BTC vs physical gold price potential

[WeThePe0ple]

This is more of a philosophical debate, but feel free to tell me if my reasoning is wrong.

People often talk about the price potential of BTC or gold, in terms of US dollars or euro. In my opinion this does not make sense because the value of euros and dollars can be destroyed by central banks printing them to infinity.

So it only makes sense to debate the value of BTC or gold, in terms of an other store of value with a limited availability (BTC expressed in gold, or gold expressed in BTC. Or even in silver)
Fiat currency is not a store of value as we all know. Currency is not money because any currency in history got inflated to 0.

There is an estimated 208 000 tonnes (208 000 000 kgs) of gold available on planet earth. This has been mined throughout history and we can assume that this is not lost. But let's estimate it at 210 000 tonnes to make it easy.

The amount of bitcoin that will ever be available, is capped at 21 million coins. So for each coin that is available, there is 10 kgs of gold available (210 million divided by 21 million = 10)

So in terms of value 1 BTC is worth 10kgs of gold. But given that 10kgs of gold costs 650 000 dollars today and 1 BTC costs 30 000, BTC must be undervalued and still has a potential to 20x from here. So why would people buy gold as a hedge against inflation, when they can buy BTC that is undervalued by a factor of at least 20? I guess the answer lies in confidence and previous experience.

Is any of the above wrong?

A few side notes:

- I think this is only true when BTC reaches mass adoption like gold does now. But I think this has a good chance of happening because CBDC's will lose their value just like fiat currency. People will run to real stores of value like precious metals or BTC. BTC is more accessible than gold and so I expect more people to chose BTC over time.

- Given the fact that many coins are lost and thus not available for trading, maybe the real amount of BTC that will ever be in circulation is more like 15 million. This makes BTC more rare and increases its value in gold significantly.

- Sales of gold are already subjected to taxation in nearly every country. I don't know if the government will succeed in taxing BTC. I guess only if BTC needs to get converted to currency, because then the banks and the IRS get involved. But if we can avoid that conversion for payment (directly in BTC), the IRS and the government are bypassed.

If I am wrong about anything here, please tell me.

[1714477588]

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[1714477588]

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[electronicash]

people buy gold because gold has been the oldest money since. we're attracted to shiny things. we rub it and stroke it and we keep pace. 

because the governments had already decided they'd launch CBDC, they will still be talking about USD or EUR despite that CBDC is the same as fiat that can effortlessly print money. they can easily tax BTC with the use of tracking using the CBDC wallet.

[franky1]

gold has limits of economics that harm it

if 1 ounce is $2k then 1 gram is $70    ()

there is a peak point were people see no desire in paying more then X per gram for gold becasue the utility is lost after that point.
EG no one will want to buy a phone that costs too many thousands of dollars if gold went too high

however bitcoin doesnt have this problem as much. bitcoin has a kind of 100sat=$1 value limit. but that is far far different to saying if 1btc was $30k then problems arise buying anything below 0.03. bitcoin has many multiples more opportunity before getting to 0.000001


from my view of just very short term market metrics with sone underlying value/cost indicators
gold has a trade window of possibility of $400-$2.6k of its value:premium range
bitcoin is currently in a window of 2 years of $15k- $120k of its value:premium range

bitcoin is at a value low in its range. gold is nearing the top third of premium

i personally see gold being in its "high" era where people would be preparing to sell
i personally see btc being still in its "low" era where people would be continuing to buy

[thecodebear]

OP you are limiting Bitcoin's potential by thinking it can only be as valuable as gold and therefore only attain a price of $650k.



Bitcoin is much much more useful than Gold. I mean if it wasn't, there wouldn't be much reason for it to exist.

Gold has a little bit of its market value in its use in electronics. Gold has a lot of its market value in jewelry and other uses of it for aesthetic or ceremonial purposes. But I believe most gold is stored in vaults and used simply as a store of value. Bitcoin doesn't have the electronics and aesthetics/ceremonial uses like Gold does, it only has the monetary use. But Bitcoin is orders of magnitude better in its monetary use case than Gold is.

We should therefore expect the value of the bitcoin market to far outstrip gold's value. I would say when Bitcoin's market cap reaches the market cap of Gold that is the BEGINNING of Bitcoin's market starting to mature, not the end. Today Gold is about $13 trillion, I expect Bitcoin to eventually have a market cap of several tens of trillions of dollars in today's dollars. So when accounting for inflation by the time Bitcoin gets to say $50 trillion it'll actually be in the hundreds of trillions of dollars against USD at that time.

