Gold Vs Bitcoin

Digital gold has similar properties to its physical counterpart - but also some striking differences.

Which is better, digital or physical gold?

Bitcoin is touted as digital gold, or gold 2.0. Let's take a look at the vital statistics for the two assets, and see how they measure up against each other.

Supply

On Planet Earth alone, the World Gold Council estimates there are 201,296 tonnes of gold above ground, and a further 53,000 tonnes yet to be mined. (There may be more; these are just the identified reserves.)

Gold supply statistics
Around 80% of identified gold reserves have already been mined.

What about further afield? Gold is a relatively scarce element, but the universe is a very, very big place. The sun alone likely contains almost 2.5 trillion tons of gold, and there's likely to be a more on other planets and hidden in asteroids. It's impossible to know how much, though.

As for Bitcoin, there will only ever be 21 million BTC, and that's an end to the matter.

Emission

Bitcoin has a known and transparent emission schedule. Of the 21 million total BTC that will ever exist, over 19.6 million have already been mined, or around 91%. We know that the remaining coins will be mined at an algorithmically pre-determined rate over the coming 100+ years, with supply cut at the regular four-yearly halvings.

As a rough estimate, 20% of gold's supply is yet to be mined, and—unlike Bitcoin—there is no schedule for how fast that will happen. Gold mining is impacted by price and how economical it is to extract reserves. Bitcoin's remaining supply is emitted at the known rate, no matter what.

Track Record

Bitcoin can't compete with gold in this area. It has been used as a store of value and as currency for 5,000 years. Bitcoin, by contrast, has been around for only 15 years.

Gold will always have that advantage of longevity. However, it's a poor argument to make a decision about ownership, since no matter how promising Bitcoin is, if you denied it a place in your portfolio on these grounds you'd have to wait thousands of years before anything changed. Moreover, in the digital age, things move fast. Very fast. Hang around even a few years, let along centuries or millennia, and you'll have missed the opportunity for staggering growth. (You'll also be dead, but that's another matter.)

Performance

On the same topic, Bitcoin has only been around 15 years, but what a decade and a half that has been.

It was launched in 2009, at which point it has zero value. It hit dollar parity in 2011, passed $100 two years later in 2013, and $10,000 towards the end of 2017. $50,000 came early in 2021.

Gold has a reputation as an inflation hedge, and over the course of history it might have played that role. But in recent years, it has hardly been the store of value it's supposed to be.

Gold had a good run into 2011, when the price topped $1,900, but since then it has barely managed to tread water. Following that high, it lost almost half its value. It recently made a new all-time high, but is back at the $2,000 level now.

Gold is too mature an asset to experience the same rapid appreciation as bitcoin. Even now, Bitcoin has a total market cap of under $1 trillion, against gold's $11 trillion. Bitcoin has plenty of room for growth. Achieving even half of gold's total value would see prices around $300,000.

Conclusion

It's still too early in Bitcoin's life to draw any final conclusions about the role it will play in the global financial system, though the picture is becoming clearer. Bitcoin has always been touted as an inflation hedge, due to its rigidly fixed supply. As currency printing and debasement continues unchecked, it appears to be outperforming gold by some margin.


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