Is Bitcoin Similar to Gold?
Background:
- As the comparison of Bitcoin vs. Gold becomes headline news. We want to point out one of the key differences between Bitcoin and Gold.
- Of course, there are certainly similarities between gold and Bitcoin. No question.
- A meteor, in theory, can potentially contain gold or other precious metals.
- We believe Bitcoin Blockchain is potentially the world’s most secure computer network due to its truly decentralized nature. Regardless of the increase or decrease in the Bitcoin cryptocurrency value, the fundamentals of Bitcoin Blockchain remains the same.
- This article focuses our attention on this decentralized anti-collusion aspect of Bitcoin.
Analysis:
The price of gold can potentially be related to the scarce nature of this precious metal (i.e. gold). In other words, potentially, there is an inverse relationship between the price of gold and the quantity of gold that is out there on this earth.
If that is the case, then the discovery of previously unknown mine(s) of gold, for example in less-traveled roads, could potentially decrease the price of gold.
If the inverse relationship between the quantity/scarcity vs. price were to be true, by the same token, then other ways of obtaining previously undiscovered gold, such as from a meteor containing large quantity of gold hitting on earth could also decrease the price of gold.
On the other hand, by contrast, there are only 21 million Bitcoins.
We have previously shared that an individual cannot wake up one day and decide to change the Bitcoin Blockchain or the consensus mechanism of the Bitcoin Blockchain. Similarly, a few friends, a few interested parties, many friends, or many interested parties cannot collude to change the Bitcoin Blockchain, change the consensus mechanism of the Bitcoin Blockchain, or alter the total quantity of Bitcoin as designed by Satoshi Nakamoto.
It is likely impossible for a person, a group of people, a few friends or many friends to collude to invent new Bitcoins, above and beyond the original 21 million Bitcoin intended.
Conclusion:
Unlike gold, one can not “discover” new Bitcoin supply above and beyond the 21 million, not even on an obscure road on earth. A meteor hitting earth could in theory contain gold, but to our knowledge, meteors hitting on earth will not contain additional Bitcoins. In other words, one can not even collude with outer space to invent additional Bitcoins, above and beyond the original 21 million intended.
Reference:
The Bitcoin White Paper: bitcoin.pdf
Disclaimers:
This article does not constitute medical advice, financial advice or any advice at all. Please consult your healthcare provider for information concerning specific medical condition. Lifestyle choices are individuals’ choices.
This article is also not intended to provide any investment, financial, legal, regulatory, accounting, tax, medial or other advice, and nothing in this article should be construed as a recommendation, by Eggschain, its affiliates or any third party, to acquire or dispose of any investments or security, or cryptocurrency, or to engage in any investment strategy or transaction. One should consult one’s own doctor, investment, legal, tax and/or similar professionals regarding one’s specific situation and any specific decisions.
