The Digital Gold Paradox

[Invariant Core]

The Digital Gold Paradox: If Bitcoin wants to become digital gold, people will tend to hoard it without trading it, reducing on-chain transaction fees. After multiple halvings, when transaction fees are insufficient to cover the original block reward, miners will shut down their machines, lowering the on-chain hash power. When this hash power is insufficient to withstand a 51% attack, a double-spending event will occur on the Bitcoin network, causing errors in the Bitcoin ledger and ultimately preventing it from becoming digital gold.

In other words, the more Bitcoin aspires to be digital gold, the more vulnerable it becomes, ultimately contradicting the goal of becoming digital gold.

Bitcoin is already doing well in its lane and one thing is sure that, every form of usage of bitcoin has contributed significantly in its growth so far from mining, to trading to holding and what so ever anyone chooses to do with their coin has all contributed to the massive growth of the coin.

I don't even know why I trust bitcoin so much but I think it has in the past shown and proven itself beyond reasonable doubt that it has come to stay.

We must remember one crucial difference between Bitcoin and gold: gold is self-sustaining, while Bitcoin requires miners to maintain it.

In 2026, only about 0.8% of the network’s value is paid to miners each year as a security budget, and because of halvings this reward will continue to decline sharply in the future. Without enough miners providing hash power to secure the network, Bitcoin will become extremely fragile.

[m2017]

The Digital Gold Paradox: If Bitcoin wants to become digital gold, people will tend to hoard it without trading it, reducing on-chain transaction fees. After multiple halvings, when transaction fees are insufficient to cover the original block reward, miners will shut down their machines, lowering the on-chain hash power. When this hash power is insufficient to withstand a 51% attack, a double-spending event will occur on the Bitcoin network, causing errors in the Bitcoin ledger and ultimately preventing it from becoming digital gold.

In other words, the more Bitcoin aspires to be digital gold, the more vulnerable it becomes, ultimately contradicting the goal of becoming digital gold.

Why do you think bitcoin should become digital gold? Is it stated in the whitepaper, or is it a milestone in the roadmap?

Users' use of the phrase "digital gold" is a metaphor and doesn't mean that bitcoin will be used solely as a store of value, like gold.

I don't believe that ALL users will solely hold bitcoin, as there are many market participants and there will always be buyers and sellers (traders, new buyers, old sellers, etc.). Therefore, miners' services will always be needed, which means it will be profitable. No miner will shut down their equipment as long as it generates a profit.

Therefore, I believe this paradox is NOT relevant. Moreover, I expect bitcoin to continue to circulate among users (for example, for p2p payments for goods and services), such as in casinos.

[Invariant Core]

The Digital Gold Paradox: If Bitcoin wants to become digital gold, people will tend to hoard it without trading it, reducing on-chain transaction fees. After multiple halvings, when transaction fees are insufficient to cover the original block reward, miners will shut down their machines, lowering the on-chain hash power. When this hash power is insufficient to withstand a 51% attack, a double-spending event will occur on the Bitcoin network, causing errors in the Bitcoin ledger and ultimately preventing it from becoming digital gold.

In other words, the more Bitcoin aspires to be digital gold, the more vulnerable it becomes, ultimately contradicting the goal of becoming digital gold.

Why do you think bitcoin should become digital gold? Is it stated in the whitepaper, or is it a milestone in the roadmap?

Users' use of the phrase "digital gold" is a metaphor and doesn't mean that bitcoin will be used solely as a store of value, like gold.

I don't believe that ALL users will solely hold bitcoin, as there are many market participants and there will always be buyers and sellers (traders, new buyers, old sellers, etc.). Therefore, miners' services will always be needed, which means it will be profitable. No miner will shut down their equipment as long as it generates a profit.

Therefore, I believe this paradox is NOT relevant. Moreover, I expect bitcoin to continue to circulate among users (for example, for p2p payments for goods and services), such as in casinos.

Look at current on-chain transaction fees: only about 0.01–0.05 BTC per block, which annualizes to roughly 525.6–2,628 BTC，just 0.0025%–0.0125% of the 21 million total supply. In fact, ever since the Ordinals boom faded, on-chain activity has remained this weak.

Such tiny fees are negligible for miners; if it were not for the remaining 3.125 BTC block subsidy, the hash power miners provide would be far lower. As block rewards continue to shrink in the future, the risk of Bitcoin suffering a 51% attack will rise dramatically.

[davis196]

The Digital Gold Paradox: If Bitcoin wants to become digital gold, people will tend to hoard it without trading it, reducing on-chain transaction fees. After multiple halvings, when transaction fees are insufficient to cover the original block reward, miners will shut down their machines, lowering the on-chain hash power. When this hash power is insufficient to withstand a 51% attack, a double-spending event will occur on the Bitcoin network, causing errors in the Bitcoin ledger and ultimately preventing it from becoming digital gold.

In other words, the more Bitcoin aspires to be digital gold, the more vulnerable it becomes, ultimately contradicting the goal of becoming digital gold.

