Opinion: June 1, 2021. Should We See Bitcoin as a Substitute for Gold?

There is an argument, currently, that state that bitcoin has become a substitute for gold as a store of value. The reason for this argument is that the digital asset was created using an algorithm that tries to mimic gold mining. In bitcoin's case the "mining" is the resolution of complex mathematical calculations. Also, both gold and bitcoin are non-inflationary, meaning that their availability is limited and cannot be created out of thin air. However, there are reasons to challenge the assertion that "bitcoin is like digital gold".

One main difference is that bitcoin has no intrinsic value, mimicking more a fiat currency (sustained by trust). On the other hand, gold has intrinsic non-monetary value. The value of gold will not drop to zero and the value of bitcoin may drop to zero if it loses the confidence of human beings.

Another main difference is that bitcoin's price is considerably more unstable than gold's. It is more a risky asset that may provide significant profits (or losses) than a place where to park wealth.

In my opinion, individuals and businesses should have a percentage of their assets in the form of bitcoin or another cryptocurrency. Another percentage of the same assets should be placed on gold and other precious metals. People should not see them as equivalents.

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