Bitcoin: Digital Gold or Something More Revolutionary?
by Elliot Davis + Benjamin Davis
Bitcoin is a digital cryptocurrency which is often referred to as digital Gold.
The main reasons brought up for this is that they both have a limited supply. Just as gold cannot be simply reprinted, neither can Bitcoin. Gold is mined by a bunch of people in a dark corner of the earth using heavy machinery to mine ore. Bitcoin is mined by a bunch of people in some dark warehouse using heavy machines to solve complex algorithms. Gold is the valuable and shiny product of processing a raw element, while Bitcoin is the valuable and shiny product of organizing raw data.
Both Bitcoin and Gold act as stores of value within their respective ecosystems, but the similarities don’t end there.
First, a common criticism of this comparison: “Bitcoin is not at all like gold because it can be forked.”
In the world of Blockchain, a hard fork happens when developers decide that changes must be made to the protocol of a cryptocurrency. This creates incompatibilities between the older and newer version and leads to the creation of a new cryptocurrency.
This means that some people can change the protocol of Bitcoin to create a new coin with new rules, giving us popular coins like Litecoin and Bitcoin Cash. A new currency is generated, and new coins are minted by using a modified version Bitcoin’s core protocol. If these forks were a danger to Bitcoin, then we should see their prices match or exceed Bitcoin’s, but they don’t even come close.
Gold too has been forked for various purposes: white gold, green gold, yellow gold, pink gold, layered gold, etc. While it is true that all of these contain gold and all of them have their own additional attributes, 24k pure gold is continually recognized by the community as being the greatest store of value.
So, what gives Gold and Bitcoin their respective values? This varies depending on your qualifications:
As much as people like to tout gold as being an invaluable resource, they are not often the same people who know how to actually use it as a valuable resource. Similar to Gold, Bitcoin is, to the layman, simply a social status symbol; the brand new sportscar in the digital driveway of your online neighbor.
But to the experts, Bitcoin and gold open near-infinite worlds of possibilities.
Gold, when in the hands of the right person, can do amazing things; as can Bitcoin. Instead of scientists and metallurgists you have programmers and cryptographers who can use Bitcoin’s underlying protocol to create magnificent things such as cryptocurrencies.
Wait a minute, how are cryptocurrencies different than Bitcoin? While some currencies work purely as a means to replace your dollar bills, others do not.
There are utility tokens, asset tokens, equity tokens, and other buzzword tokens not yet thought-up. All of these perform some function that serves the goals of a company which often has a CEO or prominent figure head. Bitcoin, like gold, has no CEO. The actions of one person or group of people cannot impact Bitcoin’s ecosystem, making it a store of value and a kind of resource.
It helps to think of the cryptocurrency market as a bevy of communities all working together, like countries. There are CEOs and advisor boards just as there are presidents and legislatures. As you can take gold to any country in the world and exchange it for local currency in order to participate in that country’s economy, Bitcoin can be taken to any company in the cryptocurrency space and used to take part in their ecosystem. Gold has value all over the world; Bitcoin has value all over the “Crypto-verse.”
Bitcoin’s value goes beyond its “Digital Gold,” status. It is a secure, data-driven resource the likes of which we have not seen before in the landscape of the modern internet.
Cryptocurrency offers businesses a new way to raise funds and launch their products. This market will continue to grow, and Bitcoin will be the best foot in the door for each of them. It is the currency of the fourth industrial revolution, which is taking place on the internet. And the internet is the superhighway that connects all of our societies and creates a world community, which is here to stay.
If society crumbles, the internet shuts down and cryptocurrency fails with it, we can all take solace in the biggest difference between Gold and Bitcoin. We won’t be able run around beating each other to death with bricks of Bitcoin.