Most people have heard about Bitcoin these days, and even those who still don’t understand how it works might be aware that it’s widely considered to be a kind of “digital gold”. That’s because Bitcoin shares several characteristics with real gold, such as its scarcity, its perceived value and its usefulness as a hedge against economic turbulence. But how does Bitcoin really stack up to gold, and which one is the best investment over the long term? These are pressing questions for many investors and they’re still up for debate, so let’s take a look at some of the established facts and see if we can guess what the future holds for these two iconic stores of value. Scarcity One of the main reasons why Bitcoin has so many fans is its scarcity. It has a hard-coded limited supply that no one can change. There will only ever be 21 million Bitcoins in total, and a lot of them have already been “lost”, which makes them inherently scarce. That’s similar to real gold, of course, which is a finite resource, albeit with an unknown amount still trapped under ground. But whereas gold mining continues to deliver a steady stream of new ingots onto the global market, Bitcoin’s halving mechanism means that fewer and fewer new coins will be minted, until such a time as the last one is mined. That said, the amount of new gold mined every year isn’t substantial enough to decrease its value, and historically the price of gold has increased slowly but surely for hundreds of years. Economic hedge For centuries, gold has been widely used across the world as a store of value, preserving wealth that can be handed down from generation to generation. Bitcoin is increasingly seen as a digital equivalent, with its deflationary nature making it an appealing investment for those who want to protect their wealth. Bitcoin’s advantages include that the price cannot be inflated easily, and nor can it be controlled or confiscated by banks or governments. Bitcoin’s price is much more volatile than that of gold, but in the 16 years it has been around, the value of this asset has risen sharply overall, consistently hitting new all-time highs at its peaks, even though its price can dip quite alarmingly during bearish conditions. Still, the fixed supply of Bitcoin provides protection compared to traditional fiat currencies, which lose purchasing power over time. In times of economic turmoil such as high inflation, many governments will print more money to counteract it, diluting the value of their currency. Bitcoin, and gold, are immune to this inflationary pressure. Decentralization Bitcoin fans often cite its decentralized nature as a major benefit, and in a way gold is similar. That’s because the gold trapped underground, waiting to be dug up, isn’t owned by anyone. Whoever finds it can claim it, and governments have very little control over gold prices either. Bitcoin lives on a decentralized blockchain that’s controlled by its users. It’s not possible for anyone, not even the US government, to censor or manipulate that blockchain in any way. This decentralization enhances Bitcoin’s security and transparency. It means anyone can acquire Bitcoin, and every transaction is made public, so anyone can verify it. These characteristics also help to make Bitcoin resilient to corruption. Physical vs digital Because Bitcoin is digital, it has a significant advantage over gold in being more portable and easier to store and secure. It lives inside user’s digital wallets installed on smartphones or PCs, and it can easily be transferred and accessed anywhere in the world with a few clicks. Someone could bring millions of dollars worth of Bitcoin with them when they fly to another country, without any difficulty or without anyone knowing, and they don’t even need to bring a smartphone if they can commit their private key to memory. Gold, on the other hand, is incredibly heavy, and when you have several million dollars worth of it, it’s not so easy to transport. You’ll need a fleet of trucks to bring it anywhere, and you’ll also want to consider security – that much gold will likely require armed guards, not to mention a secure hi-tech vault once you reach your destination. Gold’s advantage That’s not to say Bitcoin is superior, for physical gold does have some major advantages itself. For one thing, gold has stood the test of time, serving as a store of value for thousands of years. While Bitcoin is similar, it has only existed for 16 years, so we have no way of knowing if it will be able to retain its value over a similar timeframe. Moreover, gold has some unique properties that make it useful in the real world. It’s widely used in the electronics industry as a corrosion-resistant electrical connector in smartphones, computers, and other devices, and it also has uses in dentistry, aerospace, and some kinds of medical treatments, thanks to its non-reactive properties. It’s even used in glassmaking, helping to reflect solar radiation outwards in climate-controlled buildings. Bitcoin, without such physical properties, will never be useful in industry. Some investors might also consider Bitcoin’s usefulness in the event of societal collapse. If we’re ever unlucky enough to see the onset of nuclear winter and/or a total shutdown of the internet, you’ll surely wish you had bought real gold rather than crypto. Tokenized gold Notably, gold’s distinct advantages are not lost on the crypto industry, and many tokenized forms of gold live today on the blockchain. Some of the best-known gold-backed stablecoins include Paxos Gold (PAXG) and Tether Gold (XAUT), and there are many smaller ones such as GoldCoin (GLC), DigixGlobal (DGX), AABB Gold Token (AABBG) and Kinesis Gold (KAU). The price of each of these digital assets is pegged to a specific amount of physical gold, measured in grams or Troy ounces, and the creators maintain a physical supply of gold as collateral to ensure they don’t lose that peg. Such tokens have proven popular with the crypto crowd, and they’re among the most widely-traded stablecoin assets. As with Bitcoin, real gold and USD-backed stablecoins, they’re a stable store of value, used by traders to cash out of the risky positions they might hold in more volatile cryptocurrencies. The popularity of tokenized gold is evident on crypto exchanges such as VALR , which is offering users some big incentives to buy and sell XAUT in its “Great Re-Balancing Trading Competition”, with up to $5,000 in cash prizes weekly for those with the highest trade count. Digital gold is here to stay The transition towards digital economies makes it likely that Bitcoin will cement its status as a reliable store of value. Businesses and governments alike are now looking at Bitcoin as a strategic asset, with El Salvador having created the world’s first “strategic reserve” based on the cryptocurrency, and the U.S. government promising to do the same under President Trump. Bitcoin’s growing adoption leaves no doubt that it fully merits its status as “digital gold”, and while physical gold itself will always be a significant asset, it may one day find that it’s no longer considered to be the world’s de facto store of value. 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