Gold holds a special place among financial assets. It is often seen as the ultimate store of value, a hedge against inflation and economic turmoil. Yet its price history over centuries tells a different story. This article argues that gold has shown dramatic volatility, much like modern cryptocurrencies such as Bitcoin. Supply shocks, geopolitical changes, and shifts in trust have driven this. Using 760 years of inflation-adjusted data, we trace gold's role as a currency and medium of exchange. Its reliability is more myth than fact. We also draw parallels with Bitcoin's early, turbulent path. As DeFi grows, these lessons highlight money's role amid eroding trust in the current financial system.

What makes a good currency? Economists point to three key roles: 

1. A unit of account (for pricing goods)

2. Medium of exchange (for transactions)

3. Store of value (for holding wealth)

Gold has met these needs for ages. It shares features with today's digital assets. Its scarcity comes from geological rarity and first appeared in items like jewellery. Immutability means it keeps its worth even if melted down. Fungibility lets it be reshaped: coins can be split or reformed without losing value.

This mix beat out other options. Diamonds are scarce and immutable but hard to divide. Tulips or feathers are scarce and fungible but wear out or rot over time. Rocks are immutable and fungible but far too common. Gold's traits allowed decentralised pricing. It enabled trustless trades without banks, similar to blockchain now. Think of barter's problems, like arguing over Pokémon cards in school. A shared asset simplifies this by creating a standard unit for exchanges. This is why currencies are important, they remove arguments from cross-asset pricing by simplifying into a base unit of exchange.

Gold fit the market well and gained traction. Prices peaked around 1400 as demand for coins grew, based on records adjusted to 2024 USD purchasing power. However problems with the system soon emerged...

Gold's supply is not fixed. The discovery of the Americas in the late 1400s flooded markets with the precious metal, which drove prices down to about $1,000 in adjusted terms. Additionally, gold was difficult to use at scale due to its heaviness and scarcity, making it challenging to transact at large volumes.

China's Ming Dynasty is a good example of this in the 15th Century. Taxes were collected as a proportion of crops, paid to the emperor. Naturally, farmers gave the bad crops as tax. The empire tried gold briefly but found it too rare for its huge population, which accounted for a quarter of the world's total at the time. Silver offered a better balance and became the official currency in the 16th century. But as demand rose, silver supply started to dry up. As a result, the Ming Dynasty soon found itself in a position where they could no longer pay their own soldiers due to Silver shortages. 

Help arrived from early global trade. The Spanish found Potosí in Bolivia, the world's richest silver site. This solved China's shortage. From 1500 to 1800, Bolivia and Mexico produced 80% of global silver. About a third ended up in China. Economists call this the start of true international trade.

The Spanish amassed incredible wealth and squandered it on a massive meme coin-like trade of invading England (massive upside gamble), the Spanish Armarda 1588. Much like the Solana Trenchers of today, the Spanish learned the hard way that going all in is a very risky business.

As a result Imperio Español lost their money and influence and remained pissed to this day, taking up football to stick it to the English every 4 years. 

Silver rose as a global currency, pushing gold aside. New South American gold finds added to the supply glut. Prices fell during the Age of Discovery before steadying in the 17th century.

The Ming example showed the need for balance in scarcity, immutability, and fungibility. As trust in banks grew, money relied less on physical coins. It also reduced the need for the Crown to back lower-value metals like silver.

By the 18th century, gold lost ground. The Bank of England, founded in 1694, tested paper notes backed by gold. However, problems arose when  the stubborn Isaac Newton, Master of the Royal Mint overvalued gold in 1717 shortly before being a dick to Leibniz.

This led to Portuguese gold flooding England and market distortions. Traders bought cheap silver in Britain, melted it, and sold it in Asia and Europe. The Bank of England had swallowed up silver via Newton's erroneous conversion calculator for the Silver/Gold rate and was a major reason for Silver to vanish as a global currency.

The Industrial Revolution sped the decline. It started in 1771 at Arkwright's mill in Derbyshire. New technologies made gold expensive to hold compared to growing goods and services. People invested in companies instead, and gold's price stalled. Newton's mistake drained silver stocks, helping end its global use.

The Gold Standard was short-lived, despite its reputation. The Bank of England set it in 1816, but it lasted only until 1914. Victorian calm was rather artificial, supported by empire, not natural stability. Then in World War I, the great European Empires sold off their reserves to cover debts, crashing prices like a modern asset dump. This is the same as a shitcoin post-TGE unlock. The price of gold collapsed. 

