Positive consequences if Bitcoin replaces gold as a reserve asset

[viljy]

Where does Bitcoin create jobs? Exclusively in the financial sector, that is, where surplus value is not created. So, roughly speaking, Bitcoin cannot contribute to the growth of real GDP, while gold can.

The surplus value from Bitcoin comes from the efficiency as a tool to transfer value. And this affects all companies which transfer value.

Take international trade: if using Bitcoin for transfers costs less than SWIFT, then all companies active in international trade would be benefitted by using Bitcoin. Or another example: online payments. Merchants have to pay a significant amount of fees to credit card companies. If instead Bitcoin (e.g. via Lightning or Ark) would be massively used, this would reduce the fees. (Regarding the relevancy of intermediaries, see below).

There's a catch: all these use cases depend on a lower BTC volatility, but in the scenario I describe this would be the case.

The use of Bitcoin as a means of payment is hindered by its volatility (regardless of whether it’s in relation to the dollar or some other value scale). Moreover, even if volatility ever becomes low, the question will arise: how low would the volatility need to be acceptable? But let’s assume this obstacle will somehow be overcome. And Bitcoin is used instead of bank cards. Will the absence of fees for acquiring payments via bank cards lead to lower prices? It’s unknown, as it depends on competition, and for large retailers it’s more profitable to enter into a cartel agreement (which is virtually impossible to prove).

However, cashback on bank cards will completely disappear! Since cashback exists precisely because banks charge fees for acquiring card payments. By the way, in some countries, alongside bank card payments, there is a QR payment system (without acquiring fees). Such payments already account for a significant share of all transactions. But have prices decreased? It’s not noticeable...

In general, the problem of using a limited asset (e.g., Bitcoin) as a reserve or money overlaps with the problem of fractional reserve banking. In Paul Mason’s book "Postcapitalism" (one of the books written in a very simple and understandable language), there is a passage that specifically addresses Bitcoin (I highlighted what I considered important):

There will be, writes former JP Morgan manager Detlev Shlichter, a ‘transfer in wealth of historic proportions’ from those holding paper assets – whether in bank accounts or pension funds – to those holding real ones, above all gold. Out of the ruins, he predicts, will come a system where all loans have to be backed by cash in the bank, known as ‘100 per cent reserve banking’, together with a new Gold Standard. This will require a massive one-off hike in the price of gold, as the value of all the gold in the world has to rise to make it equal to the world’s wealth. (A similar rationale stands behind the Bitcoin movement, which is an attempt to create a digital currency, not backed by any state and with a limited number of digital coins.)
This proposed new world of ‘real’ money would come at a massive economic cost. If bank reserves have to match loans made, there can be no expansion of the economy through credit, and there can be little space for derivatives markets, where complexity – in normal times – aids resilience to problems such as drought, crop failure, the recall of faulty motor cars etc. In a world where banks hold reserves equivalent to 100 per cent of their deposits, there would have to be repeated stop-go business cycles and high unemployment. And simple maths shows us that we would go into a deflation spiral: ‘in an economy with an unchanged money supply but rising productivity … prices will on trend decline’, says Schlichter.

[ColdLava40]

If Bitcoin is used as a reserve or generally for "saving" money (being it by states, by companies or by retailers) then this could increase its valuation and boost its liquidity and also the usage for payments. If many people and companies hold Bitcoin, then they will be tempted to use this money directly for purchases. A higher valuation is also correlated with less volatility, which also would help it to be used more for payments.

Thus my conclusion is that a store-of-value usage very likely has also a positive effect on payment usage, and thus boosts the "productivity" effect.

With how people increasingly see Bitcoin as an asset for future gains, they may be more inclined to hold it and trust their conviction rather than sell it or use it for everyday transactions. Companies may continue to explore Bitcoin's P2P and payment potential, but individuals may prefer to keep stacking Bitcoin because they see it as a store of value over time.

So what I think is that if more people start treating Bitcoin primarily as a store of value, there could be a slight negative effect on its use as a means of payment. People are naturally less willing to spend an asset they expect to appreciate.

This is where I think the productivity effect becomes important. If Bitcoin becomes more useful and productive within the economy through payments, settlement, P2P transactions, remittances, and other financial activities, t can increase its utility and help preserve or strengthen its value rather than relying solely on speculation and scarcity.

