We have heard so many things about Bitcoin and its advantages. However, nothing speaks better about its features and importance than its comparison with the rarest metals. Bitcoin is now ‘Digital Gold’, this phrase is very common among every crypto enthusiast these days. What does it mean and how did we reach this point?
Well, this article consists of every single answer about ‘Bitcoin as Digital Gold’; let’s take a look:
Why Only Gold?
Those of you who are a bit older may remember the time when a dollar was pegged to gold and the same way, the British pound was pegged to sterling. It meant that each dollar had its equivalent in gold and was backed by it. It was a guarantee of value.
However, gold was scarce and could not back all the money we needed. So, in 1971 the dollar ceased to be the currency pegged to gold. At that time, an ounce of the gold price was estimated at $35. In the meantime, we also continued exploiting gold. At the moment of writing this post, the price of an ounce of gold is around $1,697.01.
Scarcity is Often Considered Valuable
The very first reason why crypto enthusiasts often compared Bitcoin to Gold is due to its scarcity. However, this is not the only reason for Bitcoin to be considered a ‘Digital Gold’.
Its scarcity is projected. If we check the historical data, we could say that producing Bitcoins is the process that requires time and diligence. You can look at it as fine filigree work of a jeweler. It integrates planning, proof of work, testing, blockchain network development, and more.
The value is embedded in its production, but also in its demand and supply. Moreover, it is also improved every 4 years due to the Bitcoin halving. This event, which should happen in mid-May 2020, means that new bitcoin issuance will drop from 12.5 to 6.25. To Know more about the Bitcoin Halving, we invite you to read our previous blog post.
So, BTC halving makes Bitcoin scarcer in demand and increases its value as well.
Bitcoin is Easier to Transport as Compared to Gold
Yes, BTC is scarce, with only 21 million units in circulation. Apart from the fact that it is rare, Bitcoin is available for transport through digital channels, reducing the transaction costs significantly. Compared to the transportation of gold, the costs are negligible.
The Provenance of Bitcoin
Another important advantage of Bitcoin is the power that it provides in the hands of its users. Unlike gold, the users are able to confirm the provenance of Bitcoin. Neither every ounce of gold is of the same quality, nor is every golden piece jewelry of 24 carats. However, as a regular buyer, you cannot know this.
The advantage of the BTC network is that it has allowed computers globally to run full nodes and verify the network. The ability to keep the public records of all production, buy and sell of a certain product is the main feature of BTC blockchain. That way, Bitcoin provides transparency as its most appealing feature.
No Involvement of Central Authority
Bitcoin provides transparency in each transaction, excluding the third party. It is also more convenient to send BTC as compared to gold; you can send a tiny fraction of Bitcoin, while we cannot melt down gold easily to send it in tiny pieces.
These are just a few advantages of BTC over gold. So, now you know how beneficial it is to invest in bitcoin. This is the high time to buy and sell crypto currency to earn huge capital. So, find the best fiat to crypto exchange to trade USD, EURO, and KES to buy your desired crypto.