What if the digital gold narrative is incomplete or misleading?

[venturegrit]

I've been thinking about the "Bitcoin is digital gold" narrative and have started wondering if thinking about Bitcoin in the context of gold is like thinking about Uber in the context of taxis.

https://andyjagoe.com/why-the-market-for-bitcoin-may-be-bigger-than-you-think/

Wondering what others think?

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[DooMAD]

It's natural for people to try to compare Bitcoin to whatever it is they're using it as.  But it's not like we could expect it to match up perfectly with any existing currency or asset because it's unique.  If you look closely enough, you can't compare it to anything without finding some inconsistencies.  Lately I mostly see it as a pension pot to make up for the actual pension I'm clearly never getting, but someone could write another enormous blog to explain why that comparison isn't particularly apt either.

I feel like a lot of the "Bitcoin versus gold" stuff actually comes from the goldbugs.  They find themselves in the presence of something they can't quite quantify, so they compare it against the thing they know.

[jackg]

I feel like a lot of the "Bitcoin versus gold" stuff actually comes from the goldbugs.  They find themselves in the presence of something they can't quite quantify, so they compare it against the thing they know.

It's probably also that they want it to be separate from something entirely inflationary such as fiat; or something more risky like shares or real estate... Its probably closest to some sort of precious metal as its handy to store and handy to use when needed.

People must vault gold for until they need it and they could do the same with bitcoin...

[Darker45]

You are probably right. But the comparison of Bitcoin and gold could be traced back to certain aspects other than the market itself; the design of Bitcoin being scarce just like gold, the concept of Bitcoin mining, the decreasing mining reward, and so on.

I think the competition is not really as heated as it may appear especially on social media. If one is to be objective and neutral about it, one might probably end up having both.

I kind of share your view that the main competitor of Bitcoin is really non-consumption. I went into Bitcoin but I never invested in gold. A lot of people I know invested in Bitcoin without the slightest quandary as to which is the better option, Bitcoin or gold. And so I guess Bitcoin should be defined within its own unique features and not in comparison to gold in convincing others of its investment viability. The goal therefore is not to convert gold bugs into Bitcoin bugs but to convince them of Bitcoin itself.

[batang_bitcoin]

Thoughts like that naturally comes out when a person starts to realize those replacement, upgrade and innovation made by technology. Even as me, I thought of it before and you'll see various comparisons and description of bitcoin as the digital gold and potentially will replace in the future. But sometimes, those thoughts are going that much and becomes vague and ambitious due to the feeling that we're getting as someone who really likes bitcoin and being an investor/holder of it.

[mk4]

It's because things aren't binary, especially when talking about something as new and as unique as bitcoin.

Bitcoin is being put in the same category as gold because they're similar in a way that both can't be mass printed by will, as how the central banks can do with fiat money. But it definitely doesn't necessarily mean that bitcoin is 100% similar to gold because they're obviously not the same.

[hatshepsut93]

This narrative is already not as popular as it was before. It probably peaked around 2018 and was on decline since then, and the coronavirus crash in this year probably opened eyes to some people. And anyway "bitcoin is digital gold" is more like a twitter/reddit meme rather than an investing paradigm, it was never seriously considered by mainstream investors.

[avikz]

I've been thinking about the "Bitcoin is digital gold" narrative and have started wondering if thinking about Bitcoin in the context of gold is like thinking about Uber in the context of taxis.

https://andyjagoe.com/why-the-market-for-bitcoin-may-be-bigger-than-you-think/

Wondering what others think?

Well narrative means a story and a story doesn't have to be true always! We are hearing about this digital gold narrative since a long time now and it doesn't make much sense. You don't need to dig a lot deeper but if you just look at the price patterns of both these assets, you will understand! Gold has been used for capital protection since ages but if you look at the price fluctuation of bitcoin, you will understand that bitcoin can't provide you with capital protection. It will either give you extreme profit or extreme loss under any circumstances, but definitely not capital protection!

