5 Reasons Why Bitcoin Is an Evolution of Gold

It is often remarked that bitcoin is the gold of the internet, but what does that really mean?

What is it about gold that makes it so valuable in first first place, anyway – let alone bitcoin? And so what about bitcoin? What happens when we drill down into the properties of a bit of gold to find the link?

Golden Value

Gold’s value is derived from a number of core factors, chief of which is its chemical make-up, which results in a property that is both impossible to reproduce synthetically while being aesthetically brilliant and yet, quite ordinary in its alchemy.

When you look closely, it becomes as evidently clear as a ton of 99.99% proof bullion itself that bitcoin is a similar commodity – albeit one designed for the digital age.

Gold & Bitcoin: Same Story, Different Epoch

All the criticisms that bitcoin has levelled against it – that it’s used for shady transactions, that it’s manipulated by a few key power players, that its markets are opaque and shadowy – all apply to gold at various (and in many cases, present-day) stages of the asset’s evolutionary cycle.

For the weekend, here are 5 quick reasons why bitcoin is, quite simply, evolutionary AU:

1. Both are completely unique: Bitcoin and gold are both uniquely identifiable. The difference is that gold is identifiable by its chemistry whereas bitcoin is identifiable by its mathematical formula – its virtual chemistry.
2. Both are mined: Bitcoin and gold are mined via a labor-intensive process. The improvement that bitcoin’s mining system makes on gold’s is that it is fully mobile and that it is done via knowledge workers and machines, whereas gold mining is fixed and is done via manual workers and tools. This means that bitcoin miners gravitate towards where energy prices are cheapest, meaning that energy output is more evenly-distributed across the globe.
3. Both are units of energy: Bitcoin is a unit of spent energy vs. gold, which is a unit of potential energy. A unit of spent energy is clearly a more cost-efficient way of representing payments than a unit of potential energy, especially in an economy where energy consumption is growing at an unsustainable rate, since the value has been entirely “spent” in the case of bitcoin prior to its manufacturing economic value.
4. Both are units of economic volume: Bitcoin exists only by reference of its previous transaction (in the blockchain or in a wallet), whereas gold exists by reference of its storage status (in a vault or a safe). What does that mean? Well, in a knowledge economy, transactions – not holdings – are the mechanism by which markets move. As the number of transactions speeds up and multiplies exponentially, so the requirement for detailed analysis of those transactions is increasingly imperative, whereas the need for the display of the core currency itself seems much more like baggage. (Think of the last time you had to move cash between accounts, contending with the banks’ opening hours etc.)
5. Both are social statements: Gold’s end-value is reliant on its core aesthetic component. It’s a status symbol. Believe it or not, that’s exactly what is happening to bitcoin – only in the case of the latter, the commodity is more easily obtainable (broadly distributable). In the old times, it was gold’s physical appearance that was important, since communities were small and local. Today, they are large and widely spread, meaning that solid value is less intrinsic in a knowledge economy than value that can be handily distributed. Indeed, virtual value that has increasingly counted for more over the previous decade – with the invention of the blockchain suddenly came along a way to forge together a unit of virtual value that was unique.

There are of course other reasons for the argument that bitcoin is an evolution of gold, monetarily speaking. Can you think of any? Share them in the comments below and we’ll feature the best ones here at CoinSpeaker!

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