Gold Vs. Bitcoin as a Currency: The Currency Test

How to Test Gold Vs. Bitcoin as Currencies

Actually, any post about testing gold vs. cybercurrency as a true currency needs to cover the measure of any currency. In other words, just what is a currency? If you look through history, lots of things have served as currencies. These include colorful beads, salt, and so on. By going through the factors that make some unit of exchange into a currency, it will help you decide how digital currencies compare to gold and to other units of exchange.

What Makes a Currency?

So, what makes something a currency, and how do these factors apply to the gold vs. bitcoin debate?

Accounting Unit: Certainly, gold has a long history of holding value. It's not volatile. Still, precious metal exchanges are thousands of years old, and electronic currencies are very new. This is worth noting, but it's hard to make a fair comparison or even to decide if stability or volatility are more helpful today.

Durability: In the present time period, electronic currency has still been quite vulnerable to hacking. It's fair to say that it's only as durable as the measures that the owner takes to protect it, and some of these factors may not even be within the owner's control. Gold is pretty durable, but of course, it could also get stolen.

Intrinsic value: Gold has uses in several different industries, but it's possible to argue that intrinsic value doesn't always support the market price. Even though various cybercurrencies have market caps, it's hard to argue that they have a true intrinsic value. Of course, you could make the same argument about paper money.

Transportability: if you have a little gold, you can carry it around. If you have a lot, you may have to pay a considerable sum to move it securely. You can move electronic currencies around with a few clicks of your mouse.

Hopefully, this discussion of the measures of currencies is interesting to some of you. If anybody would like to discuss the definition of a currency as it relates to electronic currencies, I'd be interested in reading your comments.