The cyber risk is a good point, as is the proneness to human error mentioned by @stompix. On the other hand, gold reserves also have to be protected. It would require a thorough analysis on which of both assets has higher "security costs".

In this sense, gold carries more costs when it comes to physical security because we also have to consider storage, transportation and protection.

It might sound ridiculous because breaking into a gold reserve would require a lot of manpower and planning. The attacker has to deal with things like gaining physical access, transportation and the risk of getting caught. All of this comes at a high cost, even though the potential reward could also be very large.

Bitcoin is different because its security is mainly digital. An attacker doesn't necessarily need to physically access a vault. If they can find a vulnerability in someone's wallet, device, exchange account or security practices, they could potentially steal the Bitcoin remotely. The cost of the attack could therefore be much lower in some cases, requiring little more than technical expertise, computing resources and internet access.

Bitcoin shifts much of the security burden toward cryptography, cybersecurity and operational security.

[d5000]

how low would the volatility need to be acceptable?

I would say around half than the current volatility. The Brazilian Real has for example a daily average volatility of 0.5 to 1%, in comparison to the USD (30 or 60 day average). Bitcoin has around 1 to 2%, with a record low of 0.75 approximately in 2023.



This would basically mean that the "crashes" and "spikes" should not go up or down more than 15-20% compared to the average price. As of now, the low in 2026 was 32-33% lower than a DMA measure I made for the average price (~85-90000) and 60% lower than the ATH spike in October 2025. Bear markets would then lead to losses of 30-40% from the ATH, this would already be better than gold (which loses up to 50%) and also occurs in the fiat world, even the Euro had such volatility in comparison to the USD in the 2000s and early 2010s.

As the volatility is going down but slowly (about 50% every 5 years), I expect this to be realistic for the early 2030s.

Will the absence of fees for acquiring payments via bank cards lead to lower prices?

I have covered this topic here. In short: there are already some businesses giving you a discount if you pay with Bitcoin (or other crypto). The discounts are low (3% was the one I got at Dynadot) but imagine every price is 3% less. And today you have still hedging costs for crypto due to the high volatility. If this goes down, then the discounts would be potentially larger.

Regarding QR payments, these exist in my country and have lower merchant fees. And sometimes they will offer you a discount for this (typically "if you pay with QR on Mondays you get a discount" or so). However some fees are still there, and it could be argued that they are only low for a time period to "drive you into this payment method" because the processing costs for the payment processors should not be different than with cards.

In general, the problem of using a limited asset (e.g., Bitcoin) as a reserve or money overlaps with the problem of fractional reserve banking.

Mason cites two problems of a Bitcoin/gold economy here:
- a possible credit crunch due to limited money supply which can't expand like fiat can,
- deflation.

My argument is that credit could be created by other means. An example is creating new cryptocurrencies. ICOs do already exist. They have a bad reputation, I know, but I think the system behind it is quite sound: basically it's a kind of pre-sale of a product the emitting business offers. If there is no product then it's a scam, but the scams also exist in the fiat world. I can also imagine some kind of "barter credit" based on the smart property concept, imo a very underrated concept which still needs some refinement.

And deflation, if businesses change their model to a more sustainable one instead of a growth-dependant one, could be beneficial in the long term. A case that is often mentioned is Japan, which has very low inflation with deflation phases but a very high living standard and cutting edge technology.

(Thumbs up for citing Mason, I read that book and it was in parts interesting I don't agree with him on a lot of things though, in particular his cycle theory is very esoteric in my opinion).

With how people increasingly see Bitcoin as an asset for future gains, they may be more inclined to hold it and trust their conviction rather than sell it or use it for everyday transactions.

Yes, that's the effect of Gresham's Law. I counter this however with the following idea: If Bitcoin stays successful and increasingly more people hold it, and it becomes more stable and trusted, then people will put a significant part of their wealth into Bitcoin, salaries in Bitcoin would become more common, and merchants would also hold it instead of exchanging it to fiat. And then it could be attractive to pay with Bitcoin just to avoid exchange fees. More and more people could go totally bankless (an old Bitcoiner dream, I know, but if the volatility problem is solved and 2nd Layers become more usable, then it becomes realistic).

