Bitcoin and Gold: Again and again, the two assets are compared. Gold is older, Bitcoin is better. The picture shows gold bars and BTC Coins.
The CEO of the publicly traded business intelligence company, which recently invested $425 million in Bitcoin, believes that BTC is a superior gold asset and that Bitcoin will outperform gold.
Michael Saylor, the founder and CEO of MicroStrategy, explains in an interview with Stansberry Research why Immediate Edge will be superior to gold in the long term. He sees a decisive advantage of BTC in the fact that the asset is limited to a maximum of 21 million units:
I thought about gold, and then I started to study them, and then I realized that the gold miners will produce about 2% more gold every year… Let’s just say that in the best 100 years in the world we produce 2% more gold, which means that $100 million will be reduced to $12.5 million in 100 years. On the other hand, Bitcoin goes exponentially towards an infinite stock-to-flow value. There will never be more than 21 million Bitcoin.
From this characteristic of BTC, the CEO concludes that Bitcoin is the harder asset. According to his calculations, USD 100 million in BTC would only reduce to 90 million:
So you are actually talking about diluting $100 million in Bitcoin by 10 million at most over a hundred years. Given the fact that Bitcoin is an infinitely hard commodity, while gold can be produced by people with enough incentive, I realized that in the long run Bitcoin is the harder commodity than gold.
Bitcoin is much more than a scarce asset
Michael Saylor also says in the interview that for any other commodity, a price increase in the price of the commodity means a greater incentive to produce it, which in turn offsets the price by increasing supply. However, Bitcoin is not facing the same phenomenon:
If you double the price of gold, you double the miners‘ incentive to produce gold, and if the price of gold increases by a factor of 10, people will have an opportunity to put capital into mining and ingenuity, and they will invent better ways to mine it, and eventually they will melt down their jewelry or find other gold. On the other hand, if Bitcoin increases by a factor of 10, no amount invested in Bitcoin Mining can produce more Bitcoin.
Saylor’s praise for Bitcoin goes far beyond the digital coin’s ability to maintain scarcity. In the interview, MicroStrategy’s CEO highlights other reasons why he is optimistic about Bitcoin.
Bitcoin is digital gold, and that means it is faster. I can move it to a thousand places in a few seconds. It is stronger. I can pawn a hundred million dollars for three hours on a Saturday afternoon in Japan. It’s smarter. I can write a computer program that can cut it into a million pieces and do complicated things with it. It’s going to get better every year forever just because it’s software, and that means people will be attracted to Apple and Amazon and Google and Facebook because they have smarter, faster, stronger networks, they’ll be attracted to Bitcoin.