolen anytime. For high net worth individuals, it gets even more difficult as they need vaults with security guards to protect their net worth. Transporting it is another nightmare, which I talked about in the 2nd point above.
And in a world where Government wants more and more control, they can easily seize your gold anytime. Happened many times in many countries and will happen again. In recent past happened in Venezuela, currently happening in Myanmar and also Turkey’s President Tayyip Erdogan is asking Turkish citizens to convert forex, gold holdings as their fiat currency is crashing.
But bitcoin can be safely secured using a small ₹10,000 hardware wallet or even in your Samourai Wallet for free (better if you run your own full node). You just need to memorize your 12-words (seed phrase) and a password (BIP39 passphrase). Basically, 13 words in total will secure your bitcoin from your ‘friend’ or your government.
6. Storage
Me, you, everyone knows how problematic is it to store gold in your home. That’s why alternatives like bank lockers (owned by banks), Digital Gold (owned by apps), Gold Bonds (owned by Govt) and Gold ETFs (owned by the asset management company) are gaining popularity, none of which are owned by you thus centralizing gold more and more in the hands of few. As it is always said, if you can’t touch your gold – it is not yours.
High Net Worth Individuals are forced to store their gold in multiple countries to safeguard it from a single government and also they can move anytime anywhere & can access their net worth. This comes with a lot of cost and risk.
Literally, the same thing can be done with a mobile app in the case of bitcoin. Doesn’t matter how much BTC you store, storage costs and risk doesn’t go up. Just remember the 13 words and unlock your net worth anywhere in the world.
The intrinsic value of Bitcoin is Financial Freedom.
– SIR
7. Programmable
You can’t innovate anything in the gold world. What it did 1000 years ago, it does the same thing today. It doesn’t fix any new problems occurring in the modern world.
We live in an age of code and control. Government, Big Tech and others are trying to ban & cancel everyone they can’t control. Bitcoin is code, bitcoin is programmable and it has the ability to solve many of these new problems. You can innovate as much as you want on top of the bitcoin network. Just like Lightning – a layer 1 solution, which makes BTC transactions as fast as India’s UPI. Sphinx Chat – a chat app running on top of bitcoin, thus making my messages end-to-end encrypted and no one can ban or censor your speech. And there are 100s of other apps & solutions being built on the bitcoin protocol.
8. National Security
Gold is a higher national security threat than bitcoin, specifically for India. Most of the gold produced in the world is produced by 2 nations – China and Russia, both of which are led by dictators. China has held its top position for more than a decade.
Fiat currency like ₹ and $ are devaluing at a faster rate than ever. Every country and its central banks know this, that’s why all of them are stacking gold. Both China and Russia are increasing their gold reserves at a shocking pace – mainly due to US sanctions. So gold mined by these countries will be mostly stacked by themselves; countries like India can’t own it even if they want it.
Also in a scenario of global unrest, if both of them or even one decides to cut off their gold supply to other countries – India will be in serious danger to fund its army and stabilize Indian economy. Indian central bank will be forced to hold only US Dollar ($) which has lost 90% of its purchasing power in the last few decades.
Gold mining isn’t a fair competition as you can only mine gold in few specific places. Even if India wants to be sovereign and mine its own gold, it can’t as their aren’t any gold reserve. But bitcoin fixes this. Anyone anywhere in the world can start mining bitcoin – it is a level playing field with fair rules & competition.
Others can cut off India from gold, no one can cut off India from bitcoin.
Conclusion
It’s not that gold is bad, it’s just that bitcoin is better. Gold has served as sound money for the last 4000+ years with some flaws; bitcoin fixes some of these flaws. If gold is an app, bitcoin is the updated version of that app.
Please don’t take this as investment advice; I am in no way a certified investment advisor. This is just a one to one talk about helping and motivating you to start your bitcoin journey as fast and with as little money as possible.
As always, never forget our life mantra: Save Invest Repeat. And if you have any questions, please send them at @InvestRepeat. Also, you can join my private Telegram channel (Username: InvestRepeat).
Your man,
SIR
