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Bitcoin vs Gold
All hail the new king
Over the last 4,000 years, gold has reigned as the world recognized store of value. From being used to preserve the wealth of Egyptian Pharaohs through the afterlife, to lying in bars in modern vaults, it has been the sound money that civilization was built on.
Up until this moment.
There is a new money in town, Bitcoin.
Bitcoin is a new species of money.
The code of life is written into an organism at its inception. Satoshi carefully architected Bitcoin’s DNA, or genetic code (computer code), to be the best money ever created. We can think of Bitcoin’s code as representing instructions that have been written to incentivize the organization and coordination of cellular function.
That genetic code manifests itself via traits (characteristics of an organism) that may or may not be visible.
In biology, a trait/character is a feature of an organism. According to Charles Darwin’s theory of evolution by natural selection, organisms that possess traits that enable them to better adapt to their environment compared with other members of their species will be more likely to survive, reproduce, and pass more of their genes on to the next generation.
Money is no different. Money has traits that enable it to survive and thrive. Bitcoin is a new species that has vastly superior traits to its predecessors.
Below I’ll compare/contrast a few of the traits.
Scarcity: How much of the supply exists, and how much will there be in the future?
With gold, we don’t how much gold has been mined, and we don’t know how much gold will be mined. But we do know that there are massive amounts of gold in the ocean and on asteroids. Just one asteroid, Psyche, has various metals are worth a gargantuan $10,000 quadrillion. As we can easily see, gold’s predictable scarcity is very poor.
With Bitcoin, we have a precise measurement of supply: 21,000,000, that anyone can audit with their home computer.
Verifiability: Can you trust that it’s real?
Gold requires expensive machinery to validate gold to a trustworthy degree (usually ultrasound + other sensors). However, this still comes with verification errors as we saw in China where 83 tons of fake gold bars ($2.8 Billion) that had copper gilded with gold. Other contracts had been made on top of this gold, which led to a series of cascading losses.
Bitcoin’s supply, every transaction ever made, and new transactions, are easily verifiable using a home computer by running a Bitcoin full node.
Divisibility: How small can you make it?
Gold can be broken down into smaller pieces, but they have to be precut before the transaction and are cost prohibitive to verify.
Bitcoin is divisible down to 1/100,000,000 pieces which are called “Satoshis” and as mentioned before, easily verifiable with a home computer.
Portability: Can you move it?
Gold is extremely heavy which is hard to physically move. And it isn’t digital, you can’t transact with it on the internet.
Germany recently repatriated it’s $31 Billion, or 743 ton gold reserves, from Paris and NYC which took 5 years at a cost of $9.3M. The process was insane:
- The gold was likely flown to Frankfurt at substantial cost
- Road transportation was avoided because it would put drivers at rise, and they’re too heavy to be moved in substantial volume
- Lawyers had to pour over contracts to insure that it was covered during the transit (just in case it got lost or stolen). Many insurers only pay out in dollars, rather than the precious metal, potentially leaving the central bank on the hook if the price of gold were to rise between the contract being signed and the bullion arriving safely in the Bundesbank’s vaults
- All of the bars had to be examined by a 5-8 person team which used x-ray machines and other techniques to evaluate the purity
Bitcoin would have taken minimal energy consumption, and 10-60 minutes depending on your confidence in Bitcoin confirmations.
Finally, gold will never exist natively on the internet in a digital format.
Seizureship resistance: Can you store it securely?
Gold has to be stored in large vaults with guards and security equipment. When it is transported, extra insurance has to be taken out, and special security has to be contracted.
Bitcoin can be safely secured using a small $50 hardware device, written on a piece of paper or metal plate, or memorized.
Bitcoin is the apex predator of money.
Bitcoin has been perfectly honed for its environment through its exceptional genetic code and the manifestation of that code in the form of superior traits.
Bitcoin is the apex predator of money, and its existence is the precursor to the extinction of gold.
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