Bitcoin emulates some of the best properties of gold. There is a
limited supply of bitcoin and new coins are created through a
resource-intensive process called mining.
The similarity stops there. While gold is a terrible medium of
exchange, bitcoin is better than the anything the world has ever
seen. With bitcoin you can transfer value to anyone, anywhere at
next to zero cost.
Despite this, Bitcoin will never be able to compete on some
areas. First, gold has a far larger network. Almost all humans on
this planet value gold. Everyone wants it, though relatively few
can afford it. It has been valued for thousands of years and is
sure to remain so for numerous generations. The price and
popularity varies but it will forever keep its special value.
Bitcoin only has a few years of track record. It is a new
technology. Would you trust your entire savings, let alone the
nation's savings, to the bitcoin network? I hope not.
My point is that bitcoin and gold should not be compared. They
are the best in their respective niches. They complement one
another. Gold excels both as a storage of value and as a unit of
account but it is a terrible medium of exchange. Bitcoin excels
as a medium of exchange but it is a terrible both as a storage of
value and as a unit of account.