Even once Bitcoin is fully mature and is worth several times over what the Gold supply is worth, it should still continue to gain value faster than Gold because Bitcoin is highly useful not just as a store of value but as a currency which is a greater use than just store of value and electronics and aesthetic purposes. Also the fact that Bitcoin is scarcer than Gold will continue to make it the best store of value in the world.

Bitcoin should surpass Gold's value within 10 years, and even at that time Bitcoin will only have captured a fraction of its eventual market.

[sunsilk]

People often talk about the price potential of BTC or gold, in terms of US dollars or euro. In my opinion this does not make sense because the value of euros and dollars can be destroyed by central banks printing them to infinity.

It's because that's been the standard of conversion for gold and bitcoin. The value of these currencies might go lower but I doubt it that they will entirely go to zero and utterly be destroyed. There can be changes in terms of monetary system but these two that you've mentioned can't just be gone too quickly just as we say.

Even with current news about BRICS that's trying to de-dollarized with their economies. It's gonna to be a work in progress and won't be just applied too quickly so as usd/btc, usd/gold, eu/btc, and eu/gold.

Also with their ability to print unlimitedly, they can still do such controls with it through interest rates and just like what US did recently and still doing some of its control based on how they want to value its fiat.

[Dump3er]

People often talk about the price potential of BTC or gold, in terms of US dollars or euro. In my opinion this does not make sense because the value of euros and dollars can be destroyed by central banks printing them to infinity.

It's because that's been the standard of conversion for gold and bitcoin. The value of these currencies might go lower but I doubt it that they will entirely go to zero and utterly be destroyed. There can be changes in terms of monetary system but these two that you've mentioned can't just be gone too quickly just as we say.

Even with current news about BRICS that's trying to de-dollarized with their economies. It's gonna to be a work in progress and won't be just applied too quickly so as usd/btc, usd/gold, eu/btc, and eu/gold.

Also with their ability to print unlimitedly, they can still do such controls with it through interest rates and just like what US did recently and still doing some of its control based on how they want to value its fiat.

Yes and the major currencies are the ones that people have an idea about in regards to purchasing power. In order for a new unit of account to establish itself, it takes a lot of time. I addition to that Bitcoin is a brand new technology, which means that people who are not familiar with it also will have issues trusting it as the new unit of account. Apart from the fact that many won't be able / like using it. It's more likely that Bitcoin will find its way into the global society with the younger generations from today. Using a phone, using wallets and so on, that is something many of the older people don't do unless it is something like Applepay where they have an idea what that is about and who is behind it. I am not saying it is better, I am only saying that a lot of people have less issues trusting it.

Whether the USD suffers from inflation or not, too many people still find it easier to judge a good in pennies or USD than in satoshis. It's also not even easy for those familiar with Bitcoin as nobody can tell for sure where its price is going, but that also has an impact because people would spend less if they know their satoshis will increase in purchasing power over time. While uncertainty is usually not a good thing, the certainly that the dollar will further be inflated gives people something to calculate with.

[dothebeats]

People buy gold or bitcoin because they believe that either of them will have any possible price appreciation in the future. The reasoning as to why they do it is completely up to them and are independent of one another, but what you have stated here also rings true to some extent and is arguable. There will always be a lot of discussions on which of the two is the better choice. End goal is always to get more fiat value per amount of bitcoin or gold that they have because, let's face it, fiat still controls the financial system until now.

[blue Snow]

- Sales of gold are already subjected to taxation in nearly every country. I don't know if the government will succeed in taxing BTC. I guess only if BTC needs to get converted to currency, because then the banks and the IRS get involved. But if we can avoid that conversion for payment (directly in BTC), the IRS and the government are bypassed.

Our government taxes BTC also but it does not an important thing, because the taxes are good for building the infrastructure, and I won't debate taxes. Because the real investor is looking for profit, in bitcoin the real investor definitely got the profit, their money sprouts a hundred percent over time. It's different with gold because gold just maintains its value (or against inflation), you don't get a profit when hold a gold and the value of your money does not increase like you hold bitcoin. (we know Bitcoin makes your money's worth folded, right?)

[ImThour]

I would never compare a Bitcoin with gold for many reasons, just because Bitcoin act as a store of value, it's not gold, to be honest.
Bitcoin is much more complex just than a piece of gold. They both have different use cases.

People often talk about the price potential of BTC or gold, in terms of US dollars or euro. In my opinion this does not make sense because the value of euros and dollars can be destroyed by central banks printing them to infinity.

Why it doesn't make sense to compare an asset with a currency? It makes a lot of sense. You need a currency to trade an asset and in the above case, both Bitcoin and Gold are an asset. The former is the one for techg33ks and the latter is for the boomers. Not true in every case, some boomers do love Bitcoin as well including JJG.

