Is “Digital Gold” Underestimating the True Value of Bitcoin?
Labeling Bitcoin as “digital gold” is a misunderstanding of this revolutionary form of currency. This characterization simplifies Bitcoin to merely a store of value, obscuring its deeper technological advantages and financial potential.
Analogies are a common way for humans to understand new things, and in the face of the unprecedented concept of Bitcoin, people naturally tend to seek a reference model. Before the general public deeply understands the underlying mechanisms of Bitcoin, “digital gold” is undoubtedly an intuitive and easy-to-accept analogy. Bitcoin is scarce, globally accepted, and serves as a store of value, making it seem reasonable to refer to it as “digital gold.”
This narrative has driven adoption at the institutional and sovereign nation levels, and it was even included in the first paragraph of President Trump’s executive order regarding the establishment of a strategic Bitcoin reserve: “Given its scarcity and security, Bitcoin is often referred to as ‘digital gold.’
This is an undeniable achievement. However, if Bitcoin is to realize its true potential, this narrative must be updated.
Bitcoin is Not “Digital Gold”.
Equating it with gold undermines a monetary innovation that fundamentally disrupts traditional financial systems. The fundamental properties of Bitcoin render the traits that gold takes pride in as outdated; at the same time, it is faster, safer, and more decentralized than fiat currency.
Scarcity and Limitation
The reason gold has long been a store of value lies in its scarcity. Over the past century, gold production has only increased by about 1% to 2% per year. The difficulty of exploration, coupled with high labor, equipment, and environmental costs, makes large-scale production economically unfeasible.
This naturally occurring supply constraint has granted gold its monetary status since 3000 BC. In ancient Rome, the price of a high-quality toga was comparable to the amount of gold required for a tailored suit today, reflecting its stable value.
However, in the age of Bitcoin, using an asset with supply fluctuations as a measure of value seems outdated. Bitcoin is not scarce; it is “limited.” Its total supply is forever capped at 21 million coins and will not increase due to technological breakthroughs or cosmic mining.
Through mathematical and technological means, humanity has for the first time possessed a fixed-supply currency that can be traded, the significance of which far exceeds what “digital gold” can encompass.
Divisibility
While gold can be cut, it is hardly considered “highly divisible.” Only under conditions equipped with saws, laser devices, and precise scales can it barely possess this trait. Therefore, gold is suitable for large transactions but difficult to use for everyday payments.
At current market prices, 1 gram of gold is worth about $108. If one were to pay for a sandwich with gold, it would require scraping off a portion, which is evidently impractical in reality.
Historically, humans addressed this issue by issuing coins with a defined metal content. However, this also opened the door to currency devaluation.
For example, the stater coin minted by Lydia circa 600 BC was initially made from electrum (a gold-silver alloy) with a gold content of about 55%. After being conquered by the Persian Empire in 546 BC, coins gradually began to be mixed with base metals like copper to reduce gold content. This practice led to a decline in the actual value of the coins, and by the end of the 5th century BC, their gold content had dropped to only 30%-40%.
The inability of gold as an asset to achieve divisibility has historically prevented its long-term effective use. To conduct small transactions, citizens typically exchanged gold with the government for coins at a 1:1 ratio, a mechanism often diluted by elite manipulation of power, leading to currency devaluation and social trust collapse.
Throughout history, no gold-standard monetary system has ultimately avoided devaluation. The practical demand for microtransactions forced the public to rely on government-issued paper money and small denomination coins, thus losing control over their wealth.
Bitcoin achieves a fundamental breakthrough in this regard. Its smallest unit, “satoshi,” equals one hundred millionth of a Bitcoin. Currently, 1 satoshi is worth about $0.001, and its divisibility surpasses that of the dollar. Bitcoin transactions do not require any institutional or governmental intermediaries, allowing users to always transact directly using the smallest denomination, making it a true currency system that can operate without intermediaries.
Therefore, comparing gold to Bitcoin in terms of divisibility and pricing units is almost laughable.
Auditability
The last time the U.S. government officially audited its gold reserves was in 1974. At that time, President Ford allowed reporters to enter Fort Knox in Kentucky to check the vault, and there were no anomalies. However, that was half a century ago.
To this day, speculation about whether the gold in Fort Knox remains intact persists. Recently, there were even rumors that Musk would livestream the auditing process, but this “upcoming” audit quickly fizzled out.
Unlike the rare and infrequent manual audits of gold, Bitcoin’s verification is automatic. Through the proof-of-work mechanism, new blocks are added every 10 minutes, and the system automatically verifies transaction legitimacy, total supply, and consensus rules.
Compared to the third-party trust mechanisms relied upon in traditional audits, Bitcoin achieves on-chain verification that is trustless and publicly transparent. Anyone can independently verify blockchain data instantly; “Don’t trust, verify” has become the consensus principle of Bitcoin.
Portability
The portability of Bitcoin requires no elaboration. Gold is bulky and heavy, necessitating specialized ships or planes for cross-border transport. Bitcoin, on the other hand, is stored in a wallet, and regardless of the amount, its “weight” is always zero.
However, Bitcoin’s true advantage lies not in its lightness, but in its lack of need for physical “movement.” In reality, receiving a payment in gold means incurring transportation costs and trust risks with intermediaries. In cross-border transactions, the involved third parties include transaction facilitators, export logistics teams, transport personnel, recipients, and custodians, with each link forming part of a trust chain.
Bitcoin does not require any intermediaries. Users can complete cross-border payments directly through the blockchain, with the entire transaction being publicly verifiable, eliminating fraud risks. This marks the first time humanity truly possesses “electronic cash.”
Conor Mulcahy from Bitcoin Magazine pointed out: “Electronic cash is a form of currency that exists only in digital form and is used for peer-to-peer transactions. Unlike electronic currencies that depend on banks and payment processors, electronic cash mimics the anonymity and direct exchange features of physical cash.”
Before the advent of Bitcoin, peer-to-peer non-face-to-face transactions remained a theoretical assumption. Those who believed that “if it can’t be seen or touched, it isn’t real” will ultimately be phased out in this accelerating digital age.
Not All Bitcoin “Adoption” is Worth Celebrating
If the goal is merely to drive up Bitcoin’s price, then the “digital gold” narrative is indeed effective, as governments, institutions, and individuals will continue to enter the market, and the price will keep climbing.
However, if Bitcoin is viewed as a technological revolution that changes the order of freedom, its propagation must be rethought. To establish Bitcoin’s core position in the global financial freedom system, it is essential to educate those who have yet to encounter Bitcoin, conveying its uniqueness rather than relying on simplified metaphors.
Bitcoin deserves recognition as an entirely new form of currency, rather than a digital substitute for gold.
This article is collaboratively reproduced from: PANews