tl;dr: Gold is the fat and lazy incumbent and it doesn’t know what is about to hit it.

If software “eats the world,” then I guess it’s fair to start thinking about things which might get eaten, even if it seems unlikely.

On page 35 of Messari’s Crypto Theses for 2022, it says:

Gold will get demonetized so brutally your grandkids will think a golddigger is someone
who scavenges for metal scraps in the dumpster to sell for sats.” – Su Zhu

Bitcoin has eaten gold’s lunch for a decade. This should have been a boom time for gold bugs – high
inflation, low trust in government, commodities booming – but instead gold was outflanked by a faster,
younger, wilder horse in bitcoin. Investing $100 in gold 10 years ago, would have yielded…$102 today,
underperforming inflation. Meanwhile, investing $100 in BTC over that time period would have yielded $1.7
million.

And here’s the sad chart that goes with it.

I’m reading a great book on strategy now called, appropriately enough, “Good Strategy, Bad Strategy” where it talks about how “old” industries get fat and lazy and rest on their laurels.

Gold has been the “king” of the ultimate reserve asset for so long that it’s forgotten how to compete and, now, faced with a young upstart, the industry has nothing to fall back upon in terms of its differentiator.

On page 138, it says

“Its important lesson is that we should learn design-type strategy from an upstart’s early conquests rather than from the mature company’s posturing. Study how Bill Gates outsmarted the giant IBM or how Nucor became a leader in the declining steel industry and you will learn design-type strategy. Study Microsoft today and you will see a mature giant, reaping the benefits of past victories but just as tied to its installed base and a rich mix of conflicting initiatives and standards as was IBM in 1985.

Granted, the book was last updated in 2017 so the recent Nadella-led transformation doesn’t get the credit it deserves (altough, to be fair, much of the growth comes from the previous installed base and the funny money in our system).

But, still, the larger point looms.

For gold, it’s an industry with mature posturing. It’s been around for millennia. What does it have to fear?

Well, it has to fear a disruptor that brings all of the benefits of gold, sacrifices on the tangible element of holding it in your had, but adds multiple new features to its value proposition.

Which means that more people can have access to its benefits and do so at lower cost.

It’s fascinating that during the greatest monetary expansion in history, gold has pretty much done nothing. Actually, negative.

Perhaps it’s getting disrupted right in front of our eyes and we don’t even realize it.