So in terms of value 1 BTC is worth 10kgs of gold. But given that 10kgs of gold costs 650 000 dollars today and 1 BTC costs 30 000, BTC must be undervalued and still has a potential to 20x from here.

You literally said there is no reason to talk about Bitcoin and Gold in terms of USD or EUR now in the next paragraph, you yourself are using USD to compare gold and BTC. Does not make any sense at all.

Also, you never know how long Bitcoin will run and what all sort of purpose it will fulfill in the upcoming years. In short, no need to compare it and let it be the way it is, and till the end of eternity, it will always be compared with an actual currency that you use in your day-to-day tasks.

[BenCodie]

If I am wrong about anything here, please tell me.

I don't think anything you have said is wrong. Actually, I think you may have highlighted something unintentionally, being that if there is a correlation between the supply of Bitcoin and the supply of gold nearly being exactly a factor of 10. Very interesting!

As for price predictions, you have a good argument with gold against BTC. The only missing component that might limit the highlighted potential of up to 600k USD (at current gold prices) is the loss of market share from gold because of Bitcoin. At the same time, gold may/should increase in price as fiat money continues to fall.

At the point that fiat money becomes worthless, then is a good time to revisit these calculations to find the difference where Bitcoin would become on par with gold...or, where Bitcoin would start to take the market share of gold due to fiat money becoming irrelevant and gold/btc being the new pair to be watched. It might seem unrealistic to think about this now, I believe over the next decade this will be worth revisiting though.

[thecodebear]

If I am wrong about anything here, please tell me.

I don't think anything you have said is wrong. Actually, I think you may have highlighted something unintentionally, being that if there is a correlation between the supply of Bitcoin and the supply of gold nearly being exactly a factor of 10. Very interesting!

As for price predictions, you have a good argument with gold against BTC. The only missing component that might limit the highlighted potential of up to 600k USD (at current gold prices) is the loss of market share from gold because of Bitcoin. At the same time, gold may/should increase in price as fiat money continues to fall.

At the point that fiat money becomes worthless, then is a good time to revisit these calculations to find the difference where Bitcoin would become on par with gold...or, where Bitcoin would start to take the market share of gold due to fiat money becoming irrelevant and gold/btc being the new pair to be watched. It might seem unrealistic to think about this now, I believe over the next decade this will be worth revisiting though.

Long term it probably makes sense to think about Bitcoin's price appreciation in terms of BTC/GOLD rather than BTC/USD just because yeah the USD will every year get less valuable and that will compound over time. Like 50 years from now Bitcoin will likely be worth tens of millions of dollars partially due to growth but partially due to loss in value of USD.

Let's say USD's average inflation for the next 50 years is 3%, because it seems unlikely they'll get it back under 2% long term considering the fiscal mess the US govt has been in the past 20 years and that isn't going to change. 50 years of 3% inflation means the dollar will only be worth 21.8 cents of what it is today. So roughly means everything that mains value or cost over time will be 5 times as many dollars.

Now if we project Bitcoin's natural slowing rate of growth in value, and say the average growth rate in pure value over time will only be 10%/year over the next 50 years starting with this year at the price of $17k, that puts Bitcoin at just about $2 million in today's dollars, then add in the 5x factor to account for inflation and that prices bitcoin at somewhere around $10 million in 50 years. Which is just getting kinda of absurd because the dollar won't be worth much at that point, I mean at that point a good hourly wage earner might be making $100/hr.

But if Gold can roughly keep its value, and therefore is around $10,000/ounce (because of inflation's 5x) we can still compare Bitcoin to Gold to get a much better idea of its appreciation against something that is at least somewhat more stable in value. In this case in 50 years Bitcoin would have gone from roughly being worth 10 ounces of Gold to start 2023 to being worth 200 ounces of Gold in 50 years, in this example. That way its easier to see that Bitcoin would have roughly gone up by 20x as a store of value, rather than the >500x against the USD which isn't really helpful.

[Poker Player]

So in terms of value 1 BTC is worth 10kgs of gold. But given that 10kgs of gold costs 650 000 dollars today and 1 BTC costs 30 000, BTC must be undervalued and still has a potential to 20x from here. So why would people buy gold as a hedge against inflation, when they can buy BTC that is undervalued by a factor of at least 20? I guess the answer lies in confidence and previous experience.

Is any of the above wrong?

This idea was popularized by Michael Saylor and many people have believed it, although I think he takes it too far by saying that the Bitcoin is going to absorb all the market cap not only of gold but also of investment art and Real Estate, and I think it is too maximalist.

