Topic: BTC vs physical gold price potential (Read 616 times)

People often talk about the price potential of BTC or gold, in terms of US dollars or euro. In my opinion this does not make sense because the value of euros and dollars can be destroyed by central banks printing them to infinity.

So it only makes sense to debate the value of BTC or gold, in terms of an other store of value with a limited availability (BTC expressed in gold, or gold expressed in BTC. Or even in silver)
Fiat currency is not a store of value as we all know. Currency is not money because any currency in history got inflated to 0.

There is an estimated 208 000 tonnes (208 000 000 kgs) of gold available on planet earth. This has been mined throughout history and we can assume that this is not lost. But let's estimate it at 210 000 tonnes to make it easy.

The amount of bitcoin that will ever be available, is capped at 21 million coins. So for each coin that is available, there is 10 kgs of gold available (210 million divided by 21 million = 10)

So in terms of value 1 BTC is worth 10kgs of gold. But given that 10kgs of gold costs 650 000 dollars today and 1 BTC costs 30 000, BTC must be undervalued and still has a potential to 20x from here. So why would people buy gold as a hedge against inflation, when they can buy BTC that is undervalued by a factor of at least 20? I guess the answer lies in confidence and previous experience.

Is any of the above wrong?

A few side notes:

- I think this is only true when BTC reaches mass adoption like gold does now. But I think this has a good chance of happening because CBDC's will lose their value just like fiat currency. People will run to real stores of value like precious metals or BTC. BTC is more accessible than gold and so I expect more people to chose BTC over time.

- Given the fact that many coins are lost and thus not available for trading, maybe the real amount of BTC that will ever be in circulation is more like 15 million. This makes BTC more rare and increases its value in gold significantly.

Currently, gold is one of the most valuable things in the world. Most of the people of the world probably know about this gold. Gold has a tangible form. People use gold not only as ornaments but now people also use gold as their savings.  There are many people who save money and spend it through them, basically those people save gold instead of money. Many people invest in gold. That is, they buy gold with a large amount of money at that time when the price of gold has come down relatively much. 

Bitcoin is a digital currency. It has no real shape. But the interesting thing is that despite its lack of physical form, Bitcoin is a very popular currency worldwide. Maybe not so many people around the world are aware of Bitcoin like gold but the amount of investment in Bitcoin is very high. Many people have now chosen Bitcoin as one of their investment mediums.

“It’s a wonderful way of laundering conflict gold,” said Richard Hayes, chief executive of the Perth Mint in Australia, one of the world’s largest refiners. “The gold is genuine, but it’s not ethically sourced… .”

Cheating Wonders: The $6,000,000,000 Gold Mine That Didn’t Exist

The potential of bitcoin is so much higher than gold. The price of gold doesn’t go up anywhere near as much as bitcoin. Gold is useless as a means of payment, you can’t transport large amounts across borders without certification & proofs.

Bitcoin is the future, gold is the past.

Physical gold will always be one of the things that we must have, it is mandatory to have some grams of gold because we do not know what can happen in the world and if something happens, the only thing with value will be gold, so it is not bad to have it, but compare with bitcoin they are things that should not be, perhaps because bitcoin is considered digital gold, but it is something that has other connotations, they are assets for me, or actions that can be used and that they must know how to use and buy to maintain stability at some point when it is necessary, between bitcoin and gold, I believe that both are equally important.

Bitcoin lovers like us have always wanted bitcoin to be the center of the world, replacing the assets of the older generation, and I know that's normal. But it should also be more realistic that that's not going to happen anytime soon, and I don't think it's possible either.
Gold is still the most sought after thing not only people but even countries are scrambling to reserve as much gold as possible, and they have a reason to do it without choosing any other asset. Bitcoin is scarcer than gold, which is indisputable, but the demand for gold is still much higher than for bitcoin, which we also accept.

Bitcoin lovers like us have always wanted bitcoin to be the center of the world, replacing the assets of the older generation, and I know that's normal. But it should also be more realistic that that's not going to happen anytime soon, and I don't think it's possible either.
Gold is still the most sought after thing not only people but even countries are scrambling to reserve as much gold as possible, and they have a reason to do it without choosing any other asset. Bitcoin is scarcer than gold, which is indisputable, but the demand for gold is still much higher than for bitcoin, which we also accept.

Gold is as scarce as Bitcoin but represents the old world we should break away from. I understand that material and tangible things always have value but now we have to think about a digital life and there is no solution other than Bitcoin.

This is more of a philosophical debate, but feel free to tell me if my reasoning is wrong.

...

If I am wrong about anything here, please tell me.

I would not compare these two assets because they have slightly different applications, although I like your idea. But I do not agree with the numbers and the peg of BTC to kg. Both of these assets are universal in their own way and freely convertible into different currencies, and this is their advantage. But gold is a more universal asset and is recognized all over the world by all countrys and people, while Bitcoin is not yet.

I agree, gold is scarce and you may see it here and there if you look for it, but there is a limit to it. there is about 210k tons of it available, a bit less (208 or something) and that is it. Now when you put that into perspective, so many nations buy it and store it so that is a proof that it will be like that for a long time.

But when we are talking about 0.00026 tones for per person, or better yet something like 25 grams per person give or take? Check my math because I am not sure if I am right . But all in all we have 8 billion people so it's 25 grams per person, that's scarce. Same goes for bitcoin though, there are 21 million bitcoins and 0.0026 btc per person available even when all of it is mined. Same logic.

Gold is scarce if you compare it to fiat and the needs of people around the world, and that's why gold has a high value and still has the potential to go higher in the future. Our world is 8 billion people, and talking about the need for gold is needed by everyone, so it is still considered scarce.

But when compared to bitcoin, gold proved to be much more abundant than bitcoin. But the problem is not scarcity is that there will be a high value, if there is no need, the scarcity will also become useless. For me, these two types of assets are very important, I don't want to compare because no one forces me to choose one of the two, I like to use both.

~snip~
What if the government doesn't let you do that, and people aren't excited to accept bitcoin because of the government ban? Bitcoin can do all that, but the bottom line is that without government consent, you won't be able to use bitcoin. As long as fiat remains the world's primary currency and the government doesn't accept bitcoin as currency, there's no way you can use bitcoin without fiat.

What if the government doesn't let you do that, and people aren't excited to accept bitcoin because of the government ban? Bitcoin can do all that, but the bottom line is that without government consent, you won't be able to use bitcoin. As long as fiat remains the world's primary currency and the government doesn't accept bitcoin as currency, there's no way you can use bitcoin without fiat.

Yup, The Fiat currency is not scarce as its supply is controlled by central banks, and they can increase its supply at will through the process of monetary policy. This can lead to inflation and decrease the purchasing power of fiat currency over time.