So I sincerely believe the "Bitcoin - A digital Gold" narrative is definitely misleading or half-true!

[adzino]

It is not completely misleading. People use gold as a store of value. They are scarce and has a limited supply. The demand for gold will keep on increasing as the population rises.  This scarcity and demand is what gives gold its value. The same goes for bitcoin. It has limited supply and the supply keeps on reducing every four years. As more people starts to own bitcoin and adopt its usage, the demand keeps on rising. Some people even use it as a store of value. Hence, they think bitcoin is a digital gold.

[btc_angela]

I've been thinking about the "Bitcoin is digital gold" narrative and have started wondering if thinking about Bitcoin in the context of gold is like thinking about Uber in the context of taxis.

https://andyjagoe.com/why-the-market-for-bitcoin-may-be-bigger-than-you-think/

Wondering what others think?

Well we have passed 10 years already and so far the narrative still continue to grow for sure in the next 10 more years. If it had to failed, then it should be in the beginning. But it didn't happen that's why it is even called by today, digital gold because it even surpasses all expectations. I think a good comparison or at least analogy is Internet. There is a lot of questions and issues in the beginning, but look at how it is accepted universally and continue to shape our future.

[witcher_sense]

The more I have learned about bitcoin the less I have become a proponent of that narrative that bitcoin is the digital version of yellow precious metal. Both are scarce, both are hard to find, both are valuable and both are monies of a free market. Nonetheless, they are completely different. Saying that bitcoin is digital gold is no different than saying that gold is a physical version of bitcoin, which sounds ridiculous. Bitcoin can't be used for industrial purposes, in this regard it is worse than gold. It is not digital gold. If bitcoin is digital gold, it may be seized via executive orders like it was with the order 6102 during the great depression. If bitcoin is digital gold, it is easy for central banks to centralize it in their vault and substitute it for less valuable banknotes. I don't want bitcoin to be compared to precious metal, because the characteristics it has make it more valuable than money we had before.

[Upgrade00]

The 'bitcoin as digital gold' narrative was probably used as a means of explaining Bitcoin during the early years to new investors by comparing it with something they were already familiar with, and also a way to show its worth. Gold for a very long time was the definition of intrinsic worth which was resistant to inflation and devaluation making it a comparison for other things which were considered valuable, same way crude oil was called 'liquid gold' when it was discovered in my country to show its value.

On such a narrative being misleading, it was never a like for like comparison and both currencies has its similarities and differences.
• To an extent both assets are resistant to supply shocks (Bitcoin more so as its supply is fixed)
• Both are universal.
• Both are divisible.
• No Central body regulates either asset.
Bitcoin's unique differences;
• It is digital
• It is highly resistant to attack or imitation as the network is progressively getting more difficult and tamper proof
• There can only be 21 million BTC ever, i.e, it is entirely resistant to supply shocks
• Due to BIPs, bitcoin is regularly evolving making it more adaptive, other than gold which relatively constant.

I would assume Bitcoin to shift farther from the gold comparison as it gets more popular and adopted worldwide and people realize its unique attributes and qualities.

[Kakmakr]

I think of Bitcoin as microscopic digital Gold flakes, because every Satoshi represents a single microscopic digital Gold flake. The process of mining Bitcoin is very similar to mining Gold.. with the exception that you know what you are going to get with Bitcoin... where the search for Gold is unpredictable.

The fact that Bitcoin also have limited supply and that it is seen as a store of value, makes it very similar to actual Gold. I think it is not a narrative, but rather a very accurate assumption when you compare the two. 

[The Cryptovator]

I am wondering who was the first person who had compared Bitcoin with the gold. OP's point about the comparison of Gold and Bitcoin is quite reasonable. I am not agreed with them those have been saying Bitcoin as digital gold. Its because, money can't be compared with the assets, doesn't matter how valuable that assets. We know that Bitcoin is a digital (crypto) currency we can exchange it with the gold, but shouldn't compare or shouldn't call as a Bitcoin's competitor.

