I saw some folks here on Reddit arguing that Bitcoin is a Ponzi scheme. It encouraged me to start a discussion on why this is not the case. When I buy a piece of Bitcoin, I’m buying because I expect the price to go up similar to when I buy real estate, stocks, or any other type of asset. Sure, you could argue that sometimes you get a dividend when you buy a stock because you are investing in a real business that generates a profit. But Bitcoin is different. Bitcoin is the new gold. Even infamous gold bugs like Larry Lepard are finally coming to this realization. Gold does not generate any dividends. It’s a commodity. Bitcoin is digital gold. Per the World Gold Council, approximately half of gold’s supply is either used for jewelry or as a store of value, meaning most of the supply has no industrial purpose. Only 8% of its supply is used for medical, dentistry, or technology use. You can also make artificial gold although it’s expensive to do so. As the great Michael Saylor once famously said, Bitcoin has all the great attributes and none of the defects as gold. So why does gold have intrinsic value but Bitcoin does not?

Why Bitcoin is superior to gold

Infinitely divisible

You need a certain amount of gold to actually use it for the few use cases it possesses. A Bitcoin can be divided infinitely. Anyone can store a fraction of a Bitcoin.

Instantaneous, seamless transactions

A person or entity once sent 2 billion dollars overseas in a matter of minutes for the cost of a couple pennies. Per CoinTelegraph “A notable Bitcoin transaction occurred where $2 billion was moved with only a $0.78 fee. This transaction showcases the efficiency of cryptocurrency for transferring large sums at minimal costs, contrasting sharply with traditional banking fees that could range between $20 million to $60 million for a similar amount.” This wipes gold out of the water. To transfer a similar amount of gold, you would need to be coordinating with a logistics company that charges a fortune, requires the purchase of insurance to prevent theft, and will take weeks if not months to reach its final destination.

Bitcoin is the only asset that stays with you after death

If you shoot me, you can break in and live in my house. The government can seize your gold, stocks, and entire bank account. They can’t touch your Bitcoin.

Digital ledger technology

Every transaction is on the blockchain. In one particular interesting case, this creates transparency among a country and its citizens. El Salvador just recently posted their address as they informed the public they transferred their holdings to cold storage. You can track every transaction the address has ever had. Anybody can perform an audit whenever they want.

You can’t counterfeit bitcoin

You can’t counterfeit Bitcoin because it operates on a blockchain that records all transactions across a network of computers. Each Bitcoin transaction is verified by multiple participants in the network, and once a transaction is recorded on the blockchain, it cannot be altered. This system ensures the authenticity of each Bitcoin and prevents duplication or creation of fake Bitcoins.

The supply is fixed at 21 million coins

Recently on a livestream Benjamin Cowen noted Neil deGrasse Tyson saying that if we find some galaxy or planet that holds a surplus of gold it would instantly become worthless. This possibility cannot happen with Bitcoin for obvious reasons.

Bitcoin is practical

You can’t pay for your groceries in gold bars. With Bitcoin, although it’s not popularized yet, there are many markets that accept Bitcoin payments and many applications that allow you to purchase goods and services with Bitcoin.

Bitcoin is digital property

Michael Saylor once compared today’s Bitcoin markets to obtaining a piece of real estate in Manhattan. Scarcity is valuable.