In the case of gold, it seems quite plausible to me that the Bitcoin, being a kind of gold 2.0, a better digital gold, will absorb much of the market cap of gold, but will it absorb it all? I don't think so. You have to think that gold is used for jewelry and in industry, and you can't put satoshis to make a ring or electronic devices. This is why I see a better future for gold relative to bitcoin than paper maps vs. google maps.

Regarding the previous discussion on inflation, I think it is clear that calculations are made on the basis of how things are now, and in any case inflation will be factored into the future. That is, if the market cap of gold is $13T and that of Bitcoin $0.5T the more maximalist think that the future will be of say $1T for gold and $12.5 for Bitcoin, but that in today's terms, in today's purchasing power. In the future inflation will have to be calculated and the total numbers will be higher.

[Accardo]

So in terms of value 1 BTC is worth 10kgs of gold. But given that 10kgs of gold costs 650 000 dollars today and 1 BTC costs 30 000, BTC must be undervalued and still has a potential to 20x from here. So why would people buy gold as a hedge against inflation, when they can buy BTC that is undervalued by a factor of at least 20? I guess the answer lies in confidence and previous experience.

Is any of the above wrong?

In the case of gold, it seems quite plausible to me that the Bitcoin, being a kind of gold 2.0, a better digital gold, will absorb much of the market cap of gold, but will it absorb it all? I don't think so. You have to think that gold is used for jewelry and in industry, and you can't put satoshis to make a ring or electronic devices. This is why I see a better future for gold relative to bitcoin than paper maps vs. google maps.

I'd say that the gold used for jewelries and industries should be considered as altgolds like in bitcoin, as they can be resold at a cheaper rate, cheaper than the actual price of gold, in exchange of goods or money by the owner of the jewelry, depending on the amount of gold used for the production. However, it's almost impossible for bitcoin to absorb all the market cap of gold as gold is scarce and on demand too, almost similar qualities as bitcoin. Hence, the world can't move completely digital, we'll need the physical treasures to show off or run transactions. Even, many people will run to utilize gold than bitcoin for top confidential transactions, as everything digital cannot be considered a secret.

[Kryptowerk]

This is more of a philosophical debate, but feel free to tell me if my reasoning is wrong.

People often talk about the price potential of BTC or gold, in terms of US dollars or euro. In my opinion this does not make sense because the value of euros and dollars can be destroyed by central banks printing them to infinity.

So it only makes sense to debate the value of BTC or gold, in terms of an other store of value with a limited availability (BTC expressed in gold, or gold expressed in BTC. Or even in silver)
Fiat currency is not a store of value as we all know. Currency is not money because any currency in history got inflated to 0.

There is an estimated 208 000 tonnes (208 000 000 kgs) of gold available on planet earth. This has been mined throughout history and we can assume that this is not lost. But let's estimate it at 210 000 tonnes to make it easy.

The amount of bitcoin that will ever be available, is capped at 21 million coins. So for each coin that is available, there is 10 kgs of gold available (210 million divided by 21 million = 10)

So in terms of value 1 BTC is worth 10kgs of gold. But given that 10kgs of gold costs 650 000 dollars today and 1 BTC costs 30 000, BTC must be undervalued and still has a potential to 20x from here. So why would people buy gold as a hedge against inflation, when they can buy BTC that is undervalued by a factor of at least 20? I guess the answer lies in confidence and previous experience.

Is any of the above wrong?

A few side notes:

- I think this is only true when BTC reaches mass adoption like gold does now. But I think this has a good chance of happening because CBDC's will lose their value just like fiat currency. People will run to real stores of value like precious metals or BTC. BTC is more accessible than gold and so I expect more people to chose BTC over time.

- Given the fact that many coins are lost and thus not available for trading, maybe the real amount of BTC that will ever be in circulation is more like 15 million. This makes BTC more rare and increases its value in gold significantly.

- Sales of gold are already subjected to taxation in nearly every country. I don't know if the government will succeed in taxing BTC. I guess only if BTC needs to get converted to currency, because then the banks and the IRS get involved. But if we can avoid that conversion for payment (directly in BTC), the IRS and the government are bypassed.

If I am wrong about anything here, please tell me.

An interesting read and I like your value comparison to gold, giving 1 BTC a 20x undervaluation in regards of its scarcity against gold. Feels about right and the numbers add up obviously.

