Why is Bitcoin referred to as digital gold

Today we often hear Bitcoin being called a digital gold and often we might wonder why that is so, I mean the physical gold is being considered as a very valuable item and something that all wants to have and it's indeed a store of value and has remained so for centuries now and then comes Bitcoin.

Bitcoin is a digital currency and highly scarce and has been depicted as a digital gold since it has no physical representation like fiat hence it's called digital gold but today I will like us to look into some of this reasons why Bitcoin is often referred to as digital gold.

Ofcourse we know Bitcoin has great unique qualities and usecase and this could have led to this comparison with gold which has long been the standard store of value for man and yes today bitcoin has drawn comparison to it.

The reasons for this description or why bitcoin is ascribed as such will be the primal focus of my article, let's get on with it.

Some reasons for Bitcoin being the perfect digital gold

One of the reasons why Bitcoin is referred to as a digital gold is due to the fact it's a store of value naturally Bitcoin is a scarce asset class like I was saying infact even more rarer than the physical gold itself as with increase in man power and equipment and in a land known to have gold more gold could always be mined and discovered in other places but that is not the case with Bitcoin.

Bitcoin's value stems especially from the fact that it has a fixed supply, true like physical gold Bitcoin is mined also with high computational power and equipment but unlike gold which though hard to mined but gold doesn't have a fixed supply which means there could always be more.

Bitcoin on the other hand has a fixed supply of 21 million which is to say no matter how hard working the miners are and the expensive equipment utilized they can't mine more than 21 million Bitcoin that's to say the total supply can only be maximum of 21 million, now when an asset is like this it means it's scarce and valuable as many are rushing to get ahold or a bit of this scarce asset making it even more suitable to be used as a hedge by many people and for those who are in a rather inflationary economy they often go to Bitcoin seeking for safe haven because of its scarce nature and for this Bitcoin is called a digital gold.

And something that makes the physical gold precious or even more valuable is that despite being physical it's durability is tested and trusted infact any effort to make it wear out will end up making it shine brighter and when tested in fire gold becomes even more purer now same it's true of Bitcoin also because it's a digital asset which means that the value of this prized asset class would never drop with time like gold.

So Bitcoin's durability similar to that of physical gold is another reason why it can only be fitting to refer to Bitcoin as digital gold.

Another thing that makes bitcoin digital gold it's due to its nature, fiat currency as we know it's controlled by the government of the place where it's issued so whether it's in physical nature or digital form like CBDC it's still centralized making it difficult for fiat to be a store of value but that's not the case with gold, gold has no government which controls it like fiat or central authority and that's why the physical gold has been renowned over centuries as a store of value due to the fact it's not being controlled by any government of the world like fiat.

Now just like gold Bitcoin operates on blockchain technology this technology ensures that Bitcoin is decentralized and being decentralized means no one no single entity, or government or institutions or collaboration of any central authority controls Bitcoin as it operates on a decentralized network and this especially makes Bitcoin a digital gold since it's posses this characteristics similar to gold.

Bitcoin is decentralized and this ensure too that no central authority have to signoff on its transactions instead it's verified in blockchain we don't need any third party to facilitate transactions here as things are done seamlessly on a blockchain base Bitcoin and cryptographic proofs are utilised by this technology for verifying true ownership of asset and other blockchain based transactions.

Also Bitcoin is used as a medium of exchange and it's not limited by borders like fiat and easily accepted anywhere without having to be converted to the country's currency in a place where it's accepted ofcourse and that's similar to how gold has operated over the years and easily accepted globally as well without cross border limitations and easily used for payments which leaves both parties satisfied at the end so this thus proves that Bitcoin is a true digital gold.

So for this reason and some others makes it really ideal and in place to say Bitcoin is a digital gold as it's value is not in question at all.

Conclusion

So Bitcoin has good use case that means it should really be looked at as a store of value and this fact means that Bitcoin is not only a currency or an asset but like gold a hedge only difference is it is in digital form hence it's rightly called digital gold.