They would first use it for high-value payments, but then they could simply open Lightning channels for everyday payments too. It could become a virtuous cycle. But we are still not there of course

[viljy]

My argument is that credit could be created by other means. An example is creating new cryptocurrencies. ICOs do already exist. They have a bad reputation, I know, but I think the system behind it is quite sound: basically it's a kind of pre-sale of a product the emitting business offers. If there is no product then it's a scam, but the scams also exist in the fiat world. I can also imagine some kind of "barter credit" based on the smart property concept, imo a very underrated concept which still needs some refinement.

It seems to me that this path will lead back to fiat currencies. Only now in the form of various "private money" alongside state-issued currencies. If we consider lending in the economy in general, it is consumer lending that primarily generates inflation, since it is an artificial way of maintaining the population’s effective demand. On a societal scale, the problem of insufficient demand is simply shifted to the future.

However, lending to producers, on the contrary, is positive for the economy, as it contributes to the country’s economic growth. If fractional reserve banking is used only for lending to production and lending never reaches the consumer level, then there will be no inflation. But for this to happen, it is necessary to constantly create new demand or expand markets that meet existing needs. That is, to create natural demand, not demand based on credit.

However, the purchasing power of the population is also a problem, especially with rising unemployment. I have no idea how this will be resolved in the future. The Chinese will bring 1000 robots to the factory and lay off everyone except for a couple of people... Robots don’t need to sleep, have lunch, or take breaks...

And deflation, if businesses change their model to a more sustainable one instead of a growth-dependant one, could be beneficial in the long term. A case that is often mentioned is Japan, which has very low inflation with deflation phases but a very high living standard and cutting edge technology.

Deflation has one unpleasant feature that can offset such benefits as falling prices, increased purchasing power of money, and so on. This unpleasant trait is the slowdown in business activity, investment, and production. After all, why do anything if you’re getting richer day by day just by holding money (or bitcoins, or gold, or some other asset that’s experiencing deflation in the current period)?

A business model that doesn’t require growth is incompatible with capitalism. That is, it must be an economy that isn’t focused on generating profits. What could this be? Something without competition. Perhaps production is planned centrally, depending on the needs of society. But then what will be the incentive for innovation? There’s a lot that’s unclear...

[Junii]

Honestly i discussed this with my friends few weeks ago. Actually it is possible but it takes a lot of time because gold as a sign of wealth is rooted in the brains of humans also gold is not 100% unproductive people wear it as a jewellery and also use in electronic products as well . But if i compare both the use case of bitcoin like peer to peer payments and international transfer without asking permissions from higher authorities also a store of value which works against inflation and most important and my favorite a self custody on the other side gold mining is not good for environment and mining needs large amount of resources also physical gold is difficult to transport and more chances of stolen as compared to bitcoin. So i think i will choose bitcoin but again the adoption of bitcoin takes time as still in some countries the bitcoin is banned but hopefully the coming generation knows the worth of bitcoin and i believe in few years bitcoin will show people what it actually is and why it was created.

[Antotena]

Honestly i discussed this with my friends few weeks ago. Actually it is possible but it takes a lot of time because gold as a sign of wealth is rooted in the brains of humans also gold is not 100% unproductive people wear it as a jewellery and also use in electronic products as well . But if i compare both the use case of bitcoin like peer to peer payments and international transfer without asking permissions from higher authorities also a store of value which works against inflation and most important and my favorite a self custody on the other side gold mining is not good for environment and mining needs large amount of resources also physical gold is difficult to transport and more chances of stolen as compared to bitcoin. So i think i will choose bitcoin but again the adoption of bitcoin takes time as still in some countries the bitcoin is banned but hopefully the coming generation knows the worth of bitcoin and i believe in few years bitcoin will show people what it actually is and why it was created.

Gold does not wear out and shiny that's why people use it to beautify and makes value from it. These are the reason why it has value, it doesn't corrode, you can leave it for years and it will stay the same. All of this characteristics are the reason why people see value it and why they use it for reserve. However, all of these are pictured in the mind of people, the way people actually pictured value in their mind is the way some pictured Bitcoin with value.

You know why Gold is so much valuable today, it's because they have valued on them. Over the years, the media has kind of found a way to tarnish Bitcoin reputations with some of the problems of people that use Bitcoin but the resistance was big that they couldn't control it and it eventually won, the government rather gave and some joined, Trump is a Bitcoin guy today because he saw the benefits of Bitcoin. If governments all over the world should endorse Bitcoin today, Bitcoin price will not remain the same.

