The Golden Debate: Bitcoin vs Gold (Part 1)

Both the gold and Bitcoin communities were ablaze with debate over the last week as the much anticipated “Golden Debate” was held on the well known CNBC channel “Crypto Trader” hosted by the South African entrepreneur Ran Neuner. In the Gold corner, we had Peter Schiff weighing in on why gold is the choice store of value. In the Bitcoin corner, we had Anthony Pompliano arguing that Bitcoin has the same properties as gold and more. We have put together a brief summary of the blow by blow moments, let’s see who came out on top:

Opening Punches: Goldtwitter

Peter is known for taking part in vibrant debates on Gold vs Bitcoin and is no newcomer to the arguments between the two assets. It was no surprise that Peter came out fighting, the first point tabled being that Gold is physical and has existed for thousands of years. Adding to this line of thinking, he added:

“Gold has useful properties, you can actually use gold today in real life and have been able to do so for thousands of years, you will continue to be able to use it in the future. Bitcoin has no use case, you can’t do anything with it besides speculate on it.”

Peter also claims that Bitcoin is just a string of numbers and it requires that one puts their complete faith in someone actually wanting to buy it from you in the future, adding to his case that it lacks any real-world use. Similar to the “greater fool” scenario where one has to offload the item onto the next fool to be able to profit and this continues until there is no one left to pass it onto and you are left “holding the bag”so to speak. Peter also put forth the usual arguments of Bitcoin being in a bubble and that those who have bought into the hype will likely get hurt over the long run as Bitcoin has no intrinsic value.

The Comeback: Bitcoin

Anthony, well known for is Off the Chain Podcast, eloquently opened up his rebuttal with a swing at Peters remarks on Bitcoin, explaining that it is important to differentiate the Bitcoin network from the asset on the network itself and that gold itself lacks the use case of medium of exchange for goods and services as it is not easy to transport nor is it easily divisible for transactions. On both counts, Bitcoin wins hands down and acts as a store of value much in the same way gold does.

“One of gold’s main use cases is as a store of value, you buy it, you hold it, then you hope that the value or wealth you put into it is the same or higher in the future, right? So that’s how you arrive at a “store of value” property for the asset.”

He added,

“Now with Bitcoin, the “Hodlers”, the people who hold Bitcoin for long periods of time, they are using it as a store of value. It’s the exact same use case as gold. And what they are doing is they are taking their wealth and they are putting it into this asset, it doesn’t have any of the physical properties that gold has, but it has something that gold does not, the cryptographic security and they are trusting that the cryptographic security or that feature is more important to them than the physical features [of gold]. That’s what gives it value and helps it maintain value over a long period of time.”

Round 1 Summary:

It is without a doubt that Gold has existed and been used as a store of value and medium of exchange for thousands of years, gold bugs have no reason for fear of being wrong on that count. If we are to believe that it is not possible for another store of value to come along with similar properties to gold combined with far superior technology to suit the times then we would have to side with gold.

On the other hand, many of the properties which gold bugs claim gold to have, hold less and less weight in the modern world we live in – It is simply not practical nor, in some cases, even possible to transport, store, or even transact in gold. Bitcoin is the new store of value asset on the block (chain) and will likely appeal to the new generations who have more in common with the “strings of numbers” than they ever will with a raw element mined from 3km below the earth’s surface.

Look out for round 2 (part 2) of our analysis later this week. Until then Happy August and here’s to another month of increased adoption and a flurry of new improvements for Bitcoin protocol.

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