Well technically Bitcoin (BTC) it is not actually going to replace Gold. It is just very similar to Gold in a lot of ways.
Don’t take this wrong. I am actually more bullish on BTC right now than I am on Gold, but I am bullish on Gold as well.
There are some ways BTC is not like Gold as well. I will cover those first.
You cannot make Jewelry out of BTC and wear it on your neck wrist or finger. BTC is a digital asset and even though they make coins that say Bitcoin on them, the Coin is not BTC it is just someones idea on how to sell 4 cents worth of metal for a couple of bucks.
BTC has a very predictable cycle that it goes through and it last about 4 years peak to peak. We just started the 3rd year of the current cycle. Gold goes through cycles as well but the Gold cycle is a lot longer and less predictable. I have heard that Gold runs on about a 20 year cycle, but don’t quote me I could have that off by a half dozen years give or take.
BTC is actually easier and less expensive to secure than Gold. You need a high quality and expensive safe or a Bank safety deposit box to store Gold and keep it safe from thieves. Or you could by a large tract of land and bury your Gold somewhere when no one is looking. But With BTC you can secure it with a FREE on line Wallet like the Atomic Wallet or Exodus wallet. or you can buy a Trezor hardware wallet for about $80 bucks, (A one time cost) and store literally millions of dollars worth of Bitcoin on it. But that puts you kinda back at the problem you would have with Gold. You have to keep the Trezor memory stick safe from thieves. If it gets stolen it won’t do them any good because only you would have the private keys to unlock the wallet and get to the BTC but it could still get stolen or even lost in a house fire or something like that.
so how is BTC like Gold?
They are both quite rare. Gold is one of the rarest earth elements. The really easy to get gold has already been mined so unless someone finds an easy deposit of Gold ore that somehow got overlooked the Gold that will be mined in the future is going to cost more to get out of the ground and process. But even with the rarity of Gold …
BTC is actually less common than Gold. There will never be more than 21 million BTC. Not even one more than 21 million. And if you consider the fact that some people who have acquired BTC have forgotten their private keys or the password to the Wallet there is actually less BTC than 21 million now. Some say it will end up being about 15 million as the max supply because 6 million BTC will be irretrievably lost.
Both gold and BTC are divisible. Gold can be melted and poured or minted into coins that are typically as small as 1/20 th of an ounce. or even 1 gram which is about 1/32 nd of an ounce. 1 BTC can be broken down into 100 million pieces called Satoshi’s after the guy who created it. Satoshi Nakamoto. (an anonymous name)
Both Gold and BTC are fungible. In other words each unit is the same as every other unit. Most mints that make Gold coins do it with 0.999 pure gold. So a 1 oz American Eagle is the exact same weight and purity as a 1 oz Canadian Maple Leaf coin They may have different dates on each coin but you always know how much gold is in the coin because the mints have standardized it. Unless of course you buy a counterfeit coin. So this is one possible disadvantage for a gold investor.
With BTC, all BTC is the same. No matter what year it was mined. And with just a little bit of education which you can get on line from many different crypto Youtubers, you can avoid any scams, kind of like education can help you avoid buying counterfeit gold.
There are other characteristics but for time and space I will only mention one more because it is an important one.
Bothe BTC and gold are Recognizable. This characteristic is important for the purpose of your confidence that the store of value you are purchasing will actually retain it’s value in the future.
And with this last characteristic, Gold currently has BTC beat. Gold is recognized world wide as a valuable asset. It has a 5000 year history as being valuable. It goes all the way back to Biblical times in it’s history of recognized value.
BTC on the other hand has a 12 year history. And it was not all that valuable at the start during the first couple of years especially. BTC has every other digital asset beat in this category since BTC was the first one to be successful, but it is still quite a ways from the reputation of gold.
This is why I would say it will not replace gold in the near future. 50 years from now it may be a different story. But for now the people who own gold are not going to get a brainstorm and sell their gold to buy BTC. Most people who own a lot of gold, have other things they would rather sell if they decide to buy BTC.
In fact from what I hear, there are quite a few of the people who were early investors in BTC are using gold purchases as an exit strategy to transfer their BTC and Crypto wealth into.
And when we get close to the end of the 4 year cycle of BTC in Dec. 2021 There will be a lot more buying pressure on gold and more selling pressure on BTC.
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