Since Bitcoin began to increase its value in the market, many experts began to call it “digital gold”, this is because it has many similarities with the gold of about a century ago, where it was so volatile, as it is now the same Bitcoin.
What is Bitcoin?
Bitcoin is a virtual currency that does not physically exist and is totally decentralized, ie; no entity or government has power over it. The latter is one of the great attractions of Bitcoin, since the possession of this characteristic, the global economic situation, does not affect its value directly.
The stability of Bitcoin is almost nil because its price is fixed by supply and demand, therefore, its price will always depend on the market. Bitcoin cannot be handled as if it were a conventional virtual currency such as the dollar or the euro, since a special portfolio is needed, which is compatible with the Bitcoin and is from that wallet, where all necessary transactions are carried out, either; receive, send, save or pay for a good or service.
The way in which Bitcoin is generated is relatively simple, since all activity depends on users who are called “miners“, these users are responsible for maintaining the system, as, through its powerful computers, they solve the mathematical operations that generate the transactions with Bitcoins and once they solve these operations, they obtain as rewards, small amounts of the cryptocurrency.
What is gold?
It is a metal found in the earth’s crust, it is yellow and quite bright, which is why it has made human beings always want to have gold in their hands since it was discovered, it has been striking.
Currently has many uses related to jewellery, not to mention that it is used in a few quantities in many electronic components, this is one of the factors that has helped gold maintain its value in the market.
Why is it said that Bitcoin is the new digital gold?
When Bitcoin began to increase in value during 2012 and 2013, many experts began to say that it was the new digital gold, these comments began to come to light in the wake of the similarities that both assets have. These similarities are the following:
Instability in the market, something in common
Both assets depend on supply and demand because despite being used for many things, its true value comes from its attractiveness, which makes people want it and therefore, increases demand and in turn, the value that these assets have in the market.
This in a certain part is positive, since the value is almost always increasing, however, it makes its price totally unstable and gives space for financial bubbles to exist.
There is a limited amount, which means that investors always want to monopolize more
Both Gold and Bitcoin are limited assets, that is; There can only be an exact amount in the market, this generates an effect of inflation in both assets, since its price cannot be maintained, but it increases constantly.
This for the Bitcoin is not a problem since it can be handled easily in small quantities, said quantities are called Satoshi, however, in gold if it represents a problem, since the smaller the quantities, the more complicated is its handling.
Both assets can be used as an international currency, but Bitcoin will always be better for these negotiations
Both gold and Bitcoin can be used to pay for goods and services in a simple way, since basically in all countries they are accepted and there are always people interested in doing business with these assets, however, Bitcoin is at this point much better, since being digital, it is not required to be transporting large quantities of metals, which makes the whole operation much faster, simpler and safer.
The chances of the Bitcoin going much further than the gold itself: Is it really possible for that to happen?
Currently, Bitcoin has a value much higher than gold, not to mention that its peak has been much higher than gold in its history, which has made many experts will begin to speculate on whether the Bitcoin is really the new digital gold or a simple financial bubble.
The chances of Bitcoin going further than gold are real, and even in prices, it has already managed to be better than gold. One of the reasons why Bitcoin has a chance to succeed is because it is totally decentralized and digital, which makes it go with the current technological trend.
It should be mentioned that this does not mean that Bitcoin will replace gold since gold will always have an appeal that will keep a series of loyal investors.