Bitcoin is a commodity.
If you're thinking of it like that, then simply acknowledge that bitcoin has the properties that gold does, but taken to their intellectual extreme. PLUS excellent transactability. There aren't many things in this world with gold's properties (eg, only a few other precious metals, really). Let's ignore bitcoin's transactional properties for the moment... Do you think there's value in something that does gold better than gold itself?
Bitcoin does share many of the characteristics of gold as a commodity, but it also shares some of the characteristics of Electricity as a commodity. Perhaps you could say Bitcoin is to gold what electricity is to coal. The value of Electricity is in its ability to transport energy and the value of Bitcoin is in its ability to provide liquidity (transport value). However, Bitcoin unlike Electricity can be stored without losing its value. This makes it durable like gold.
To be clear, by "does gold", I mean properties such as limited supply, divisibility, fungability, durability, etc... That is, all the acknowledged properties of what makes a good money.
Bitcoin is superior to gold in its divisibility and fungibility.
Durability is somewhat debatable
- Some precautions such as backups need to be taken. I am sure many of us have this handled fine, but the market as a whole perhaps not.
- Also more importantly the price of a commodity good is determined as a function of its market as a whole, thus with Bitcoin you must consider the infrastructure. I do realize it is near impossible to destroy, but even damaging it will affect its value.
Supply is also a bit debatable
- You can probably discount Bitcoin denominated credit since it is asset backed and the number of Bitcoins is not increased unless a secondary market of Bitcoin IOUs is created. In that case it would have to trade at a discount.
- Also at some point commodity substitutes can and will challenge Bitcoin, right now Bitcoin has an edge in its form of liquidity (security, portability, low overhead transactions), however given enough incentive the market will create competition. I am not saying they lose to competition or that the demand for liquidity will not outpace the supply just that it challenges this notion.
The issue with gold is that it's actually no longer a good money because in modern society, we need excellent electronic transactability.
agreed
The issue with bitcoin with respect to gold is that it requires a functioning electronic society. Gold bugs will argue that it's therefore no good to protect against a full-on disaster scenario, which is true. I'd argue, however, that if you're putting significant wealth into gold to hedge that specific kind of tail risk, you ought to be putting the money into durable hard-assets that can be directly utilized in such a scenario (tools, materials, etc). Thus, bitcoin is my preferred hard-money.
Agreed the gold bug argument falls a bit short. Also most gold bugs just think of inflation as the supply of money and don't even consider the velocity of money. Gold's physical nature is a poor hedge on the velocity of money in todays world. Clearly Bitcoin does not have this issue.