The debate between gold bugs and Bitcoiners over each respective investment’s store value is as old as Bitcoin. Indeed, gold has been considered valuable by countless cultures throughout human history, but its use cases have changed as the marketplace has changed. Where gold has lost its store value in a market application, Bitcoin has filled the gap.

Similarities and differences

Gold bugs like Peter Schiff, the chief economist at Europac, have argued for years that gold has tangible uses, such as in medical supplies and phone parts. In contrast, Bitcoin has no ancillary benefits beyond a currency unit, yet many Bitcoiners point out that gold’s tangible value is irrelevant when it comes to global money.

Gold and Bitcoin have similarities, which is one thing that fuels the argument. They resist counterfeiting, and both can be durable, portable, divisible, and accepted in the marketplace; gold has been for millennia. 

One significant difference is the scarcity of each of these assets. Gold mining companies mine 2,500 - 3,000 tons more gold annually than is predicted, meaning gold is not the scarce commodity it is sold as. In contrast, Bitcoin is programmatically scarce, capped at 21 million.

While gold coins could be used in grocery stores or to purchase a vehicle, gold is not easy or efficient to send to another person, bank account, or liquidate a hard asset into gold. To move $1 million of gold from a bank in San Francisco to a bank in Hong Kong would take large sums of money and time to transact, ship, and deposit. Bitcoin, however, can be transferred, sent, and deposited in a few minutes or hours.

Gold vs. Bitcoin as monetary units

Gold’s monetary premium and metallic durability give the precious metal its value; if those were to disappear, its price would collapse. Moreover, if gold were to become the global unit of account, as gold bugs want it to, the precious metal would be used even less for nonmonetary purposes due to its cost limitations.  

From a monetary unit perspective, Bitcoiners and gold bugs agree that a gold-based system could encourage economic responsibility and limit inflation. Indeed, gold was used for this purpose until eliminated from backing the dollar in 1971 by President Nixon. 

Importance of ledgers in modern commerce

While gold and Bitcoin are similar, Bitcoin’s ledger is superior to any other currency. Traditional financial ledgers are the backbone of modern commerce. We rely on the ledgers of credit card companies, banks, and central banks. Most cash is ledger-based, with only 50.3 billion physical dollars circulating worldwide as of December 31, 2020.

Bitcoin provides an elegant solution to both the monetary unit and the ledger. The BTC unit offers all the characteristics of sound money. Bitcoin transactions can be balanced anywhere globally on Bitcoin’s decentralized network. 

Gold bugs and Bitcoiners debate

In the end, gold bugs and Bitcoiners share many beliefs about monetary responsibility, while they differ in their views on the superiority of their chosen monetary units. Apart from money, Gold’s commodity use cases are irrelevant to global capital, and its ledger system is significantly inferior to Bitcoin’s ledger. Investors looking for good investment opportunities should consider Bitcoin for their portfolios.