As an emerging digital asset, Bitcoin is gradually challenging gold’s status as a traditional store of value. This article analyzes the three core functions of money—medium of exchange, unit of account, and store of value—to explore why gold historically became the dominant asset for wealth preservation, citing its scarcity, durability, portability, divisibility, and social consensus. However, gold also faces four key limitations: high storage costs, difficulty in liquidation during crises, potential government confiscation or price controls, and a lack of digital capability.
In contrast, Bitcoin operates as a decentralized digital currency powered by blockchain technology, offering global accessibility, openness, and verifiability. Generated through a "mining" mechanism, it has gradually built value consensus. The author argues that Bitcoin not only surpasses gold in portability, divisibility, and digital utility but also presents a generational opportunity for epic wealth creation and transfer.
Summary
Author: Bill Qian
This article is a companion piece to "How to Protect Wealth in Wartime."
We explore three questions: First, what truly constitutes a store of value? Second, why did gold emerge as the modern winner? Third, why is Bitcoin a better "gold" for the 21st century and beyond?
Over the past 5,000 years, competition for the "best store of value" has persisted, but gold gradually dominated due to its scarcity and millennia-forged value consensus. Simultaneously, Bitcoin is slowly eroding and challenging gold’s market position, creating an epic wealth creation and transfer opportunity for our generation.
「The History of Money」
To compare gold and Bitcoin, we must first discuss the broader category: money itself.
Money serves three core functions: medium of exchange, unit of account, and store of value. From shells and copper coins to modern fiat currencies (e.g., the U.S. dollar, euro), mediums of exchange and units of account have continuously evolved. Meanwhile, gold, silver, land, and blue-chip stocks have long served as primary stores of value.
In monetary history, the U.S. dollar during the Bretton Woods System was one of the few currencies that simultaneously fulfilled all three roles—but this was an exception, not the norm. Moreover, this trifecta collapsed after Nixon’s 1971 televised address. Some might ask: Why do many in emerging markets still prefer using and saving in U.S. dollars, even as data shows the dollar continuously depreciates? The answer, I believe, is that they lack better alternatives; their local currencies are worse. This topic relates to stablecoins, which we’ll explore next time.
「How Did Gold Become Today’s 'Gold'?」
A strong store of value must meet five criteria: scarcity, durability, portability, divisibility, and social consensus. Silver, land, and diamonds all struggle to outperform gold across these metrics.
Thus, over tens of thousands of years, gold finally won humanity’s consensus and mindshare, becoming the nearly exclusive asset for wealth preservation.
「What Are Gold’s Limitations?」
Storage requires expensive vaults, insurance, and sometimes transportation costs, with expenses scaling alongside volume. During World War II, gold in Parisian bank safes was directly looted by German forces. This taught me a stark lesson: The safe in the bank is not safe at all.
Liquidation costs are high in extreme times. During WWII, whether in Shanghai, Paris, or Amsterdam, gold transactions often faced steep discounts—30-50% below spot prices, with even deeper discounts in high-risk environments. Worse, trading gold in conflict zones carried severe personal risks: once others knew you held gold bars, robbery and violence became imminent threats.
Governments can undermine gold’s reliability through confiscation and price controls. In 1933, the U.S. required citizens to surrender most gold at below-market fixed prices under threat of severe penalties. Note: The government mandated surrender at $20.67 per troy ounce. Then, the 1934 Gold Reserve Act revalued gold officially to $35 per troy ounce—effectively "devaluing" citizens’ gold by ~41% within a year. The U.S. confiscated over 2,600 tons of gold, directly altering monetary policy and paving the way for the complete end of the gold standard in 1971. All this occurred in the 20th-century U.S., arguably the world’s beacon of private property rights.
Gold lacks digital utility in today’s economy. For example, you cannot send one kilogram of gold to a friend or another address via an electronic wallet.
「In 2009, Bitcoin Emerged! What Is It Exactly?」
Launched in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin is the first decentralized digital currency. It operates on a global, public, open computer network (commonly called a blockchain—a term I’ve always found esoteric)—a shared digital ledger anyone can participate in and verify. New Bitcoin is generated through "mining": computers solve complex mathematical puzzles to bundle transactions into new "blocks" added to the blockchain, with "miners" rewarded in newly minted Bitcoin. This process ensures the system’s security and smooth operation.
