Both precious metal gold and Bitcoin are two assets that are independent of the government. Furthermore, both gold and Bitcoin are finite assets. Therefore, the prices of these two assets will appreciate or depreciate according to their demand and supply. Since Bitcoin has been providing excellent returns under the circumstances of regulatory uncertainty, there is still no conclusion on whether gold will lose its luster in the competition with Bitcoin.
The similarities between the two are limited digital assets. In terms of scarcity, Bitcoin is similar to gold. Unlike fiat currency, fiat currency can depreciate in bank deposits due to government-controlled inflation. Bitcoin and gold are independent of the government.
But Bitcoin has some advantages over Gold. Vinshu Gupta, founder, and director of Nonceblox Blockchain Studio said: “Gold has long been a hedge against inflation. It may be stolen, stored, and usually needs to be maintained. Investors have begun to view Bitcoin as the future. Mining through Bitcoin ASIC miner is one of the ways to obtain Bitcoin. ASIC chips are not only used for mining, also have a wider range of applications. Bitcoin is purely decentralized, there are no storage or maintenance issues, and it will not be stolen. Just call it a hedge. It may not be completely fair; I would rather call it the most profitable asset on the surface of Earth and Mars.”
When asked whether Bitcoin or gold is the best option for hedging inflation, SAG Infotech MD Amit Gupta said: “Many institutional investors seem to be turning to Bitcoin, and it is conceivable to see it as a better investment option than gold. Especially in terms of hedging inflation. In April, the cryptocurrency trading platform Coinbase reported in its first quarter that the company had conducted transactions worth US$335 billion in the quarter, of which more than US$215 billion came from 8,000 institutional investors. Amit Gupta also said that everyone is encouraged to invest in Bitcoin and other similar cryptocurrencies.
In fact, in the face of anti-inflation, Bitcoin has a higher voice than gold mainly because Bitcoin has the following four characteristics. These characteristics make Bitcoin not only similar to gold but also make Bitcoin a better anti-inflation asset than gold:
1. Rare: There are only 21 million Bitcoins in total, and no one can increase the number. This means that no government can use various channels to control it or forge it. No one will create more viable gold. The scarcity of gold is constantly changing, depending on how much you pay to find it.
2. Durability: Bitcoin and gold are almost both very durable. As long as the Internet is still running, Bitcoin will be used. It can be traced back a long time, and gold has been used to make jewelry, trade, etc.
3. Severability: Bitcoin can be divided into individual satoshis; 100,000,000 Satoshis constitute 1 BTC. Although gold can be minted in smaller denominations, it is not so easy or so precise to divide.
4. Difficult to counterfeit: Bitcoin and gold cannot be counterfeited or copied. Bitcoin is easy to identify and cannot be forged through other channels. Gold is easy to identify, but its purity must be tested in some cases.
However, it is also necessary to be vigilant that Bitcoin is an unregulated asset class that any sovereign government does not support. As a result, these digital currencies have more significant risks and become increasingly volatile. In addition, Bitcoin does not have enough historical support to establish a trustworthy relationship between it and inflation in the long run.
