Bitcoin, Gold, and Silver. Which is Better?
Similarity of Precious Metals and Bitcoins
As we have already said, such metals do not corrode which makes them a great option for saving your money. One gram of this precious metal is equal to any other grams of gold in any forms such as rings or chains, bars or little coins. In fact, the value of a particular item of gold may differ significantly. The gold ring’s price may consist of the value of the pure metal, plus the payment for work done by a jeweler and the age of the old ring. Bitcoin does not have this issue but in other ways, it seems the same. Every single Bitcoin is the same as any other of the 21 million coins, which can ever be mined. By the way, the process of getting coins is quite similar to mining for silver and gold. That’s why it’s also called ‘mining’. Mining is a hard and costly business. Obviously, you do not need to dig deep into the mines but it’s still not easy to gain a Bitcoin.
Furthermore, they have a very specific feature, which makes them very similar to precious metals but also differ from currencies such as the Dollar, Euro, or any other currency from around the globe. The United States Federal Reserve and the US Treasury backs the US dollar. They print money and control the monetary policy of the United States. In fact, some foreign governments and people believe and rely on the US dollar because the first economy of the world uses the dollar as its currency and promises to pay off all debts and bonds in the future. Precious metals are completely different. They are valuable because people believe them to be. Nobody backs precious metals. There is no reason to believe gold bars to be more valuable than copper or iron bars. This is due to the understanding of people who assume precious metals to be assets. This is a very important point where precious metals differ from the Dollar or Euro but makes it similar to digital currency.
In fact, the cryptocurrency is just an array of numbers, which is considered something valuable. People buy them because of that.
Like gold, it’s almost impossible to fake a digital coin because it is positioned in a blockchain, which tracks every transaction with cryptocurrency and therefore, all transactions are traced and unique. You may only need to buy a Bitcoin or to mine it.
Who Will Win the Race?
Some people think that cryptocurrency can replace precious metals because it’s more convenient and does not cause inflation as centralized currencies do. This cryptocurrency has a strong defense against inflation; there will only be 21 million coins in the network in total. Moreover, some of them can become lost or be stored for a very long time. Therefore, it may be the opposite process, ‘deflation’, which means a permanent growth of the currency. It really seems to be a good alternative to precious metals and centralized currencies. Will Bitcoin be the future of financial systems? It’s a difficult question to answer because the currency is relatively new. Centralized currency is more than a century old; precious metals are an even older asset. Time will tell whether cryptocurrencies can dominate, take the place of other payment options, or simply fade away in a few years.
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