When someone is asking us about Bitcoin, one of the best comparisons that we can make is to compare it with Gold and tell them that Bitcoin is more like a commodity and not a stock. That's what I do and when I explain to them about Bitcoin and how the value of Bitcoin is created, they are able to relate it to Gold and understand it. We can easily say that it is created based on demand and supply but people will not be convinced to understand that. If we compare it with Gold and explain the concept they will be able to understand how the supply and demand works.
Finite supply
We can probably say that Bitcoin has a finite supply but that's definitely not the case with Gold. There can be some new gold reserves somewhere in the world that can suddenly pop up decreasing the value of Gold. But as long as new reserves are not found and gold stays precious because of the limited supply it has, we can compare it with Bitcoin and say that Bitcoin is so pricy because it is not abundant. Only 21 million bitcoins are in circulation and many coins would have already be gone due to various reasons.
There is definitely new gold mined each and every year but the supply is still relatively small because the mining part contributes only to a smaller extent. The same applies to Bitcoin too. With the limited supply or fixed supply, the mining difficulty keeps increasing every year and it can become hard to get new bitcoins into circulation making it really hard. At the same time, there will also be a continuous loss in Bitcoin and Gold that is circulating. People either keep it in some wallet and forget the password or people try to make something out of Gold and lose some part of the gold and it is very common. There have been many news in the past that many big Bitcoin holders died without sharing their password with anyone. There was no possibility to trace the wallet address or the passwords and it was gone. These Bitcoins can be considered as something gone out of effective supply.
Gold and Bitcoin are great investments
People usually compare both Gold and Bitcoin because they see both as potential investments for them. One of the biggest reasons why people choose to invest in Bitcoin or Gold is because the value has only increased in the past years. As time goes the value keeps going up and never goes down really. Only when there is a really bad time, the value go down and again it only creates an investment opportunity for the people.
Currently the price of Bitcoins is very good and people are investing a lot right now. In the next bull run, there is a high chance that the price of Bitcoin can go over 60k dollars again. This is one of the biggest expectations for individuals and they expect the same for Gold too. As long as there is no Golden Mountain found somewhere the value of Gold would still continue to stay higher.
Use cases of Bitcoin and Gold
This is the most important thing and I would personally say that this is where there is a huge difference between the two. Bitcoin in general doesn't have a huge use case compared to Gold because with Gold we can use it for preparing medicines and making Jewelry. There are also industrial applications and in many hardware components and electronic components, Gold play an important role. We don't have such a concrete usecase for Bitcoin but the who crypto market is definitely based on Bitcoin as this is the first cryptocurrency. Bitcoin can be used for trading and for transaction purposes. Other than this there is no sole purpose for Bitcoin compared to Gold.
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