OP, you are spamming the forum with topics, that have been discussed multiple times before(like the "51% attack" theory). Please read the older forum threads about these topics, instead of posting new threads about old topics. Do we really have to repeat the same thing over and over again about the "51% attack" theory? Such attack is pointless, because it will crash the Bitcoin price and the attackers will get nothing in return. Bitcoin is "digital gold" right now. I don't see the transaction fees crashing down and the BTC miners turning off their mining equipment.

[viljy]

For some reason, this scenario assumes a decrease in the number of transactions. And from this assumption, an "apocalyptic" ending is deduced. Even the role of digital gold as a means of saving does not mean a decrease in the number of transactions. On the contrary, the wider the adoption of bitcoin grows, the more users there are, the more transactions there are. The more transactions, the higher the fee.

[Invariant Core]

The Digital Gold Paradox: If Bitcoin wants to become digital gold, people will tend to hoard it without trading it, reducing on-chain transaction fees. After multiple halvings, when transaction fees are insufficient to cover the original block reward, miners will shut down their machines, lowering the on-chain hash power. When this hash power is insufficient to withstand a 51% attack, a double-spending event will occur on the Bitcoin network, causing errors in the Bitcoin ledger and ultimately preventing it from becoming digital gold.

In other words, the more Bitcoin aspires to be digital gold, the more vulnerable it becomes, ultimately contradicting the goal of becoming digital gold.

OP, you are spamming the forum with topics, that have been discussed multiple times before(like the "51% attack" theory). Please read the older forum threads about these topics, instead of posting new threads about old topics. Do we really have to repeat the same thing over and over again about the "51% attack" theory? Such attack is pointless, because it will crash the Bitcoin price and the attackers will get nothing in return. Bitcoin is "digital gold" right now. I don't see the transaction fees crashing down and the BTC miners turning off their mining equipment.

A 51% attack can be profitable, because derivatives markets are now enormous and an attacker could short Bitcoin to make money. Transaction fees are not something that will crash down in the future—they are already crashing down today: recent blocks collect only about 0.01–0.05 BTC in fees, which is negligible compared with the 3.125 BTC block reward.

Satoshi wrote in the whitepaper, “Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.” Right now this does not look optimistic at all, if the community does not make a serious effort, transaction fees will not automatically replace block rewards as miner incentives.

[Invariant Core]

For some reason, this scenario assumes a decrease in the number of transactions. And from this assumption, an "apocalyptic" ending is deduced. Even the role of digital gold as a means of saving does not mean a decrease in the number of transactions. On the contrary, the wider the adoption of bitcoin grows, the more users there are, the more transactions there are. The more transactions, the higher the fee.

Gold obviously does not change hands very often—just think about how rarely banks move physical gold out of their vaults, or how seldom the bars in your own safe are transferred.

In reality, Bitcoin now processes only a few hundred thousand transactions per day, while USDT handles tens of millions daily.

[viljy]

For some reason, this scenario assumes a decrease in the number of transactions. And from this assumption, an "apocalyptic" ending is deduced. Even the role of digital gold as a means of saving does not mean a decrease in the number of transactions. On the contrary, the wider the adoption of bitcoin grows, the more users there are, the more transactions there are. The more transactions, the higher the fee.

Gold obviously does not change hands very often—just think about how rarely banks move physical gold out of their vaults, or how seldom the bars in your own safe are transferred.

In reality, Bitcoin now processes only a few hundred thousand transactions per day, while USDT handles tens of millions daily.

This is an incorrect argument. Obviously, gold and bitcoin are two big differences. Therefore, gold in physical form does not participate much in circulation, whereas we see thousands of bitcoin transactions in each block. This is the advantage of bitcoin. For gold, one of the disadvantages is the difficulty of transportation. Therefore, "paper gold" is involved in transactions. Look at the trading volumes - the trading volume of "paper gold" is more than 600 times higher than the volume of gold mined annually and 10 times higher than the volume of physical gold mined throughout the history of mankind.

[Darker45]

If people hoard Bitcoin without trading it, on-chain transaction fees go down, but the price goes up. So, even if transaction fees in Sat/vB are falling, their fiat equivalent is rising. It's still worth it. Years ago, it was unimaginable for a transaction of high priority to cost 1 Sat/vB. Today, that's what's shown in the mempool. And you can broadcast a low priority transaction for as low as 0.1 Sat/vB. But the miners aren't shutting down their machines.

[Invariant Core]

If people hoard Bitcoin without trading it, on-chain transaction fees go down, but the price goes up. So, even if transaction fees in Sat/vB are falling, their fiat equivalent is rising. It's still worth it. Years ago, it was unimaginable for a transaction of high priority to cost 1 Sat/vB. Today, that's what's shown in the mempool. And you can broadcast a low priority transaction for as low as 0.1 Sat/vB. But the miners aren't shutting down their machines.

The key issue is the proportion, not the absolute dollar amount. For example, current transaction fees of only 0.01–0.05 BTC per block translate to about 525.6–2,628 BTC per year, just 0.0025%–0.0125% of Bitcoin’s total supply. If only such a tiny fraction of fees were used to incentivize miners, Bitcoin would already have collapsed.

