Who Could Have Thought Man Can Create Something More Valuable Than Gold Using Technology? Satoshi Nakamoto Could.
Bitcoin is hot property. And we’re certain it’s only going to get hotter. Of all the things you’ll be hearing about it, one is that “Crypto is Gold 2.0”. There are more than 10 million Google searches about it. It’s been said by the founder Gemini Cryptocurrency exchange, Tyler Winklevoss — you may also remember him as a character in the movie, ‘the Social Network’. And he added, “Whatever the reasons for investing in gold — we think that Bitcoin matches or beats gold across the board.’ We’re about to show you why.
Aluxers, one’s around a decade old. The other’s been around since at least the Ancient Egyptians. But we’re going to break it down for you, and explain what Bitcoin has in common with gold. And how it’s even got a few points where it beats gold.
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Of course you don’t want to miss on the luster of gold and bitcoin, here’s a fun YouTube upload with all the visuals for this topic:
With that served, let’s get right back into the article.
Like Gold, It’s Inflation-Proof
First, a few plus points that crypto has over traditional currency, that it shares with gold. Probably the biggest is that it’s inflation-proof.
The problem with traditional money is that when there isn’t enough go around, governments start printing it like crazy. It seems like an easy fix. Except for one problem — more money is chasing around the same quantity of goods and services. And that’s bad.
It means that money can now buy less. It’s gone down in value, what we call inflation. And if you’ve got money in the bank — or stocks or bonds — guess what that means. Yep, you’ve become poorer. Without even spending a penny of it.
For centuries, gold has got round that problem. And Bitcoin does too. There’s one big reason for this …
They Both Have a Limited Supply
The great thing about gold and Bitcoin is that you can’t just make more of them. With money, governments can just print more on worthless bits of paper. But when it comes to gold and Bitcoin — no chance.
With gold, it’s obvious. The amount of gold that can go around is limited by the earth’s chemical composition.
With Bitcoin, the answer isn’t in any chemical properties, but the source code that it’s written in. There’s a limit to the number of Bitcoin that will ever be released — 21 million. So far, around 18 million Bitcoins are in circulation. The closer the number gets to 21 million, the slower they’ll be released. It’s estimated that the last Bitcoin won’t be out until 120 years from now.
They’re Both Mined
We all have at least an idea of how gold is extracted using mining equipment and what about crypto? Well, kind of like gold, it’s also mined.
Yeah — kind of like gold. Obviously, it’s a very different process. But mining is the word that’s used. And Bitcoin mining involves high-powered computers, or networks. The Bitcoin software throws complex math equations at them, and when they solve them, Bitcoin gets released. Remember, these are super-high-powered computers. Sorry to tell you, but try it at home with your PC or Mac, and you’re not going to have much luck.
But the point is — Bitcoin mining may not have much in common with gold mining on the face of it. But both make it difficult to put them into circulation. And with both of them, it means the market won’t be flooded. And they don’t get devalued.
They Both Go up in Value
So if traditional currencies lose value over time, but gold and crypto don’t, what does that mean? Yep — gold and Bitcoin steadily go up against the dollar, the euro, the yen, the pound or any currency.
True, gold has a heck of a lot more history than Bitcoin. But if gold wins for history, the last few years have shown that Bitcoin beats gold hands down somewhere else. In price appreciation.
Just look at the last five years. If you’d invested $100 Bitcoin at the start of 2016, you’d now have $4300. And yes, Bitcoin also crashed in early 2018 — but the latest we looked, it had just about reached the same peak it was at pre-crash. WWe think this is a great indication that even if Bitcoin is volatile, it’s on a strong upward trend, that isn’t stopping any time soon — one that gold can’t come close to.
They’re Both Used to Diversify Portfolios
For investors out there, we’re not saying you should just invest in one thing. The key is to diversify. Hedge your bets in case one part of your portfolio goes down. Buy stocks too — maybe index funds for safety. Mix them up with some commodities —like gold. And we’re recommending you buy some crypto. And Bitcoin — the so-called king of crypto — is as safe a bet as they get.
Traditionally, gold has been a key part of any well-diversified portfolio. Nowadays, Bitcoin and other crypto are coming in and moving into its space as a serious alternative. And once again, there’s a good reason why …
They’re Both Safe Havens in Times of Volatility
Crypto, like gold, is a safe haven for investors. Smart people know that times of economic uncertainty are going to happen sooner or later. Ones when governments print money like crazy, and otherwise stable companies get into trouble. Yep, like the times we’re in now.
And smart people have known for a long time, that if they have gold, not only is it going to hold its value when everything else comes crashing down. But when markets go crazy, everybody will start buying gold, because it’s safe. And when they do that, gold doesn’t just hold its value — it goes up.
And in 2020, Bitcoin doing just that. Stocks have been down across the board, apart from tech stocks, which went up. Then the vaccine came along — and suddenly tech stocks did worse, and everything else did better. But all the way through, gold’s been strong. And Bitcoin, even stronger, going up and up, and more than doubling over the course of the year. And that’s why they’re called safe havens.
Bitcoin Is Even More Verifiable Than Gold
A few other specifics that make Bitcoin so great. First up — how verifiable it is. In other words, how to prove it’s legit.
Now, we’re not saying it’s easy to forge cash. But just watch a few crime shows on TV, and you’ll know people are doing it. With gold, like we said, you can’t just create it out of thin air like crypto. But you can mix it with less valuable metals and push its value up.