One point to keep in mind, though: Bitcoin already has major upsides against gold (ease of transaction, doesn't need space nor does it weigh anything, accessible for anyone around the globe instantly) AND has traits totally outside the scope of gold, given by its immutable blockchain among other things. It's aotential payment method especially with layer2 solutions (ligthning etc), it's a ledger technology that allows for transparent verfication methods and more.

To sum things up: Additionally to its amazing store-of-value capacities, Bitcoin has (much!) more potential, thus not limiting its value to that of gold. 50x or more still more than possible imho.

[Kakmakr]

The reason why people favor Gold is as follows :

1. Gold is fully regulated
2. Gold is a well-known store of value
3. Gold is physical (People cannot see bitcoins, so they think it is fake)
4. Gold are being used to make jewelry, so it has multiple uses.
5. Gold is simple... and the Bitcoin concept is complex.

So, these are just some of the reasons why Joe Public will rather invest in Gold... until they learn more about Bitcoin and how rare it actually is.     

[Fundamentals Of]

For as long as there is fiat, there is always a fiat equivalent to the prices of gold, Bitcoin, silver, real estate properties, etc. Fiat is the the basis of all because it is the legal tender of the country. You may measure stuff in ounces of gold or silver or in Satoshis or Bitcoin, but you cannot remove fiat from the picture even if its supply can be inflated infinitely. It would only mean that commodities such a Bitcoin and gold will have a rising price.

[pooya87]

Think of fiat as a unit of measurement, it is not perfect since it is inflationary but it is a lot better than using anything else.
When we report the price of anything in fiat, the point is to quickly understand how much something is worth. For example if I say something is worth 20 dollars, euros, yuans, rubles, rials,... everyone reading this would quickly understand what value I'm talking about but if I said something is worth 20 ounce of gold, most people won't know how much that is worth and have to do some conversion to really understand it.

Besides gold's value and price are both changing. It is not as fixed as you'd think.

[Lucius]

There is an estimated 208 000 tonnes (208 000 000 kgs) of gold available on planet earth. This has been mined throughout history and we can assume that this is not lost. But let's estimate it at 210 000 tonnes to make it easy.

I believe that there is much more gold than those predictions, but even if the data you present are correct, what about the gold that has been talked about in recent years and is located outside the planet Earth? Of course, that gold is not available today, but the predictions are that in a maximum of 50 years it will be commercially available in quantities that will far exceed the reserves on our planet.

The amount of bitcoin that will ever be available, is capped at 21 million coins. So for each coin that is available, there is 10 kgs of gold available (210 million divided by 21 million = 10)

At the moment, no one is seriously talking about increasing the max supply, but it is still something that should not be completely rejected, because who is to say that some new "visionaries" will not decide in 20 or 30 years to change the code a little and add a few million new Bitcoins. People are prone to stupid things, and I wouldn't be surprised if they add another one to their list of stupid things.

- Sales of gold are already subjected to taxation in nearly every country. I don't know if the government will succeed in taxing BTC. I guess only if BTC needs to get converted to currency, because then the banks and the IRS get involved. But if we can avoid that conversion for payment (directly in BTC), the IRS and the government are bypassed.

I don't need to pay any tax when I buy or sell investment gold, and I think this is a law that applies throughout the EU, although there are probably exceptions from country to country. And regarding the payment of capital gains tax when it comes to Bitcoin, in most regulated countries there are laws that clearly regulate this and the procedure is not significantly different from the payment of capital gains tax from other investments.

In addition, even the EU has several countries where capital gains tax is not paid if you sell Bitcoin 1 or 2 years after purchase.

[Plaguedeath]

- Sales of gold are already subjected to taxation in nearly every country. I don't know if the government will succeed in taxing BTC. I guess only if BTC needs to get converted to currency, because then the banks and the IRS get involved. But if we can avoid that conversion for payment (directly in BTC), the IRS and the government are bypassed.

AFAIK even though El Salvador and Central African Republic accepting Bitcoin as a legal tender, when you want to pay something directly using BTC, you're still paying in USD equivalent. So until now there's no country set a price in BTC equivalent.

But I don't think paying in BTC equivalent will make you avoid paying tax, because if the banks are accepting Bitcoin, they're will monitor your address and we don't know what they will do. Maybe they will skip if your total holdings are small, but if it's really huge you need to prepare anything.

[Bureau]

One of the biggest reason why everyone favours Gold over Bitcoin is due to its existence. I had read somewhere that Gold trading started in the 17th century, we are living in the 21st century. Just imagine the trust Gold has generated in the mind of human in so many years.

Whereas Bitcoin is a decade old commodity and is somewhat complex to understand, doesn't have a physical existence. I assume by the end of this century it would gain the same trust like Gold had gained among humans.