Some people buy BTC and argue that BTC is a store of value, digital gold. Let's compare gold and BTC.
Gold is a precious metal. It does not oxidise, it does not combine with other chemical elements by itself. It is used in the jewellery industry, dental technology, in the electronic industry and in many other industries. Gold has countless applications. Without gold you wouldn't have a computer or a smartphone and many other things. About half of the gold traded on the market is processed into jewellery, 9% is used in industry including dental technology. Gold is indispensable. Gold has excellent utility value. Over millennia, gold has evolved into a store of value and a medium of exchange. In particular, the fact that the gold items looked good and were very durable made it a valuable commodity.
The scarcity of gold played in the history a rather subordinate role. On the contrary, year after year more gold is mined and brought to the market.
Thousands of years ago, there were no international markets. Gold was worth different amounts in different countries at different times, but it was always valuable because it was useful. Usefulness has given gold its value. Much, much later, when modern capitalism came into being, modern markets started trading in gold. As a result, the price of gold has evened out across the world and is regulated by supply and demand. Some central banks have started buying gold as a hedge for their currencies.
In the markets, confidence is the most important currency. The price of gold rises and falls, but people trust the precious metal because it is needed and will continue to be used in the future. People will always buy jewellery and it will always be used in technology (at least for a very very long time). They also know that in difficult times gold will be always accepted as a means of payment. It has always been that way and it will certainly continue to be that way. There are at least no indications that it should not be so.
What can be made from BTC? Nothing. Can at least programmes be executed on the Bitcoin-BTC chain? No. Where is it needed? Nowhere. You can use it hardly for payments, because the transaction fees are so unpredictable that sometimes it costs $0.50, sometimes $5 and sometimes even $30 or more. At this point, many list the Lightning Network as a solution. No, that is not a solution and never will be. I have already written about this here. You can see here how slowly the adoption of LN is increasing. At this rate, LN will not be used significantly in a hundred years. You can also check what websites are using LN. They are mostly some non-essential roulette and gambling websites. Besides, at the places where you can pay with BTC, you can usually pay me with other, cheaper coins. Moreover, many BTC advocates argue that gold is not there to be paid with. So what's the point of BTC? Where is the similarity with gold? I don't see any.
How can something be like gold without having the properties of gold? Scarcity is often cited as evidence of similarity to gold. Is the scarcity a sufficient property? I have already written above that the scarcity of gold plays a rather subordinate role. Gold is mined in many places in the world and is not that scarce. Its supply even grows.
Besides, there are many things that are rare, but nobody needs them. They are worthless. For example, I can very easily create 100 SLP tokens, I would call them Digital Gold. They would be extremely scarce, much scarcer than BTC. Would scarcity alone make my token valuable? Would it be good as a store of value? No, my token lacks confidence. Without trust there is no value. Does BTC have the confidence? For some people still yes, but it is fading. It is best seen in the falling BTC dominance over the years.
Most of those who have bought BTC and hodl it hope to sell it at a higher price at some point. But why should the price of a coin rise if it has no properties that would justify the long-term price increases? It can only go up if more people buy it and hope to sell it more expensively in the future. But for the price to keep rising, even more people have to buy more it in the hope of selling it to others at a higher price. And so on and so forth. But it can't work endlessly. At some point, no one will buy it anymore, because simply no one will be found. Then the price will inevitably collapse. And that will be the end of the "digital gold". End of the fairy tale of BTC as a store of value.
Many are blinded by the fabulous rise in the price of BTC over the last 10 years. Do you really think the price will continue to rise like this? 10 years ago, very few people had heard of Bitcoin. Now almost everyone has heard about it and those who wanted to buy it have bought it. Do you really think that so many will be willing to put their money into the coin, which is technically at the level of 2017 (introduction of SegWit)? There are so many other ways to invest the money. There are also so many much better coins that are developing. Do you really think there will be so many new buyers who will believe in "digital gold"?
Added to this is the fact that the price of BTC is massively pumped by USDT. BTC price is in reality not almost 50,000 USD, but in fact almost 50,000 USDT. Over 65 billion USDT have already been minted. It was mainly used to pump the BTC price. No one knows if there is any real USD behind the USDT, maybe some, but how much? A lot is probably nothing, just air. Everything is being done to inflate the bubble further and further. At some point, the BTC hodlers will want to sell their BTC, but may not get a USD for it, but a worthless USDT.
The value of gold is real. The BTC value is not real. It's like the matrix.
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Well, to some extend I see a good cited point, it may not directly be the gold, but to me, I see it as a means that gave room to other coins that better hold good stand, like Bitcoin cash. However, it concept still remain a great one, and unique to my liking.
Thanks for sharing. Cheers.