[Junii]

Gold does not wear out and shiny that's why people use it to beautify and makes value from it. These are the reason why it has value, it doesn't corrode, you can leave it for years and it will stay the same. All of this characteristics are the reason why people see value it and why they use it for reserve. However, all of these are pictured in the mind of people, the way people actually pictured value in their mind is the way some pictured Bitcoin with value.

You know why Gold is so much valuable today, it's because they have valued on them. Over the years, the media has kind of found a way to tarnish Bitcoin reputations with some of the problems of people that use Bitcoin but the resistance was big that they couldn't control it and it eventually won, the government rather gave and some joined, Trump is a Bitcoin guy today because he saw the benefits of Bitcoin. If governments all over the world should endorse Bitcoin today, Bitcoin price will not remain the same.

Yes i agree with you what you just said and your quote looks like a polished version of my reply to the op. Any how our country banned the bitcoin in 2018 and now they regulate it and make another whole department for it because the way people doing investments in it is huge and due to this they find an opportunity so now a days the countries that still has restriction on bitcoin i believe in the future they will regulate it and due to that regulation and limited supply of bitcoin it will sky rocket its price.   

[tabas]

IMHO, one of the negative effects that they will reason if they are to adopt Bitcoin than gold as a reserve asset is they'll point out how it is made or produced and that's through mining. Like what Elon Musk has said before despite that there are a lot of mining farms that uses renewable energy, they'll always go back to that argument that it consumes a lot of electricity which can be harmful to a specific area for which instead of going to households, it goes to mining. Economically, the time might come that those countries who longs to diversify and has got enough gold will also step to have more bitcoin reserve and we're starting to see it little by little.

[d5000]

It seems to me that this path will lead back to fiat currencies. Only now in the form of various "private money" alongside state-issued currencies.

In many cases yes, we could consider this private money fiat, but not in all cases. If every token is backed by a potential product, then no money is generated "out of nowhere". This is where for me smart property comes into play: if we can tokenize real products (just like futures already do for commodities) then we could imagine different forms of pre-financing where there is always "something" behind the newly issued money. But businesses can use this model to finance their operations, and there is less growth pressure (see below).

The MiCar regulation in Europe (which regulates, among others, the issuance and "offer" of cryptocurrencies) for example has an exception for such utility tokens (and gift card-like tokens or similar concepts) which are 100% backed by existing products.

If we consider lending in the economy in general, it is consumer lending that primarily generates inflation, since it is an artificial way of maintaining the population’s effective demand. On a societal scale, the problem of insufficient demand is simply shifted to the future.

I agree that this is indeed a main reason in the current economic system. But business lending does also contribute, and that could be "solved" in a different way, see above.

However, lending to producers, on the contrary, is positive for the economy, as it contributes to the country’s economic growth. If fractional reserve banking is used only for lending to production and lending never reaches the consumer level, then there will be no inflation. But for this to happen, it is necessary to constantly create new demand or expand markets that meet existing needs. That is, to create natural demand, not demand based on credit.

I don't agree fully with this distinction. In my view business and consumer lending lead to the same problem. If you have the effect of consumer lending on the demand of final goods in mind (lending produces more purchasing power -> more demand -> higher prices), take into account that this also happens in the same way for intermediate goods (or for wholesale goods) for business lending. Even lending to primary production (agriculture and mining) creates demand for other sectors, albeit a bit less in comparison to its output, than for commerce for example.

So for me it's a gradual thing, there are sectors where lending influences inflation more than others, but this is not limited to the consumer <-> business distinction.

However, the purchasing power of the population is also a problem, especially with rising unemployment. I have no idea how this will be resolved in the future. The Chinese will bring 1000 robots to the factory and lay off everyone except for a couple of people... Robots don’t need to sleep, have lunch, or take breaks...

Take into account that a productivity increase due to automatization, if the wealth distribution in society doesn't change, also increases the real salaries. So it's possible people simply will work less, like in other productivity boosting eras (industrial revolution). The transition time of course leads to some hardnesses (as it was in the past, see the Luddites in the 19th century).

Deflation has one unpleasant feature that can offset such benefits as falling prices, increased purchasing power of money, and so on. This unpleasant trait is the slowdown in business activity, investment, and production.

