Gold vs. Bitcoin
Currencies have evolved over thousands of years. Most of the currency we use today consists of paper notes and coins. They have come to this advanced stage after evolving alongside the economy of the world. Each country has paper notes and coins of its own. The name of the currency also differs from country to country.
Bitcoin is the newest currency type in this long history of currency evolution. It is a very recent innovation, invented in 2008 by an unknown individual under the name Satoshi Nakamoto.
A cryptocurrency is only meant for use on the internet. It is not physical but just like computer software in nature. Many businesses on the internet don’t allow its use and some countries also have prohibited the use of cryptocurrencies.
Each bitcoin is a file on a computer that is stored in a digital wallet. Bitcoins can be both sent and received but they are always kept in a digital wallet. This is just like an ordinary currency but in software form. It is also possible to send only part of a bitcoin as payment.
Meanwhile, gold has great historic recognition as a valued metal. People tend to have a great association with it. It is a name they trust. They think that gold will always be valued and therefore having it is a smart investment. This view is held all around the world. Many cultures have an even greater association with gold. Some use it as ornaments, jewelry, and other traditional purposes. All this makes gold a very trusted name for all. Gold has been used as a currency for a very long time.
Gold and bitcoin make a great comparison. They are the absolute opposite of each other. Gold is a hard metal that is very expensive. Bitcoin has no physical existence and is an online virtual currency.
Both give rise to a lot of interest. Gold not just for its great look and high value but also for its ornamental use, especially by women. Bitcoin is the virtual currency of the internet. It holds not just fanciful interest but already has a great use. It also holds great promise for the future.
There are advantages and disadvantages of using gold or bitcoin as a currency. People differ in their tastes and choices. It depends on what you prefer. Situations and circumstances also vary. They play a very important role in determining what currency to use.
Here are the pros and cons of both gold and bitcoin.
- Gold may be carried physically from one place to another.
- Gold has been used as a currency as it has a high value-to-weight ratio. Lesser quantity needs to be carried as compared to a cheaper metal like silver. It can be weighed and exchanged. It can later be molded into other shapes. It is non-reactive and doesn’t tarnish.
- Gold cannot be destroyed. Bitcoins may get deleted or destroyed by viruses.
- Gold is very costly. It is hard to afford for many people around the world. Also, low payments cannot be made with gold because of its high value.
- Its availability is limited. Only a limited quantity of gold is available on the earth. It is natural and we cannot make new gold.
- Being high in value, it is tempting for crimes like theft and robbery. Such crimes can easily cause bloodshed.
- No widely used system in the world uses gold as currency. Large payments too are usually made in the form of large amounts of currency notes through banking transactions.
- Unlike gold new bitcoins can be generated. In fact, creating new bitcoins is a business that is open to the public. The process is called mining.
- Unlike gold, bitcoins can be used to make very small payments easily. They are virtual and a part of a bitcoin may be used as a payment.
- They can help small businesses save money by avoiding paying through intermediaries like MasterCard, Visa, Paypal, etc.
- Bitcoin is decentralized. They are not controlled by some central authority like a bank. A bitcoin computer network is peer-to-peer. In peer-to-peer computer networks, all participating computers have the same role. There are no dependent computers. A bitcoin transaction is saved in a public list called a blockchain. This helps prevent problems and keep the system running smoothly.
- A user can keep the transaction anonymous keeping his details hidden. This includes details like an account number. Anonymous use of bitcoins is very common.
- Bitcoins are available only on the internet. Even on the internet, many businesses don’t accept bitcoins. Some countries don’t allow the use of bitcoins.
- Bitcoins may be lost to hacking, deletion, and viruses.
- They have an uncertain future as even on the internet ordinary currency remains in far greater use compared to bitcoins.
What is the future of a currency is a very important question. People want security for their money above all. They obviously don’t want to lose their hard-earned capital. They tend to trust the traditional methods unless the alternative is not just secure but also attractive to them.
Bitcoin is very new. Though its future seems promising, uncertainties remain since some countries don’t allow its use. The same applies to many businesses. Time-tested normal currency alternatives have far greater use even on the internet.
In such a situation much depends on how bitcoin evolves in the future. It must assume a role that is more central to business, industry, and world economy instead of only being a side player.
Gold naturally makes a good currency because of reasons that have already been mentioned. However, its scale of use cannot be extensive as many people cannot afford it. It is good for making larger payments in business and trade. Its high value, shiny beauty, emotional association, and traditional use will always keep it a viable alternative for currency use. It can also be molded easily into other valuable items like ornaments. The future of gold seems ever promising though only for those who are rich and affording.