Bitcoin and gold: the two assets are compared over and over again. Gold is older, Bitcoin is better. In the picture there are gold bars and BTC coins.
The CEO of the publicly traded business intelligence company, which recently invested USD 425 million in Bitcoin, believes that BTC is a gold-superior asset and that the Bitcoin price will outperform gold
Michael Saylor, the founder and CEO of MicroStrategy, explains in an interview with Stansberry Research why Bitcoin will be superior to gold in the long term. He sees the decisive advantage of BTC as the fact that the asset is limited to a maximum of 21 million units:
I was thinking about gold and then I started studying the two and then I realized that the gold miners are going to be producing about 2% more gold every year … let’s just say that in the best 100 years in the world we have 2 Produce% more gold, which means that 100 million dollars in 100 years will be reduced to 12.5 million dollars. Bitcoin, on the other hand, is going 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 calculation, USD 100 million in BTC would only decrease to 90 million:
So you’re really talking about diluting $ 100 million in Bitcoin by no more than 10 million over the course of a hundred years. Given that Bitcoin is an infinitely hard good, while gold can be produced by people with enough incentive, I realized that Bitcoin is the harder good than gold in the long run.
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Bitcoin is far more than a scarce asset
Michael Saylor also says in an interview that for every other raw material a price increase means a higher incentive to produce it, which in turn offsets the price by expanding the 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 when the price of gold increases by a factor of 10, people have an opportunity to put capital into mining and ingenuity, and they will invent better ways to get around mine it, and at some point 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 well beyond the ability of digital coin to sustain scarcity. In the interview, the CEO of MicroStrategy highlights other reasons why he is optimistic about Bitcoin.
Bitcoin is digital gold, and that means it’s faster. I can move it in a thousand places in a few seconds. It’s 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 cuts it into a million pieces and does complicated things with it. It’s only going to get better every year just because it’s software, and that means people are drawn to Apple and Amazon and Google and Facebook because they have smarter, faster and stronger networks, they are going to be drawn to Bitcoin.
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