Bitcoin is Not “Digital Gold”
Equating Bitcoin with gold diminishes a currency innovation that fundamentally disrupts the traditional financial system. This article is based on a piece by Isaiah Austin for Bitcoin Magazine, organized, translated, and written by Yuliya for PANews.
(Background: US April CPI hits a four-year low, increasing the likelihood of Fed rate cuts, Bitcoin approaches $105,000, and US stocks rise)
(Supplementary Background: Trump’s second son confirms holding large amounts of Bitcoin: My father also holds a lot and is optimistic about BTC as digital gold)
The label of “digital gold” attached to Bitcoin is a misunderstanding of this revolutionary currency form. Such statements reduce Bitcoin to merely a store of value asset, obscuring its deeper technical advantages and financial potential. Analogies are a common way for humans to understand new concepts, and faced with the unprecedented idea 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 easily accepted analogy. Bitcoin’s scarcity, global usability, and store of value function make it seem reasonable to call it “digital gold.”
This narrative has propelled adoption at the institutional and sovereign nation levels and was even included in the first paragraph of President Trump’s executive order regarding the establishment of a strategic Bitcoin reserve: “Due to 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 diminishes a currency innovation that fundamentally disrupts traditional financial systems. The fundamental attributes of Bitcoin render the qualities that gold prides itself on outdated, while it is faster, safer, and more decentralized than fiat currencies.
Scarcity and Limited Supply
The reason gold has served as a long-standing store of value lies in its scarcity. Over the past century, gold’s annual output has only increased by about 1% to 2%. The difficulty of exploration, coupled with high labor, equipment, and environmental costs, creates no economic incentive for large-scale expansion.
This naturally formed supply constraint has given gold its monetary status since 3000 BC. During ancient Rome, the price of a high-quality toga was equivalent to the amount of gold needed for a tailored suit today, indicating its stable value. However, in the age of Bitcoin, it seems outdated to use an asset with fluctuating supply as a measure of value. Bitcoin is not scarce; it is “limited.” Its total supply is permanently capped at 21 million coins and will not increase due to technological breakthroughs or cosmic mining.
Through mathematical and technical means, humanity has, for the first time, created a tradable currency with a fixed total supply, the significance of which far exceeds what “digital gold” can encompass.
Divisibility
While gold can be cut, it cannot be termed “highly divisible.” Only under conditions equipped with saws, laser devices, and precision scales does it barely possess this characteristic. Thus, gold is suitable for large transactions but difficult to use for daily payments. At current market prices, 1 gram of gold is valued at about $108. If one were to pay for a sandwich with gold, they would need to scrape off a corner, which is evidently impractical.
Historically, humanity has alleviated this problem by issuing coins with a metal content determined value. However, this also opened the door to currency devaluation.
For example, the stater coins minted by Lydia around 600 BC were initially made with electrum (an alloy of gold and silver) containing about 55% gold. After being conquered by the Persian Empire in 546 BC, coins gradually began to mix with basic metals like copper to reduce gold content. This practice led to a decline in the actual value of coins, with gold content dropping to only 30%-40% by the end of the 5th century BC.
Gold, as an asset, fails to achieve divisibility, a flaw that has historically prevented its long-term effective utilization. For small transactions, citizens would typically exchange gold with the government for 1:1 coins, but this mechanism often led to currency dilution and the collapse of social trust due to elite manipulation of power.
No gold-based monetary system in history has ultimately avoided devaluation. The real demand for microtransactions forced the public to rely on state-issued paper currency and small denominations, thereby losing control over their wealth.
Bitcoin has achieved a fundamental breakthrough on this issue. Its smallest unit, “satoshi,” equals one hundred millionth of a Bitcoin. Currently, 1 satoshi is worth about $0.001, and its divisibility has surpassed that of the US dollar. Bitcoin transactions do not require any institutional or governmental intermediaries; users can always transact directly using the smallest unit of valuation, enabling it to truly function as a currency system that does not require intermediaries. Therefore, comparing gold and Bitcoin in terms of divisibility and unit of account has become almost laughable.
Auditability
The last time the US government officially audited its gold reserves was in 1974. At that time, President Ford allowed reporters to enter Fort Knox in Kentucky to inspect the vault, and everything appeared normal. However, that was half a century ago.
Today, speculation about whether the gold in Fort Knox remains intact persists. Recently, there were even rumors that Musk would livestream the audit process, but this “upcoming” audit quickly fizzled out.
Unlike the rare and low-frequency audits of gold, Bitcoin verification occurs automatically. Through a proof-of-work mechanism, a new block is added every 10 minutes, and the system automatically verifies the legality of transactions, total supply, and consensus rules.
Compared to the third-party trust mechanisms relied upon in traditional audits, Bitcoin achieves a trustless, publicly verifiable on-chain validation. Anyone can independently verify blockchain data in real-time; “Don’t trust, verify” has become Bitcoin’s consensus principle.
Portability
The portability of Bitcoin needs no elaboration. Gold is bulky and heavy, requiring specialized ships or planes for cross-border transport. Bitcoin, on the other hand, resides in a wallet, and regardless of the amount, its “weight” is always zero.
However, the true advantage of Bitcoin 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 trusting intermediaries. In cross-border transactions, involved third parties include transaction facilitators, export logistics teams, transport personnel, recipients, and custodians, each link forming a trust chain.
Bitcoin, however, requires no intermediaries. Users can complete cross-border payments directly via the blockchain, with transactions being publicly verifiable throughout, eliminating the risk of fraud. This is humanity’s first true possession of “electronic cash.” Conor Mulcahy of Bitcoin Magazine pointed out, “Electronic cash is a type of currency that exists only in digital form and is used for peer-to-peer transactions. Unlike electronic currencies that rely on banks and payment processors, electronic cash mimics the anonymity of physical cash and the direct exchange characteristic between users.”
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 gradually be phased out in this accelerating digital era.
Not All Bitcoin “Adoption” is Worth Celebrating
If the goal is merely to drive up the price of Bitcoin, then the “digital gold” narrative is indeed effective; governments, institutions, and individuals will continue to enter the market, and prices will keep rising.
However, if Bitcoin is viewed as a technological revolution that changes the free order, its propagation methods must be rethought. To position Bitcoin at the core of the global financial freedom system, it is essential to educate those who have not yet encountered Bitcoin, conveying its uniqueness rather than relying on simplified analogies.
Bitcoin deserves to be recognized as a brand new form of currency, not merely as a digital substitute for gold.