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As an emerging digital asset, Bitcoin is gradually challenging gold’s status as a traditional store of value. This article analyzes the three core functions of money—medium of exchange, unit of account, and store of value—to explore why gold historically became the dominant asset for wealth preservation, citing its scarcity, durability, portability, divisibility, and social consensus. However, gold also faces four key limitations: high storage costs, difficulty in liquidation during crises, potential government confiscation or price controls, and a lack of digital capability.
In contrast, Bitcoin operates as a decentralized digital currency powered by blockchain technology, offering global accessibility, openness, and verifiability. Generated through a "mining" mechanism, it has gradually built value consensus. The author argues that Bitcoin not only surpasses gold in portability, divisibility, and digital utility but also presents a generational opportunity for epic wealth creation and transfer.
Summary
Author: Bill Qian
This article is a companion piece to "How to Protect Wealth in Wartime."
We explore three questions: First, what truly constitutes a store of value? Second, why did gold emerge as the modern winner? Third, why is Bitcoin a better "gold" for the 21st century and beyond?
Over the past 5,000 years, competition for the "best store of value" has persisted, but gold gradually dominated due to its scarcity and millennia-forged value consensus. Simultaneously, Bitcoin is slowly eroding and challenging gold’s market position, creating an epic wealth creation and transfer opportunity for our generation.
「The History of Money」
To compare gold and Bitcoin, we must first discuss the broader category: money itself.
Money serves three core functions: medium of exchange, unit of account, and store of value. From shells and copper coins to modern fiat currencies (e.g., the U.S. dollar, euro), mediums of exchange and units of account have continuously evolved. Meanwhile, gold, silver, land, and blue-chip stocks have long served as primary stores of value.
In monetary history, the U.S. dollar during the Bretton Woods System was one of the few currencies that simultaneously fulfilled all three roles—but this was an exception, not the norm. Moreover, this trifecta collapsed after Nixon’s 1971 televised address. Some might ask: Why do many in emerging markets still prefer using and saving in U.S. dollars, even as data shows the dollar continuously depreciates? The answer, I believe, is that they lack better alternatives; their local currencies are worse. This topic relates to stablecoins, which we’ll explore next time.
「How Did Gold Become Today’s 'Gold'?」
A strong store of value must meet five criteria: scarcity, durability, portability, divisibility, and social consensus. Silver, land, and diamonds all struggle to outperform gold across these metrics.
Thus, over tens of thousands of years, gold finally won humanity’s consensus and mindshare, becoming the nearly exclusive asset for wealth preservation.
「What Are Gold’s Limitations?」
Storage requires expensive vaults, insurance, and sometimes transportation costs, with expenses scaling alongside volume. During World War II, gold in Parisian bank safes was directly looted by German forces. This taught me a stark lesson: The safe in the bank is not safe at all.
Liquidation costs are high in extreme times. During WWII, whether in Shanghai, Paris, or Amsterdam, gold transactions often faced steep discounts—30-50% below spot prices, with even deeper discounts in high-risk environments. Worse, trading gold in conflict zones carried severe personal risks: once others knew you held gold bars, robbery and violence became imminent threats.
Governments can undermine gold’s reliability through confiscation and price controls. In 1933, the U.S. required citizens to surrender most gold at below-market fixed prices under threat of severe penalties. Note: The government mandated surrender at $20.67 per troy ounce. Then, the 1934 Gold Reserve Act revalued gold officially to $35 per troy ounce—effectively "devaluing" citizens’ gold by ~41% within a year. The U.S. confiscated over 2,600 tons of gold, directly altering monetary policy and paving the way for the complete end of the gold standard in 1971. All this occurred in the 20th-century U.S., arguably the world’s beacon of private property rights.
Gold lacks digital utility in today’s economy. For example, you cannot send one kilogram of gold to a friend or another address via an electronic wallet.
「In 2009, Bitcoin Emerged! What Is It Exactly?」
Launched in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin is the first decentralized digital currency. It operates on a global, public, open computer network (commonly called a blockchain—a term I’ve always found esoteric)—a shared digital ledger anyone can participate in and verify. New Bitcoin is generated through "mining": computers solve complex mathematical puzzles to bundle transactions into new "blocks" added to the blockchain, with "miners" rewarded in newly minted Bitcoin. This process ensures the system’s security and smooth operation.
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