Fortunately, the miners still receive a reward of 3.125 BTC per block, preventing them from surrendering and encouraging them to continue contributing significant hash power to maintain network security.

[Invariant Core]

For some reason, this scenario assumes a decrease in the number of transactions. And from this assumption, an "apocalyptic" ending is deduced. Even the role of digital gold as a means of saving does not mean a decrease in the number of transactions. On the contrary, the wider the adoption of bitcoin grows, the more users there are, the more transactions there are. The more transactions, the higher the fee.

Gold obviously does not change hands very often—just think about how rarely banks move physical gold out of their vaults, or how seldom the bars in your own safe are transferred.

In reality, Bitcoin now processes only a few hundred thousand transactions per day, while USDT handles tens of millions daily.

This is an incorrect argument. Obviously, gold and bitcoin are two big differences. Therefore, gold in physical form does not participate much in circulation, whereas we see thousands of bitcoin transactions in each block. This is the advantage of bitcoin. For gold, one of the disadvantages is the difficulty of transportation. Therefore, "paper gold" is involved in transactions. Look at the trading volumes - the trading volume of "paper gold" is more than 600 times higher than the volume of gold mined annually and 10 times higher than the volume of physical gold mined throughout the history of mankind.

While Bitcoin does have a larger actual trading volume than physical gold, it is far smaller than fiat currency, and even within the blockchain space, it is significantly smaller than stablecoins.

If it maintains its positioning as digital gold rather than electronic cash, its trading volume will never surpass that of stablecoins. This results in very low on-chain transaction fees, currently around 0.01 BTC per block. Such low fees are insufficient to effectively incentivize miners. Satoshi Nakamoto's original plan to replace the native block reward with transaction fees will thus fail.

[viljy]

For some reason, this scenario assumes a decrease in the number of transactions. And from this assumption, an "apocalyptic" ending is deduced. Even the role of digital gold as a means of saving does not mean a decrease in the number of transactions. On the contrary, the wider the adoption of bitcoin grows, the more users there are, the more transactions there are. The more transactions, the higher the fee.

Gold obviously does not change hands very often—just think about how rarely banks move physical gold out of their vaults, or how seldom the bars in your own safe are transferred.

In reality, Bitcoin now processes only a few hundred thousand transactions per day, while USDT handles tens of millions daily.

This is an incorrect argument. Obviously, gold and bitcoin are two big differences. Therefore, gold in physical form does not participate much in circulation, whereas we see thousands of bitcoin transactions in each block. This is the advantage of bitcoin. For gold, one of the disadvantages is the difficulty of transportation. Therefore, "paper gold" is involved in transactions. Look at the trading volumes - the trading volume of "paper gold" is more than 600 times higher than the volume of gold mined annually and 10 times higher than the volume of physical gold mined throughout the history of mankind.

While Bitcoin does have a larger actual trading volume than physical gold, it is far smaller than fiat currency, and even within the blockchain space, it is significantly smaller than stablecoins.

If it maintains its positioning as digital gold rather than electronic cash, its trading volume will never surpass that of stablecoins. This results in very low on-chain transaction fees, currently around 0.01 BTC per block. Such low fees are insufficient to effectively incentivize miners. Satoshi Nakamoto's original plan to replace the native block reward with transaction fees will thus fail.

Although I doubt your conclusions, well, let's say you were right. The only known way to keep miners running is through tail emission. But this means abandoning the deflationary principle. Instead, tail emissions create inflation (which slows down relatively over time). Will Bitcoin be changed so drastically to support the work of miners? Or will the price of bitcoin rise so much that it will be profitable for miners to work only for a fee?

[X-ray]

Digital gold because bitcoin is deflationary, the main hurdle that make transaction become less in the blockchain is the fact that we have both ETF and Exchange. You send bitcoin across accounts and that is executed off chain. That is bigger problem than bitcoin becoming digital gold and deflationary.

If you want to increase transactions in the blockchain, we should be advocating for people to do self custody because with self custody, every bitcoin moved is a new transaction.

Just imagine those accounts in exchange that amounts to million actually doing self custody. I'm sure the transactions in the blockchain will be significantly improved.

After all if not for the deflation and bitcoin being considered as digital gold, I doubt there will be as much capital inflow from the institutions and retailers that could help bitcoin to become even bigger.

[melinoe]

Digital gold because bitcoin is deflationary, the main hurdle that make transaction become less in the blockchain is the fact that we have both ETF and Exchange. You send bitcoin across accounts and that is executed off chain. That is bigger problem than bitcoin becoming digital gold and deflationary.

If you want to increase transactions in the blockchain, we should be advocating for people to do self custody because with self custody, every bitcoin moved is a new transaction.

Just imagine those accounts in exchange that amounts to million actually doing self custody. I'm sure the transactions in the blockchain will be significantly improved.

After all if not for the deflation and bitcoin being considered as digital gold, I doubt there will be as much capital inflow from the institutions and retailers that could help bitcoin to become even bigger.

Agreed. People are just getting their heads in the right direction with BTC - they see potential and the results that can be achieved as those that are possible.

On the scale of businesses and institutions alike, that's the biggest feat to make - to be considered as something worth going into..