Bitcoin is compared to a lot of existing currency and asset classes.
Let’s take a look at Bitcoin in relation to the dollar first. To be a currency like AUD you really need it to be as stable as possible. So far Bitcoin does not tick this box. It is too volatile to be classed as stable and let’s look at the practicalities of what I am saying here. If you get paid $1000 every wednesday for your job. The last thing you want is for your wages to half by saturday or in some cases worse. This is why stability makes for a good currency. Is Bitcoin readily accessible like the dollar? No, at least not yet. It is still in its adolescence and the off-ramps and on-ramps although getting better by large degrees and fast, still too tech savvy for the average Joe off the street.
Now let’s look at gold. Gold is limited in supply. Gold has been labeled as deflationary, Bitcoin is limited in supply and Bitcoin has been labeled deflationary. Because of this deflationary attribute gold has been used as a ‘store of value’. Bitcoin has also been characterized as a store of value. Gold has to be physically mined and in doing so uses a vast amount of resources. Bitcoin has to be digitally mined and in doing so uses a vast amount of resources. To add fuel to the fire that Bitcoin is more like gold, it seems that inflation is still steadily rising which is pointing out that FIAT currency is not being given up on anytime soon.
To sum up Bitcoin in its current form I would suggest leans more towards Bitcoin being similar to Gold for the reasons stated above. But that does not mean that it can lean the other way and the pendulum could swing in the opposite direction depending on the future. Things that would assist in the pendulum swinging in favour of Bitcoin baring more resemblance to the dollar would be things like:
- Mass adoption
- Ease of use
- Trust build over time
Regardless of which one Bitcoin is comparable to, it can not be questioned that the thirst for more Bitcoin will not die anytime soon. Even when thrown to the wolves by the mainstream media and portrayed as a black-market currency when in actual fact that is less than 1% of its transactions. I personally think of Bitcoin as gold which is why I accumulate as much as I can while it is cheap.