Author: Mu Mu, Vernacular Blockchain

In recent times, Bitcoin has fluctuated close to the US$100,000 mark, and finally broke through the important "psychological" mark of US$100,000 today. In fact, The crazy rise of Bitcoin in recent times has already overshadowed the also sharp rise of gold. Maybe in some countries, including the United States When successive proposals were made to use Bitcoin as a strategic reserve, the corner of gold had already been dug up by Bitcoin:

10 years ago (December 2014), gold was 250 yuan/gram. 10 years later, 630 yuan per gram, 2.5 times in 10 years

10 years ago (2 December 2014), Bitcoin was US$360 per coin, and 10 years later, it was US$100,000 per coin, 277 times in 10 years

A few years ago, when someone just proposed the concept of "digital gold", as long as someone Talk about it, and almost everyone will look at the liar. However, 10 years have passed in the blink of an eye, and Bitcoin is growing at an alarming rate, so much so that today’s Bitcoin has finally begun to shake the unbreakable status of gold that has been held for thousands of years...

01 Gold VS Digital Gold Bitcoin

The reason why Bitcoin is called digital gold is because some characteristics are similar to gold, but many people still have difficulty connecting physical and virtual assets. Perhaps this starts with the background of the birth of Bitcoin...

1) The background of the birth of Bitcoin

Thousands of years ago (the specific date is not exact) gold was already " "Hard currency", its use as currency was actually first recorded in the Spring and Autumn Period and the Warring States Period more than 2,000 years ago, and has been used ever since. People hold and use gold without being restricted by any person, institution, or even government, truly achieving "private property is not infringed upon."

Historical records show that in 1717, Newton of the United Kingdom first proposed the gold standard (a monetary system with gold as the standard currency, and the amount of gold held determines the quantity and exchange value of currency). Subsequently, countries around the world successively adopted it. . Until 1971, U.S. Secretary of State Kissinger announced a plan to break away from the gold standard. The U.S. and other currencies were no longer dominated by gold, so that the value of currencies was no longer limited by the amount of gold reserves. This means that a modern monetary system can regulate depreciation and inflation on demand.

Later, in the 2008 global financial crisis, the United States printed a large amount of money to bail out banks. People found that the money in their pockets was diluted, which triggered strong dissatisfaction and distrust in the financial system, which later gave rise to China’s Satoshi left some text clues about the background of his original intention to create Bitcoin.

This is why Satoshi Nakamoto left this sentence on Bitcoin’s genesis block, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks (The Times of the day) Front page headline: Chancellor on edge of second bailout of banking sector)"

Satoshi Nakamoto.The trail of messages left behind before the sudden disappearance led many to believe that Bitcoin was a response to the events of the 2007-2008 financial crisis. On a message board for the P2P Foundation, Satoshi Nakamoto wrote an article introducing Bitcoin in February 2009.

In the article, they expressed their distrust of the Reserve Bank and concerns about assets: "Banks must be trusted to hold our money and transfer it electronically, but they will be in a wave of credit bubbles." Take it out with a small reserve. We must trust them with our privacy and not let identity thieves drain our accounts by making small payments useless. "

2) What are the specific similarities between gold and Bitcoin?

A. Decentralized gold: natural resources all over the earth, anyone can get it from somewhere. Gold mines are dug out of corners

Bitcoin: a public blockchain with network nodes all over the world, becoming a resource that anyone can participate in mining

B. Mining gold: gold mining requires It requires workers, mines, equipment, and electricity

Bitcoin: Bitcoin mining also requires block producers, mines, equipment, and electricity

C, scarcity

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Gold: a non-renewable natural resource

Bitcoin: upper limit of 21 million coins

D. Durability

Gold: stable physical properties, Never rust

Bitcoin: The network is strong and secure, and the data on the chain will never be erased

E. Anti-counterfeiting

Gold: Real gold is not afraid of fire

< p>Bitcoin: Even if you invest ten thousand dollars, it cannot be tampered with

Having said that, it is very similar in some aspects, but digital gold still has many advantages that physical gold cannot match, such as:

· Bitcoin is very easy to carry, and you only need to remember a string of words. Physical gold is particularly heavy;

·Bitcoin can be verified for anti-counterfeiting anytime and anywhere, while physical gold is easy to use for counterfeiting with metals with similar specific gravity (in recent years, many times There have been cases of adulteration of gold jewelry);

·Bitcoin is easier to split transactions, and the opposite is true for gold;

·Bitcoin, even though on-chain transfers often cost hundreds of millions of dollars, the handling fees are only tens of dollars, while gold and even the modern banking system are It is difficult to achieve a real transfer of assets so cheaply and quickly.

02 Bitcoin has opened up the corner of gold

1) Grayscale has repeatedly launched advertisements to remind Bitcoin to replace gold

Grayscale launched its first Drop on May 1, 2019 Gold campaign launched an advertisement with the theme of "Drop Gold" to remind people that it is time to replace gold with Bitcoin.