Yes, that's an ongoing discussion in the "degrowth" community. I have no full answers for that, but some say that this would lead to more focused consumption, e.g. less short-lived product fads which only are possible due to the inflationary model. See the thread by Satofan44 I linked in my previous post (yeah it's a long read but I think it is worth it)

A business model that doesn’t require growth is incompatible with capitalism. That is, it must be an economy that isn’t focused on generating profits. What could this be? Something without competition. Perhaps production is planned centrally, depending on the needs of society. But then what will be the incentive for innovation? There’s a lot that’s unclear...

I am also not sure about that. Profits can also be simply linked to productivity growth due to technological progress. This means: businesses that really increase the productivity, can make profits even in a slightly deflationary economy. This would be even a bit stronger incentive for "real" innovation in this model - but not for "fake" innovation that attracts capital but doesn't lead to productivity increases.

In the end, I think deflation is neutral or even positive, only we need other financing models for that to happen.

[Alpha Marine]

But, for example, buying or selling stocks does not create any added value in the economy, it merely redistributes it speculatively.

This is not true. "Adding value" to the economy doesn't always happen directly. The fact that you can't see the value, doesn't mean it's not there. When people buy stocks, it makes the company bigger and creeates more divident whiich goes back into the economy in different ways.
Taxes are paid, people and companies have more money so they spend more money and they spend this money in the economy.

Gold also creates jobs in the mining industry. And also in the production of electronics. Where does Bitcoin create jobs? Exclusively in the financial sector, that is, where surplus value is not created. So, roughly speaking, Bitcoin cannot contribute to the growth of real GDP, while gold can.

This is also not true. Bitcoin creates jobs in the tech industry too. Bitcoin has created jobs through companies and exchanges. There are people working in various companies because of Bitcoin. And these companies have various departments, which include marketing, which creates various jobs. Who do you think works on Bitcoin wallet software? All those are jobs that Bitcoin has created. Bitcoin has created jobs in the mining sector; it has created jobs like security auditors, Blockchain developers and engineers. So Bitcoin has created jobs too.

[viljy]

Yes, that's an ongoing discussion in the "degrowth" community. I have no full answers for that, but some say that this would lead to more focused consumption, e.g. less short-lived product fads which only are possible due to the inflationary model. See the thread by Satofan44 I linked in my previous post (yeah it's a long read but I think it is worth it)

This is an interesting idea that can serve as a starting point for imagining a model of a different type of economy (without inflation). In such a system, production is triggered and produces goods only in response to a specific consumer’s demand. There is no mass production at all. Moreover, the entire production chain works this way. There are warehouses with small stocks of raw materials and semi‑finished products to prevent production stops. This is possible with full robotization of the entire production chain under AI control.

Also, in this economy, a very large share of goods may be shared. For example, most transport is either public or part of a carsharing service. The most appropriate analogy for such an economic system is as if there were a universal 3D printer that produces any item on demand. In a fully robotic production chain, the cost of production will decrease with the production of each new item. Since human labour, which creates value, is not used. That is, items are either free or very cheap (creating any items for resale is pointless, since anyone can do the same).

By the way, we can already observe some "pieces" of such a system. For example, the production cost decreases with the sale of each new copy of a game on Steam, since human labor is only spent once on creating the game itself. Robot labor will consume only raw materials and energy to create things (similarly, loading a game also consumes energy and incurs costs for transmitting the amount of information).

A huge number of people use chatbots - this is essentially a shared-use format. The Japanese "just-in-time" production system is similar to the beginning of an "on-demand" production chain. The marketplace website is like a huge virtual 3D printer, where any item is delivered at the consumer’s request.

This system is not aimed at generating profit, since human labor is absent in production, and therefore no surplus value is created. Well, robots don’t need motivation or a goal to work. The engine of the economy is only "necessity" in a broad sense.
The need to eat, dress, get around, and have fun gives rise to focused consumption.

There is no inflation, and, as you rightly noted, there are no short‑lived fads, and consequently, there is no marketing in the broad sense either. But some small‑scale exchange does exist between people (creative products), and for this purpose, Bitcoin or something derived from it is used.  

