Crypto 101 with Jonathan · Lesson 5 of 8
Gold and Bitcoin: what’s the difference?
Two kinds of scarcity, one physical and one digital, and why the comparison keeps coming up.
In this lesson
- Gold is scarce because there is only so much of it in the ground.
- Bitcoin is scarce because its supply is capped by its code.
- Gold is physical and has thousands of years of history. Bitcoin is digital, moves anywhere in minutes, and is young. Neither is a substitute for the other.
Lesson notes
People compare Bitcoin and gold for one reason: both are scarce. Gold is scarce because there is only so much of it in the ground, and getting more out is slow and expensive. Bitcoin is scarce because its supply is capped by its code at 21 million.
The differences matter just as much. Gold is physical. You can hold it, store it in a safe, and it has been valued for thousands of years. Bitcoin is digital. It can be sent anywhere in the world in minutes, it can be divided into very small pieces, and its network only launched in 2009.
Two kinds of scarcity, then: one physical, one digital. Understanding that is the first step to deciding whether either of them belongs anywhere near your plans. That decision is yours and your advisor’s, not mine.
Next: not all crypto is the same. A simple way to tell the categories apart.