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Blog 06, Apr

Is Bitcoin Digital Gold? What Do You Think?

Gold has been valued by numerous groups of people throughout history in many different parts of the world. It's crucial to remember that gold is just a shiny piece of metal and has no intrinsic worth. It gains value since everyone just agreed that it is valuable, which is a confusing truth that gives it value.
The reason they picked gold over other items is significant because gold, as is well known, has several properties that make it a superior "store of value" to other items: One reason is that there is a limited quantity because it is rare (there is only a certain amount of gold in the world – if it was too abundant everyone would have it and then it would have no value). It is malleable (it can be melted down and formed into smaller units, like coins), and crucially, the price per unit doesn't change when you break it up, unlike with items like diamonds. It is steady, doesn't deteriorate, is simple to recognize, and most importantly, is challenging to copy.

It turns out that Bitcoin shares all of these qualities and even more. It is in short supply (only a specific amount of Bitcoin exists and will ever be produced). It can be divided into smaller pieces without losing value per unit (1 Bitcoin = 100,000,000 Satoshis, the smallest unit that a Bitcoin can be divided into; this is also the reason why one can purchase fewer than one Bitcoin at a time). Because of its technology, it is incredibly stable, won't deteriorate, and can't be copied. Furthermore, unlike gold, you may send any amount of Bitcoin, no matter how large or tiny, to any location on Earth in a couple of minutes. Because of this, many claims that Bitcoin is not merely a form of digital gold, but rather a superior form of gold.

Furthermore, Bitcoin is valuable as a payment method in and of itself, adding to its worth. The more transactions made using Bitcoin, the more valuable this system grows. It's comparable to purchasing Visa stock and using those shares to purchase a Coke at your neighborhood 7-11. Because you paid with Visa shares, both Visa (the payment system) and Visa shares increase in value. In this way, both Bitcoin's gold-like qualities and its capabilities as a payment system contribute to its value.