Due to its shortage, Bitcoin can be understood as digital gold. Because of its digital nature, it is difficult to confiscate and outweighs the risks of transporting gold.
Decrypto, an exchange based in Buenos Aires, Argentina, allows purchasing and selling Bitcoin and other cryptocurrencies and aims to connect traditional financial markets with digital ones.
In the digital age, virtually any piece of data or information can be added to the network. This ease of encoding digitally has reached such an extreme that, once something is on the Internet, it is very unlikely to sustain its uniqueness. For example, a photo of a single moment can be replicated so many times that it becomes difficult to identify the original.
It should be noted that this has affected not only the information but also the value that we exchange through the network. Under the control of the world’s central banks and governments, digital money can also be created infinitely, thus generating inflation and poverty as collateral effects. Even though this type of economic measures is common throughout the world, living proof of their consequences is the Venezuelan hyperinflation.
As societies move towards digitization, the number of monetary transactions made through the Internet and digital services increases, leaving physical cash behind, and eliminating the general idea of cash.
It may seem that people are moving their money directly, but everything depends on trusted third parties, that is, institutions, as well as service and payment providers, are the ones that do. There is no effective relationship in the exchange, which makes it impossible to conduct direct transactions between peers.
Bitcoin can be understood as digital gold because of its shortage since there will only be 21 million BTC, as well as the difficulty to obtain it through the process of mining, similar to the activity that allows obtaining precious metals and minerals.
However, it can be said that it is superior as it is a digital native asset without intermediaries, offering the possibility to exchange value through the network directly, without trusted third parties certifying the authenticity of gold or validating the coupons on it, or updating bank account statements.
Therefore, citizens of different countries that decide to establish a valuable relationship using Bitcoin will not find any authority that censors this operation, which is conducted effectively between two users, irrespective of location, completely cutting expense on transportation and certification that could concern those trading with gold.
Besides, no authority certifies the authenticity of that intangible gold, which applies other standards. As Bitcoin is a platform that has conquered an important level of decentralization, it is the nodes that ensure that the rules allowing bitcoins to remain scarce are still respected.
The verification of trusted third parties is not necessary, which leaves this task to the nodes of the network and software consensus rules. Given its digital nature, it is difficult to confiscate and it outweighs the risks of transporting large amounts of value that gold faces.
Because of its shared characteristics with gold, a growing number of users will eventually realize its value. Its proven digital shortage, programmed to meet the purposes of money, potentially makes Bitcoin as valuable as gold, or even more.
By Willmen Blanco