But thanks to blockchain — the technology Bitcoin’s built on — Bitcoin beats traditional money and gold. Every transaction that’s ever taken place is recorded on open-source ledger — that means electronic records that are kept on the computers of tens of thousands of users who voluntarily store it. And altering records on that many computers is almost impossible. Which means Bitcoinis about as legit — or verifiable — as it gets.
It’s More Portable Than Gold
Something else that makes currencies useful, is being portable. Easy to carry around and store.
Traditional money is very portable. Whether as cash, or on bank records you can access with a card. Gold — not so much. It’s heavy and bulky, and not so easy to store, let alone carry around. Sure, you can invest in gold, without ever seeing it. But that means you’re paying somebody to store it in a super-secure vault — and guess what, there are storage costs for that.
Bitcoin gets the best of both worlds. Like gold, it doesn’t suffer from inflation. And like money, it’s portable. Because it’s digital, all you need is an internet connection, and you’re good to store it, send it around like an email, or access it wherever or whenever you need.
It’s Easily Divisible
Here’s another measure of how useful something is for investment, or for spending. Can you divide it into smaller amounts? With stocks, if you want to invest, you sometimes have to buy a whole stock — which could be hundreds or thousands of dollars.
Investing in Bitcoin, you can start small, because there are lots of sub-divisions. The smallest is called a Satoshi which is a hundred millionth of a Bitcoin — that’s about a fiftieth of a cent right now.
Bitcoin Beats Gold for Transactions
So, Bitcoin’s more portable than gold — and very divisible too. Put those together and you get something that’s ideal for making transactions. Multi-million dollar one, as well as just doing your groceries.
The fact that gold isn’t very portable or easily divisible is one reason we don’t pay for things in gold — and why cash became king.
But Bitcoin gets around those problems. And a growing number of companies — like Microsoft, Norwegian Air, AT&T, Virgin Galactic and McDonalds — accept is as payment. There’s still resistance because it’s volatile. But with time, we’re sure that will wear off. And in the near future, we’re going to see more and more everyday transactions in Bitcoin. Something that’s never been that practical with gold.
And Aluxers, just in case you still haven’t heard, we’re going to take a moment to tell you exactly how you can take advantage of this huge innovation. A little while back we decided to create the best resource out there to guide you step by step through everything we’ve learned about Bitcoin and Blockchain — from scratch.
It’s called Bitcoin Essentials. In it, you’ll learn how the technology works, how to use it, how to buy Bitcoin safely, and how to store it. Just to go alux.com/bitcoin. Believe us when we say, this is something you really don’t want to miss out on. So, sign up now, and become part of this revolution in technology and wealth.
It’s Got the Best Security Out There
It’s true, there’s no big powerful institution monitoring Bitcoin. But it’s extremely safe. As well as being verifiable, and practically impossible to forge, it’s equally difficult to steal, or make a transaction without the owner’s consent.
Remember we said that the data is controlled by hundreds of thousands of users. If you’re going to tamper with it, you need to tamper with all those computers — or at least a majority of them. And as you any potential coin robbers don’t even know where those computers are, that means it’s quite a bit harder than, say, robbing a bank.
They’re Both Decentralized — but Crypto Still Wins
Unlike currencies, governments can’t touch crypto and the price is determined by supply and demand. Much like gold has been for centuries.
Except, Bitcoin is that bit more decentralized than gold. Because gold is being hoarded more and more by central banks to back up their currencies, and large investment banks. And it’s in their power to fix the price of gold. In 2014, Barclays Bank was fined for stopping traders from manipulating gold prices, and in 2018 a JP Morgan trader pleaded guilty to manipulating metals markets. And Forbes has stated that when it comes to fixing gold prices, it’s not a matter of if, but of how much.
They’re Both Confidentialc
To set up a bank account or invest in shares, you need to fill in a lot of forms, and hand over identification. To trade gold through a broker, you need to do the same. But to buy it in its pure form, you can do that anonymously.
Because of the way blockchain works — and because Bitcin is pseudonymous, that means you don’t give your real name — it’s impossible for governments to know who owns it. And it’s impossible for them to confiscate it. This feature was built into it from the start — it’s anti-authoritarian by design.
With worries about surveillance, and authoritarian governments in some parts of the world, this isn’t such a bad thing. No surprise Bitcoin’s making huge waves in countries that have a lot of political turmoil, like Iran and Venezuela— as yes, in those countries it’s also a safe haven from rising inflation.
They Both Have a Number of Uses
Gold has all kinds of uses. Here at Alux, being the luxury channel, we’ve done quite a few videos on all kinds of things that contain gold. But right now, let’s stick to the topic of this article.
True, Bitcoin doesn’t have uses other than storing or transferring wealth. But the technology it’s based on — blockchain — does. More and more companies are using Blockchain, from Pfizer to Walmart, to record data like stock, parts from suppliers, and track anything from food products to vaccines.
And look out for the use of blockchain in recording property ownership, and voting, where it could come in really useful in years to come.
Bitcoin Is Better Suited to a Digital Generation
Aluxers, we’re now at a moment in history where a new generation is taking more of a role in how the world works.
This generation can see how traditional money is flawed — 2020 was a great demonstration of that. They’re on the lookout for an alternative. And, historically, gold has been that alternative. We’re not saying it’s going to completely stop being an alternative.
But for this generation that’s used to doing everything online — given the choice of gold, which works the same way it has done for for centuries — or a way of investing and making transactions that’s hi-tech, secure, confidential, and decentralized — do you think this generation is going to go for gold or crypto? Yep, we think so too. It’s another reason why Bitcoin and possibly other crypto will challenge gold, and keep on getting stronger.
What do you think is crypto’s biggest plus point over gold?