Bitcoin is often referred to as digital gold, something that gold bugs don’t like a whole lot. They claim that Bitcoin’s valuation is arbitrary and not based off solid fundamentals, while some state the Bitcoin is almost impossible to use as the currency it was intended to be. Business Insider put some of these theories to the test in an interesting video which we will look.
Subway, unfortunately, would not accept our bar of gold pic.twitter.com/eSYs9mAY0J
— Business Insider (@businessinsider) July 29, 2019
Bitcoin’s Double Standard
The presenter states that Bitcoin suffers from being held to a double standard, that its critics claim it has failed at being both a store of value and a medium of exchange, something that she sees as unfair:
I’ve also seen arguments against Bitcoin that show how difficult it is to spend in your day-to-day life, but I don’t really ever see gold being held to the same test.
To address this imbalance she takes a small gold bar worth around $4,000 and her phone containing her Bitcoin wallet around New York City, seeing which she is able to use. The results are hardly surprising – she can’t buy a sandwich or fruit and veg with either the gold or the Bitcoin, although she was able to pay for her daughter’s schooling with Bitcoin and not with gold. The presenter also mentions a feather in Bitcoin’s cap, which is that shoppers can use any number of debit cards connected to their Bitcoin wallet to buy anything online and in-store where debit cards are accepted. There is no such functionality for gold.
Bitcoin’s Better Prospects
The short video is an interesting experiment, and a handy rebuttal to gold bugs that claim Bitcoin has failed on both fronts, but this quick clip mainly serves to show that neither Bitcoin nor gold are that useful as real-world currencies. Very few cards let you spend Bitcoin without you having to manually transfer it to fiat currency first, but the fact that you can do it at all is a boost over gold.
The other thing in Bitcoin’s favor is the ‘not yet’ factor – no merchants refuse to accept gold because of a lack of demand, they don’t accept it because of its complete lack of practicality. Bitcoin acceptance is mainly being held back by demand however, with the technology there to easily allow merchants to accept Bitcoin payments should they wish. This has the benefit that, should demand increase, they can adapt. No technological improvements are going to allow vendors to accept gold however, even if they wanted to. A more in-depth comparison is needed to really examine the benefits of the two stores of value, but videos like this are a good start to raise awareness of their differences and similarities.