{"id":37648,"date":"2022-07-16T13:01:32","date_gmt":"2022-07-16T10:01:32","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=37648"},"modified":"2025-08-29T19:37:13","modified_gmt":"2025-08-29T16:37:13","slug":"is-bitcoin-digital-gold","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/is-bitcoin-digital-gold\/","title":{"rendered":"Is bitcoin \u2018digital gold\u2019?"},"content":{"rendered":"<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Key points<\/h2>\n<ul class=\"wp-block-list\">\n<li>Bitcoin is often dubbed \u201cdigital gold\u201d, highlighting its store-of-value properties by analogy with physical gold.<\/li>\n<li>There is no consensus on whether bitcoin is a safe-haven or a speculative asset. Only a few investors and organisations allocate to the first cryptocurrency as an inflation hedge.<\/li>\n<li>Studies of bitcoin\u2019s correlation with different asset classes show it behaves differently across market regimes.<\/li>\n<\/ul>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What do bitcoin and gold have in common?<\/h2>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/who-is-satoshi-nakamoto\">Satoshi Nakamoto<\/a> envisioned bitcoin as a fully fledged means of payment, stripped of the flaws of fiat money. Chief among them is inflation, the gradual erosion of real value measured by purchasing power.<\/p>\n<p>To counter this, bitcoin\u2019s architecture embeds the following properties:<\/p>\n<ul class=\"wp-block-list\">\n<li>Issuance is capped at 21 million BTC. Miners will extract the last coin in the autumn of 2140.<\/li>\n<li>The production of new coins declines over time. Owing to a programmed event known as the <a href=\"https:\/\/forklog.com\/en\/news\/what-is-the-bitcoin-halving\">halving<\/a>, bitcoin mining rewards are cut in half roughly every four years.<\/li>\n<\/ul>\n<p>Gold has similar characteristics. As a natural metal, its supply is finite. And although production has been rising, it <a href=\"https:\/\/www.mining.com\/web\/mined-gold-supply-still-not-keeping-up-with-demand\/\" target=\"_blank\" rel=\"noreferrer noopener\">has not kept up with demand<\/a>, and new deposits are found ever less often.<\/p>\n<p>Finally, as with bitcoin, society has voluntarily recognised gold as a valuable asset that embodies value.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Has gold always been a safe haven?<\/h2>\n<p>An important similarity between bitcoin and gold is how they are used. For many years gold was not only a store of value but also a means of payment. Coins\u2019 value and denomination were judged by their gold content.<\/p>\n<p>In the late 19th century developed economies adopted the \u201cgold standard\u201d. Under it, gold served as the universal measure of value, and the state backed the worth of fiat money with its reserves of the metal. The issuing state guaranteed that banknotes could be exchanged for a specific amount of gold.<\/p>\n<p>In 1944 Western countries concluded the <a href=\"https:\/\/ru.wikipedia.org\/wiki\/%D0%91%D1%80%D0%B5%D1%82%D1%82%D0%BE%D0%BD-%D0%92%D1%83%D0%B4%D1%81%D0%BA%D0%B0%D1%8F_%D1%81%D0%B8%D1%81%D1%82%D0%B5%D0%BC%D0%B0\" target=\"_blank\" rel=\"noreferrer noopener\">Bretton Woods agreement<\/a>, under which national currencies had fixed exchange rates to the dollar, which in turn was pegged to gold. A troy ounce of the precious metal was set at $35. The new monetary system, though replacing the gold standard, still rested on the price of gold.<\/p>\n<p>The United States scrapped the dollar\u2019s fixed link to gold in 1971, rendering Bretton Woods moot. Since then fiat exchange rates have been set by supply and demand in open markets. At the same time, persistent, if modest, dollar inflation became the norm.<\/p>\n<p>Even so, from the 1980s until 2022 its annual rate did not exceed 2%. The dollar, as money, also remains the world\u2019s reserve currency, a popular safe-haven asset.<\/p>\n<p>Gold is no longer used for payments, but it has retained its value. The reason is its ability to preserve purchasing power: the economic incentive works against selling.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Why is bitcoin not recognised as digital gold?<\/h2>\n<p>Gold\u2019s primary function as an investment asset is the ability to preserve and increase value during crises. When the economy enters a prolonged downturn, investors sell high-risk assets\u2014such as equities\u2014and buy stores of value, notably gold.<\/p>\n<p>The gold price began to rise in 1972 and peaked in 1979. Over the next 30 years the precious metal traded roughly sideways, alternately gaining and losing.<\/p>\n<p>It did not regain its 1979 peak (around $680 per troy ounce) until 2007. After that the global financial crisis hit, and by 2011 the metal\u2019s price had almost tripled, topping $1,800. Over the next eight years the asset fell. It began to rise in mid-2019. The pandemic pushed prices higher, and in August 2020 quotations nearly reached $2,000.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"489\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/XAUUSD_2022-07-16_12-49-36-1024x489.png\" alt=\"Is bitcoin \u2018digital gold\u2019?\" class=\"wp-image-179088\" srcset=\"https:\/\/forklog.com\/wp-content\/uploads\/XAUUSD_2022-07-16_12-49-36-1024x489.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/XAUUSD_2022-07-16_12-49-36-300x143.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/XAUUSD_2022-07-16_12-49-36-768x366.