The price for the stupidity of Kings, had been paid by blood and gold. 

The Great Depression led to Roosevelt's 1933 gold seizure. This devalued the dollar by loosening gold ties, allowing more money printing. This wasn’t a rise in gold price per-se. Less gold was required to back the dollar, and the FED was free to print.

It was the OG brrrrr.

In 1944, Bretton Woods linked the dollar to gold at $35 per ounce. Other nations tied their currencies to the dollar. This created a gold-exchange system and boosted US power. The US Empire was born, backed by nukes and the Dollar. This valuation of gold was treated as sacrosanct and a modern “Gold Standard” despite its primary purpose being brrrrrrrr.

However, Nixon then invoked some Roosevelt in 1971 by dropping the gold standard entirely and the price of gold spiked dramatically as currency was debased. The Fiat Currency era started and frankly became the most volatile period of all time for the price of gold. Gold really did trade like a shitcoin in the 2000s fluctuating as much as 10x in the space of 10 years; and certainly not upwards!

The chart covers 1264 to 2024 in adjusted USD and shows the ups and downs. Medieval prices were often higher in real terms than today. The Black Death from 1347 to 1351 caused huge economic shifts through labour shortages and inflation. Discoveries cut values in half. Industrial times brought drops as output grew faster than metal. The Gold Standard era from 1717 to 1971 hid volatility under rules. Fiat era saw wild moves, with rises in crises like COVID-19 but overall loss in buying power.

As of July 2025, gold is at about $3,376 per ounce nominally. This is a high driven by global tensions and inflation worries. Adjusted for a 2.7% CPI increase from mid-2024, it equals roughly $3,287 in 2024 USD. This continues the chart's fiat volatility.

Bitcoin follows a similar pattern. It faces criticism for volatility, with one-year swings around 50%, compared to gold's 12 to 20%. But gold in the 1970s post-standard had spikes over 30% during changes. Research shows Bitcoin acts like gold as a hedge but is more volatile due to its newness and speculation. Both rely on scarcity: Bitcoin's 21 million limit matches gold's limits. Yet both face supply and demand jolts. Gold's past hints Bitcoin could steady over time, but neither promises constant value.

Nixon's move showed gold's weakness as a store. Trust, not the metal, supports trade. Central banks have done okay, but the 2008 crash eroded trust in the modern era. This fuels fears of inflation, especially in developing markets.

Gold's journey reveals the weakness in its 'store of value' image. Centuries of volatility match Bitcoin's ups and downs. In 2025, with prices at highs, it reminds us that trust is money's core. As DeFi calls, using its strengths and learning from gold could build a stronger financial system.

DeFi offers a fix through programmable money via smart contracts. These create trustless, decentralised systems like gold's early appeal. Cryptocurrencies provide scarcity, immutability, and fungibility in digital form. But challenges remain. Smart contracts can be hacked, and compliance issues let bad actors dodge rules, worrying governments and regulators.

DeFi is the future with trustless contract-based systems. But rogue actors still prey on crypto users. Hackers and exploiters make headlines at retail's expense. Despite low real metrics, the potential for criminals and rogue states to evade sanctions terrifies those in power, who've long used finance as a substitute for war.

Smart contract risk + Compliance risk = the two biggest blockers to adoption.

At Keyring, we believe DeFi will win. Cryptocurrencies satisfy all the requirements that gave such strong PMF to historic currencies. The next natural progression of DeFi is trust.

Rational privacy is required in DeFi. Trust based on commonly held standards and assertions that are provable. Keyring will remove compliance risk and smart contract risk, opening the floodgates to capital markets.

Prove what matters. Share nothing else. Access everything.

The zkVerified revolution starts now. Institutional money is moving. DeFi will win, verified, not doxxed.

Methodology: Britain has the longest history of markets, allowing us to obtain gold prices back to 1257 in pounds. We converted GBP to USD using historic inflation figures and 2024 GBP/USD rates. Sources: Lawrence H. Officer and Samuel H. Williamson, "The Price of Gold, 1257 - Present," MeasuringWorth, 2025; Eric W. Nye, Pounds Sterling to Dollars: Historical Conversion of Currency.

The future is zkVerified. Join our community to be early for the upcoming TGE: https://t.me/keyring_network