I know people compare Bitcoin and Gold to explain how the potential to invest in Bitcoin. But more important is to explain the technology of Bitcoin so that investors automatically will realize what is bitcoin and how its potential.

[kryptqnick]

I've been thinking about the "Bitcoin is digital gold" narrative and have started wondering if thinking about Bitcoin in the context of gold is like thinking about Uber in the context of taxis.

https://andyjagoe.com/why-the-market-for-bitcoin-may-be-bigger-than-you-think/

Wondering what others think?

There are different approaches to finding the defining things of an object. One is to look for something that is inherent to the object, something from its nature. Another is to look at how it expresses itself (its performative nature). I believe that with Bitcoin the performative approach is more effective. Some people use Bitcoin for trading, buying and selling it regularly for fiat. In this sense, Bitcoin plays a role similar to securities when they are traded. Bitcoin is also used by some to actually buy goods and services, so in this sense Bitcoin is money. Moreover, Bitcoin is held by many over a long period of time, and in this sense it's like gold, a store of value. So the 'Bitcoin is digital gold' narrative is incomplete, as it focuses only on some ways of how Bitcoin performs, ignoring some other aspects.

[BrewMaster]

as far as i can remember there was no such narrative, only some people at all times love comparing bitcoin with other things and even go as far as trying to create a link between them. most of the "digital gold" narrative era was for the time when bitcoin price was lower than gold price and some people were looking for "parity" and ever since bitcoin shot through that price level they faded away too.

[DooMAD]

In this case, you can pay attention to the stablecoins backed by gold. If you are not satisfied with bitcoin as digital gold.

Or not.  Stablecoins are comparably even further away from gold than Bitcoin is.  Those are more akin to an IOU.  And that's the charitable comparison.  Part of me just wants to dismiss all stablecoins as outright scams, as I'm yet to see much evidence to the contrary.

[fiulpro]

There are people who do believe that bitcoins can be treated like : Gold
Reason:
Store of value
Good investment
Profits are remarkable
Pretty expensive etc

But there are reasons like:
Volatility
Not accepted all over the world
Fully digital etc
Which makes it very different from the Gold itself but still at the end of the day we might say that it's the Gold in cryptocurrencies itself.

[bitmover]

In this case, you can pay attention to the stablecoins backed by gold. If you are not satisfied with bitcoin as digital gold.

Or not.  Stablecoins are comparably even further away from gold than Bitcoin is.  Those are more akin to an IOU.  And that's the charitable comparison.  Part of me just wants to dismiss all stablecoins as outright scams, as I'm yet to see much evidence to the contrary.

Yeah, stable coins backed by gold are very far away from gold.

There is physical gold, in the first level.
There are gold ETFs,  also called paper gold, in the second level. Gold etfs are backed up by gold, theoretically
And  in the third level we have stable coins gold. Which are theoretically backed up by ETFs.  You are too far away from the first level, the physical gold.

Bitcoin on the other hand isn't backed up in anything . You almost have a physical bitcoin. Completely different t.

Stable coins requires trust. They have nothing to do with gold. Trust goes away in financial crisis.

[target]

We been hearing it out in the social media influencer that Bitcoin is a Digital Gold. Maybe because of the term "MINING" to acquire BTC and there is some truth to it since BTC constantly becomes lesser and lesser in numbers. But most of all, I think BTC is more than gold itself. There is just nothing compares to it in many aspects.

In this case, you can pay attention to the stablecoins backed by gold. If you are not satisfied with bitcoin as digital gold.

Or not.  Stablecoins are comparably even further away from gold than Bitcoin is.  Those are more akin to an IOU.  And that's the charitable comparison.  Part of me just wants to dismiss all stablecoins as outright scams, as I'm yet to see much evidence to the contrary.

If its a stablecoin that they can just print and print, it leaves doubt that its really backed by gold.