Is BTC the ugly digital gold?

Getting your Trinity Audio player ready...

More than one year ago, I showed why BTC is not digital gold. However, I now came to the conclusion that BTC does indeed have something in common with gold—but not the way BTCers would like it to be. Let me show you.

Craig Wright on gold, Bitcoin and hoarding empires

Recently, Joel Dalais from the MetaNet ICU and myself caught up with Dr. Craig Wright to discuss gold, Bitcoin and hoarding empires. What Satoshi Nakamoto said in this interview changed my perception of BTC being “digital gold” a little bit:

Let us see step by step what Craig Wright stated on gold and simply put in “BTC” instead of gold whenever he mentions gold.

Why do people hold gold? Why do people hold BTC?

“The only reason to hold gold is people value the damn thing,” Wright said.

Well, the only reason to hold BTC is “people value the damn thing.” 

“Gold sounds valuable, until you realize: what happens if society collapses? What happens if suddenly tomorrow productivity goes down by 50%? Then that gold doesn’t suddenly make you rich,” Wright said. 

Again: BTC sounds valuable, until there is a crash. We have seen how BTC correlates with stock market crashes. 

Auditing gold vaults? Auditing BTC exchanges?

“I have been involved in audits before, including in The Perth Mint,” Wright said. 

He explained how auditing gold is problematic, as on the one hand, one is never sure if the gold bars are actual gold bars and not just gold covered metals. On the other hand, auditing large gold vaults means being able to audit all stored gold bars at once—as soon as there is a day off between different vault rooms, there is a chance that gold bars are moved from room to room to deceive auditors. 

So auditing gold vaults is tough.

That makes one think of all the shady “crypto exchanges” out there that claim to have their customer’s digital assets such as BTC in custody. How sure are we that they actually have the assets stored? 

Are the BTC really there? Or is there just a graphic interface that displays an amount of BTC, while the exchange does not actually have these BTC ready to be withdrawn? 

Why did empires hoard gold? Why do people hoard BTC?

“The reason they hoard gold is, they think it is wealth. Gold isn’t wealth. Money isn’t wealth,” Wright said.

Compare gold hoarding empires who think of money as wealth with the BTC camp nowadays. BTCers literally take BTC as money, and money as wealth. In reality, wealth is the economy, the goods and services being produced and offered. 

This is exactly what we can witness within Bitcoin SV as in the BSV blockchain: we are creating an economy, while BTC tries to hoard wealth. 

“People didn’t ever use gold to pay for anything, apart from a few elites,” Wright said.

Sounds just like BTC again. BTC isn’t used for small payments, only for no payments or really big ones. 

Problems with hoarding gold? Problems with hoarding BTC?

We also discussed why hoarding itself is disadvantageous.

“Hoarding is an anti trade position,” Wright said. It basically means that whoever hoards gold does not want to put their money back into the economy. 

That again sounds like what BTC is doing with their “HODL narrative.” Buy BTC, hoard it, never spend it, don’t ever put it back into the economy. Compare that to the Bitcoin SV earn and spend economy. 

By the way: interesting to hear another bright Bitcoin mind on the same topic. In a recent interview with Daniel Krawisz, he stated concerning BTC and gold:

BTC is good for nothing whereas gold for all kinds of real things is good and there are real reasons to think it will go up, not just a bunch of people promoting a belief. However, there is a similarity in that the same scam has been perpetuated with both goods. Fiat money was originally based on gold. People were tricked into accepting new dollars that were not redeemable in gold. This was the same scam that was perpetrated on Bitcoiners when Bitcoin was replaced with Segwit coin, which is what BTC is now.

My new conclusion to BTC being a sort of “digital gold”

So we have seen that much of what applies to hoarding gold also applies to “HODLing BTC.” It is the same mentality.

“There is no correlation between Bitcoin in any possible history and gold. (…) There is no way that it (gold) correlates with Bitcoin. Ever,” Wright said.

After hearing Craig Wright talk about gold, I came to the thought that while BTC has none of the desirable features of gold, it indeed has all the undesirable ones:

1. BTC is—like gold—“heavy” as it is costly to transact with
2. Only big payments or no payments at all are done with BTC (as with gold historically)
3. Nobody knows how many BTC are actually on the shady “crypto exchanges,” just like nobody knows how much gold is actually in the gold vaults
4. People hold BTC more than they use it, similar to gold

Yet, gold has been perceived as money for thousands of years. BTC has a very young history compared to gold. Real economic use cases for gold are there that cannot be easily substituted, as in jewelry and electronics, but with BTC, one has no real use case that could not be substituted with another digital asset.

BTC has all the negative features of gold and none of the good features of it. 

There you have your digital gold. BTC is the ugly digital gold.