Here’s something else that’s similar: the society of the future from Wells’s novel "The Time Machine", except that instead of robots, it’s the cannibalistic Morlocks who work there. If you replace the Morlocks with robots, you’ll get something similar.

Can such an "economy of a universal 3D printer" exist? Only ideally, and for a small population. Although a scenario is no less possible in which production simply stops and a general degradation of infrastructure and a shortage of everything occurs - due to mass unemployment (caused by robotics) and a collapse of effective demand.

But, for example, buying or selling stocks does not create any added value in the economy, it merely redistributes it speculatively.

This is not true. "Adding value" to the economy doesn't always happen directly. The fact that you can't see the value, doesn't mean it's not there. When people buy stocks, it makes the company bigger and creeates more divident whiich goes back into the economy in different ways.
Taxes are paid, people and companies have more money so they spend more money and they spend this money in the economy.

Here, we are referring to added value in the Marxist sense (i.e., in production). Simply transferring money from the pocket of the stock buyer to the pocket of the stock seller does not create new value. Speculative growth in stock prices does not create corresponding real value, it only inflates a bubble in the market.

Dividends, taxes, etc., are financial transactions, they do not create real economic growth. The financialization of the economy can only create nominal growth, and in the end, this either increases debt or simply disappears. In other words, for example, a company’s market capitalization is a virtual value that does not correspond to its real worth.

Right now, for the US market, the Buffett Index is around 240%, which is more than one and a half times higher than the "red zone" threshold (135%). Moreover, the lion’s share of the market capitalization is accounted for by just a few technology companies (the AI sector). Here’s even a picture I found on Telegram:

Gold also creates jobs in the mining industry. And also in the production of electronics. Where does Bitcoin create jobs? Exclusively in the financial sector, that is, where surplus value is not created. So, roughly speaking, Bitcoin cannot contribute to the growth of real GDP, while gold can.

This is also not true. Bitcoin creates jobs in the tech industry too. Bitcoin has created jobs through companies and exchanges. There are people working in various companies because of Bitcoin. And these companies have various departments, which include marketing, which creates various jobs. Who do you think works on Bitcoin wallet software? All those are jobs that Bitcoin has created. Bitcoin has created jobs in the mining sector; it has created jobs like security auditors, Blockchain developers and engineers. So Bitcoin has created jobs too.

Well, this is the financial sector in a broad sense. I didn’t say that jobs aren’t created at all. They are created, but mainly in the financial sector. Yes, the financial sector is very technologically advanced nowadays. But it’s not a manufacturing sector, and therefore it doesn’t create real economic growth.

[Jubilee58]

I believe Bitcoin has been seen as a digital asset replacing Bitcoin already. Before now, when Bitcoin was not created, I believe there was no particular digital asset that was seen to be better than gold, but looking at when Bitcoin came onboard till date, bitcoin has really outperformed gold in terms of growth, gold is only bigger in terms of market capitalization, and that is because, gold has been in existence long ago before Bitcoin came onboard, and there is no doubt that Bitcoin will still overtake gold even in market capitalization.
Already many countries of the world are already investing in Bitcoin as a reserve, and the positive consequences is that Bitcoin posseses faster growth potential compared to Bitcoin, which means country's economic reserve will boost very fast, and massively on the long run.

[BlackHatCoiner]

If gold crashed back to its "industrial" value (less than 10% from now), then several goods could be (a bit) cheaper.

There's like $1.50 worth of gold in a modern smartphone. If gold crashes 90%, Apple isn't dropping the price of the next iPhone.

Bitcoin, instead, can be considered at least a bit productive: it has some advantages that benefit the economy if it is widely used, like eliminating some friction, above all in international commerce.

In economic terms, neither gold nor Bitcoin is a productive asset. Productive assets generate cash flow or goods. Both Bitcoin and gold are monetary stores of value.

Also, there's no way Bitcoin and its second layers replace credit/debit card payment companies like Visa and Mastercard, because handling payments is a real market need that the second layers alone cannot satisfy.

[marrcelo]

The complete replacement of gold seems distant, central banks keep buying alot of gold.

The most likely is that the central bank lives with both, its not necessary one has to replace the other.

Bitcoin with the blockchain is more auditable, has a limit of 21 million.

But to replace the most traditional protection asset in the world. Bitcoin has to decrease its volatility. Speculation can destabilize the economy in the moment of panic in the market.