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/XAUUSD_2022-07-16_12-49-36-1536x733.png 1536w, https:\/\/forklog.com\/wp-content\/uploads\/XAUUSD_2022-07-16_12-49-36.png 1834w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>Monthly XAU\/USD chart, broker FXCM. Data: TradingView.<\/figcaption><\/figure>\n<p>According to <a href=\"https:\/\/p2pfoundation.ning.com\/forum\/topics\/bitcoin-open-source\" target=\"_blank\" rel=\"noreferrer noopener\">evidence<\/a> left by Satoshi Nakamoto himself, bitcoin was created in response to the 2007 crisis, which the United States \u201cput out\u201d through large-scale additional issuance of dollars. Since the launch of the network, its price has increased year after year. Over shorter periods, however, bitcoin is highly volatile, aligning it with high-risk assets.<\/p>\n<p>Researchers have repeatedly found correlations between bitcoin and equities. In April 2022 Arcane Research said the first cryptocurrency\u2019s moves were closest to those of technology stocks, considered a riskier segment of the equity market.<\/p>\n<p>Several months earlier Goldman Sachs analysts warned that bitcoin\u2019s price depends on macroeconomic factors and could fall as the Fed tightens policy. That is what later happened.<\/p>\n<p>According to Bank of America, since 2021 the first cryptocurrency has correlated with equities. As an example, the bank\u2019s researchers cited its correlation with key stock indices\u2014the S&amp;P 500 and Nasdaq 100. Therefore, bitcoin is not a safe-haven asset, the bank argues.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What argues for the \u2018digital gold\u2019 thesis?<\/h2>\n<p>There are also arguments in favour of bitcoin as a store of value.<\/p>\n<p>First, prominent investors have spoken about its defensive properties. In 2021 the American financier Ray Dalio supported the \u201cdigital gold\u201d thesis, although he later noted that the first cryptocurrency loses out to gold.<\/p>\n<p>In April 2022 former BitMEX chief Arthur Hayes expressed the view that bitcoin will ultimately become a safe-haven asset because of Fed policy and the dollar\u2019s debasement.<\/p>\n<p>Second, a ForkLog study showed that during the 2020 crisis the first cryptocurrency <a href=\"https:\/\/forklog.com\/en\/news\/coronavirus-crisis-and-markets-has-bitcoin-finally-proven-its-status-as-a-safe-haven-asset\">correlated<\/a> mainly with the precious metal.<\/p>\n<p>Third, bitcoin can change its correlation with asset classes depending on market conditions. The view that the first cryptocurrency starts to behave like risk assets during market sell-offs was <a href=\"https:\/\/forklog.com\/en\/news\/researcher-bitcoin-sp-500-correlation-strengthens-in-falling-markets\">voiced<\/a> in 2020 by The Block researcher Larry Cermak.<\/p>\n<p>Another argument \u201cfor\u201d is the practical use of bitcoin as digital gold. Despite its high volatility, several large companies already hold savings in the first cryptocurrency. According to the Bitcoin Treasuries website, these include Tesla, Core Scientific and Square.<\/p>\n<p>One of the chief advocates of bitcoin as a safe-haven asset is MicroStrategy CEO Michael Saylor\u2014his company holds nearly 130,000 BTC.<\/p>\n<p>In addition, bitcoin is already used in sovereign reserves. Since 2021 El Salvador\u2019s government has been buying bitcoin for its treasury.<\/p>\n<p>JPMorgan believes bitcoin has the potential to become digital gold as institutions accept it in that role, but achieving this is constrained by the first cryptocurrency\u2019s dependence on inflation.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Further reading<\/h2>\n<p>How does the Fed\u2019s policy rate affect the price of bitcoin?<\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-the-stock-to-flow-model-and-why-is-it-criticised\">What is the Stock-to-Flow model and why is it criticised?<\/a><\/p>\n<p>What are stablecoins?<\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-central-bank-digital-currency-cbdc\">What is a central bank digital currency (CBDC)?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-the-austrian-school-of-economics\">What is the Austrian school of economics?<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Why is bitcoin called \u201cdigital gold\u201d? What are the arguments for and against the thesis? This ForkLog explainer answers.<\/p>\n","protected":false},"author":1,"featured_media":37649,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[2113],"tags":[2116,2125,2118,18,536],"class_list":["post-37648","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptorium","tag-101-bitcoin","tag-101-economic-theory","tag-101-trading-and-investing","tag-bitcoin","tag-gold"],"aioseo_notices":[],"amp_enabled":true,"views":"113","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37648","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=37648"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37648\/revisions"}],"predecessor-version":[{"id":37650,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37648\/revisions\/37650"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/37649"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=37648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=37648"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=37648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}