In 2020, Barry Silbert, the founder of Grayscale and blockchain venture capital company DCG, tweeted that Grayscale had re-launched the anti-gold advertisement "Drop Gold".The ad is now live on all major networks in the United States. This is a marketing campaign for Bitcoin. The video proposes that "digital currencies like Bitcoin are the future trend" and aims to promote Bitcoin as a store of value in the 21st century.

In fact, most people, including some financial institutions, have always ignored grayscale advertising a few years ago. At that time, some financial tycoons even scorned it. For example, the famous BlackRock CEO Larry Fink once bluntly said that Bitcoin is worthless! However, not long ago, Larry Fink changed his view. He said: BTC will subvert traditional finance.

Today, BlackRock has become a Bitcoin whale holding nearly 500,000 BTC.

2) Rapid inflow of spot ETF funds

As early as 2020, JPMorgan Chase, the bank with the largest balance sheet in the United States, released a report studying Grayscale A success story for Bitcoin Trust (GBTC), the bank was once one of Bitcoin’s biggest critics, yet the report acknowledged that demand for Bitcoin is affecting even mature markets.

JPMorgan Chase noted that demand for Bitcoin could erode demand for gold ETFs. According to this study, the number of people flowing into the Grayscale Bitcoin Trust in October 2023 was significantly higher than the gold ETF. As a result, the US bank concluded that GBTC may be able to capture some share of the gold ETF market.

coinglass: The current total market value of BTC ETF has exceeded 110 billion US dollars

As expected, the Bitcoin spot ETF is online Later, there was a large inflow of funds, and at the same time there was a large outflow of gold ETF funds. Many financial commentators have pointed out that this is no coincidence. Bitcoin spot ETFs "attract a lot of money," and a large part of the money comes from gold ETFs. Some time ago, media reported that BlackRock's IBIT asset management scale has surpassed the largest silver ETF. BlackRock currently holds more than 500,000 BTC, and its scale far exceeds the largest silver ETF.

3) Bitcoin ranks among the top 10 global assets by market capitalization

As of December 5, according to the global asset ranking list from Companiesmarketcap, Bitcoin surpassed silver with a market value of 2 trillion. , ranking 7th in global asset market value. Currently, the market value of Bitcoin has exceeded the total market value of the world’s four largest banks.

Top 10 global assets, source: Companiesmarketcap

Bitcoin is still more than 7 times short of gold’s market value of more than 15 trillion US dollars, perhaps In the eyes of many people in the crypto asset circle, this is possible for Bitcoin, which has grown 277 times in 10 years.It's not a very difficult thing.

Recently, SkyBridge Capital CEO/senior hedge fund manager Anthony Scaramucci said that Bitcoin’s market value will eventually exceed gold’s $16 trillion market value. In an interview with CNBC, the founder of SkyBridge Capital called Bitcoin a high-quality asset that has never been seen in the past 5,000 years of human history.

Scaramucci said that Bitcoin is still a long way from gold’s $16 trillion market cap, but he believes that distance will increase over time as regulators approve BTC ETFs And shrink.

4) Bitcoin is exerting its "safe haven" value

Most of the time, gold is actually used as a risk hedge against inflation in many people's portfolios. This is also Can act as a safe-haven asset. However, the fact is that gold does not outperform inflation most of the time. But Bitcoin, which has been breaking new highs, has a fixed upper limit on the supply chain, and has been halved in 4 years, seems to have never failed anyone in this regard.

Due to the general consensus, the volatility of gold is very low, and the opposite is true for Bitcoin. Therefore, while Bitcoin has higher growth potential, it also bears correspondingly higher risks, but the volatility of Bitcoin The security is gradually decreasing, and at the same time, Bitcoin is truly on the road to becoming an optional "hedging tool" against high inflation...

Recently, a new report "A Primer on" by the International Monetary Fund (IMF) Bitcoin Cross-Border Flows” pointed out that BTC has become a necessary financial tool to preserve wealth in the face of financial instability. The analysis also pointed out that on-chain Bitcoin transactions, which are recorded on the blockchain and provide greater security, tend to be larger than off-chain transactions. . This demonstrates that blockchain technology’s robust security features often protect greater financial interests.

The report's authors stated that Bitcoin transactions provide a way for individuals suffering from high inflation to stabilize their savings and participate in global commerce in a way that is not possible with local currencies.

From another perspective, when shorting is also regarded as a "risk", when the "alternative asset" Bitcoin is added to the portfolios of many investors, in many cases it is considered The purpose is to hedge against the risk of not being able to get on board with future Web3 technology in time and being short on crypto assets.

When the crypto market gets worse, some people will choose to exchange high-risk altcoins for more stable and lower-risk Bitcoins, which can stop losses in time to reduce risks without leaving the market short. . Therefore, Bitcoin is often used to hedge the high risks posed by altcoin assets.

03 Summary

In fact, it is not surprising that Bitcoin is gradually eroding gold’s market share. The relationship between “digital gold” and “gold” is just like “digital payment” and “paper money” . As time advances, banknotes are used less and less, and ancient gold may not be able to meet everyone's needs, so HubiBitcoin fills this gap. As for whether Bitcoin can gradually surpass gold, time will tell.