Gold vs bitcoin an Apples-Apples attempt at comparison
Inspired by my reply to a reply to this tweet https://twitter.com/rogerkver/status/830149085738983424 I started thinking about how gold and bitcoin can be fairly compared. So lets start by taking a look at supply and movement of both:
- Gold contrary to popular belief is not a finite asset. Gold on Earth my be finite but the universe constantly creates (super nova) and destroys (black holes) gold.
- Bitcoin is limited to just under 21 million although this theoretically could be changed via consensus fork.
- Bitcoin and gold are both nearly infinitely divisible. Bitcoin is limited by technology in so far as how many decimal places it can go out to. Currently this is 8. Gold can be divided down to 1 atom.
- Moving bitcoin between any 2 places is a transaction.
- Moving gold between any 2 places is not necessarily a transaction.
- Bitcoin gets it's value from it's utility as both as a currency
- Gold gets it's value from it's utility as a currency and due to it's utility. Doesn't matter if that utility is just looking good or protecting astronaut visors from cosmic rays.
- Both get value from speculation.
Now with that in mind lets compare transactions of gold and bitcoin in a fair method in terms of bitcoin transactions:
- Buying/Selling on an exchange. This is probably the thing both have in common. Each move to or from the exchange is a transaction. In gold it can be a 1 input 1 output transaction but bitcoin will always have the fee so gold transaction could be smaller if it were a blockchain.
- Use to transact. Gold can still be used to buy and sell things directly although it has been largely replaced by fiat, bitcoin, and other methods. These transactions in gold are for the most part free (sure it takes extra energy to carry the gold) Bitcoin of course can be used as currency too. These transactions could be free but usually aren't. Both can have a variety of inputs and outputs.
- Wearing gold. This is a transaction. You have moved gold from a storage location (akin cold storage) to a use state (aka a hot wallet). In bitcoin this is a transaction. In gold it's a 1 input 1 output transaction per item worn. Bitcoin again will always have the fee.
- Mining. Both bitcoin and gold are mined. Not entirely similar but both are transactions. In gold it's moved from the ground to the smelting plant. In bitcoin it's electricity used to put bitcoin in a wallet. Bitcoin comes in nice blocks. Gold comes mostly in dust so lots of small transactions. Each piece of dust moved is a transaction.
- Smelting. Taking a bunch of gold, removing impurities and making it into a usable hunk. Could be compared to both mixing and consolidating unspent transactions to reduce utxo pool. Large number of inputs 2+ outputs (unless you input the exact amount of gold to make a bar)
- Manufacturing. Every bit of gold melted down, ground or whatever is a transaction. All the shaving, dust, excess bits as well as the final product are outputs. Nothing I can think of to compare to bitcoin here.
- Commerce. Every product containing gold that is bought or sold is a transaction. Every piece of jewelry, circuit board with gold plated connectors, collectible with gold plate or leaf, every cable with gold connectors, every coated windows, helmetes for space suits, whatever it is that contains even 1 atom of gold. Every time it is bought sold it's a transaction.
- Misc. Lose the back of a gold earring. Transaction. Get a gold filling. Transaction. Gold chain breaks and any piece comes off. Transaction. You get the point.
So I put to you gold has a much higher transaction rate then bitcoin and even credit cards in a fair comparison with bitcoin transactions.
Now imagine if you take into account the creation and destruction of gold in the universe. Asteroids smashing, dust falling to earth and other planets. Those would all be transactions. Granted we don't care about them right now but in a future of space travel we may. We already send gold into space. Lets hope one day we send bitcoin around the universe too.
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Very tangential but recent research suggests that very little gold is created in supernovae, the vast majority has been created in a much rarer event: the collision of neutron stars. Both do of course continue to this day so it doesn't really affect your point.
And in a practical sense, if we ever start mining asteroids (could happen within the next few decades), gold will become practically abundant on Earth along with other metals which are presently rare.