Why is Bitcoin called digital gold? Why can such a great value erupt?
Last night, the United States started a new relief program and opened a money printing model, this time at a scale of US$1.5 trillion. It is precisely because a large number of excessive currency issuance has led to inflation, so prices have risen, especially in the capital market, there will be a large increase.
During periods of high inflation, gold is also an asset with a fairly good return. It has the following characteristics: scarce supply and stable output. The demand is stable , and there are always some stable people who are optimistic about holding or spending. The storage is stable, even the more “fragrant” it is stored.
Obviously, Bitcoin, which has skyrocketed recently, has the same attributes. Think of bitcoin, gold, stocks, real estate, cash, etc. as equivalent investment targets take cash, for example. Many people don’t think that holding cash is an investment. In fact, holding cash is also an investment choice. Then select the real long-term value of the subject matter. Bitcoin and gold are long-term rare varieties. Holding these varieties is guaranteed in the long-term, and it can resist currency inflation.
Investment pursues the effect of preservation and appreciation, and the preservation of value is caused by the over-issue of the currency as a whole. Large-cap ETFs, Bitcoin, specific real estate, and some security-type public utilities (water, electricity, energy, etc.) also have the role of alternative assets in the long run. Of course, these assets also require reasonable buying prices and long-term firm holdings. As the ballast stone of investment assets, gold’s main function is to resist currency depreciation caused by inflation. In addition to Moutai and Hermes, which have the role of gold as an alternative currency, some widely recognized collectibles can also be used as such alternative currencies for value preservation. In addition, if the ability radius is sufficient,
Why is Bitcoin called digital gold? This is just a string of numbers driven by some code and software. Why can it erupt so much value?
The core lies in its scarcity. There is a famous s2f model for judging scarcity. That is, Stock to flow, the ratio of stock to capacity (stock/annual output), which explains the scarcity of assets. The larger s2f, the scarcer the assets (the larger the stock, the smaller the output). Gold’s s2f is currently the highest at 62. Silver is 22. Bitcoin is 50, which has already reached the second place, and because Bitcoin production halves every four years, it will definitely surpass gold in the future. The holding of Bitcoin is better than that of gold. Just keep the private key, and the portability is far better than gold. At the same time, after more than ten years of development, Bitcoin consensus is gradually accumulating, and consensus comes from time. Compared to gold, Bitcoin’s current consensus is minimal. But don’t forget, gold has a history of thousands of years, and Bitcoin is only 11 years old, but time is on Bitcoin’s side. As time goes by, everyone’s consensus on Bitcoin will become stronger.
The consensus of gold comes from its very limited reserves and mining volume, but this premise is on the earth. According to the current detection, there is an asteroid named “Psyche”. This asteroid is rich in gold, platinum and other heavy metal resources. According to NASA estimates, this asteroid is worth $700 Quintilian. Individuals can share $93 billion. If space mining can be realized in the near future, the value of gold will be wiped out in an instant.
And only Bitcoin, known as digital gold, can continue this consensus. So Bitcoin is a safer means of storing value.