Bitcoin vs. Gold: Why “Digital Gold” Misses the Mark

As Bitcoin continues to gain momentum with strategic investors, nation states, and retail alike, it is hard to not acknowledge the inevitability. I mean, would the world's governments and Blackrock (let alone countless corporations of all sizes) be increasing their positions of a speculative asset at such breakneck speeds? Contrary to how Bitcoin has been described in the not so distant past, it now continues to blow the minds of tradfi (tradition finance) players, reinforcing its position as the strongest performing asset in the world. If you have done any research on Bitcoin, you have no doubt heard to it referred to as “digital gold” at one point or another. Just this past week, a Bloomberg host referred to gold as "Physical Bitcoin," a description that indicates the increasing shift to Bitcoin as the underlying.

That said, comparing the two assets is meant to make Bitcoin more relatable to those familiar with gold’s long history as a store of value. But let’s be real—this analogy is more of a crutch used by prognosticators in the space than reality. Whether those using the reference truly believe in the similarity or they are simply using it for brevity so as to not have to explain Bitcoin by way of its unique properties is unclear in most cases. Because, while Bitcoin and gold may share some surface-level similarities, but when you dig deeper, they’re fundamentally different beasts when it comes to most of the attributes that have led them to be considered strong stores of value. Let’s break down why Bitcoin isn’t just digital gold—it’s something entirely new.

Bitcoin’s Absolute Finiteness vs. Gold’s Relative Scarcity

One of the biggest differences between Bitcoin and gold is in the scarcity of their supply. I keep hearing people say Bitcoin is like gold because both are “scarce,” but that’s nowhere near the full picture. Gold is scarce, sure, but it’s certainly not finite. There’s always more gold to be mined—whether from the earth, asteroids (as companies like AstroForge are exploring), or even recycled from electronics. The World Gold Council estimates that around 208,874 tonnes of gold have been mined throughout history as of 2023, with about 3,000 tonnes added annually. So, while it’s not easy to extract, the supply of gold can keep growing as technology improves. Another factor that can lead to an increase in supply is an increase in the incentives (human behavior being downstream of incentives and all) by way of an increase in gold's price, which is at all time highs of ~$3,300 at the time of writing…cue a ramp in the gold mining operations world wide.

Bitcoin, on the other hand, is perfectly finite. Its creator, Satoshi Nakamoto, hardcoded a supply cap of 21 million coins into its protocol, a protocol which is now agreed upon via the consensus across the entire decentralized Bitcoin ecosystem. As of April 2025, about 19.7 million Bitcoins are in circulation, with millions lost through the past 15 years…thank you all for your donation to the network! The last satoshis (fractions of a full Bitcoin) will be mined around 2140 and then that’s it—no more will ever be mined, no matter how much computing power you throw at it. This absolute scarcity is a stark contrast to gold’s relative scarcity. Bitcoin’s fixed supply makes it immune to the kind of supply inflation gold faces, giving it a unique edge as a predictable store of value.

No Third Parties for Bitcoin, Unlike Gold

Another key difference is how you secure and store these assets. Gold, for all its allure, comes with a big catch: it’s a physical asset that requires third-party involvement to keep it safe. If you own a significant amount of gold, you’re likely storing it in a bank vault, a safe deposit box, or with a custodian like Brinks. That means trusting someone else—banks, security firms, or even governments—to protect your wealth. History shows this can, and certainly will, backfire. During the 1933 U.S. gold confiscation, the government forced citizens to turn over their gold at a fixed price, only to devalue the dollar right after. Truckers in Canada had their access to funding cut off because of wrong think. Examples throughout recent and distant history abound, because third parties introduce risk, a risk which gold’s physical nature makes unavoidable.

Bitcoin flips this on its head. You can secure and store Bitcoin yourself with a private key—a string of code that gives you complete control over your funds. No banks, no vaults, no middlemen, just you, your private key, and your feet touching grass as you soak in some Vitamin D…oh wait, sorry that's me as a daydream while writing this. But seriously, you can rest easy without any fear of third party risk by self custodying your Bitcoin on a hardware wallet, securing the access to your Bitcoin (your keys) with a seed stamp, on a piece of paper, or even by memorizing them—although I wouldn’t recommend that unless you’re a memory champion and aren't worried at all about taking your Bitcoin with you if you were to suddenly pass away. This self-custody model cuts out third parties entirely, reducing counterparty risk. Sure, you can use exchanges or custodians if you want, but the beauty of Bitcoin is that you don’t have to involve a third party with your money. Gold simply can’t offer that level of independence.

Infinite Divisibility and Portability: Bitcoin Solves Gold’s Old Problems

Finally, let’s talk about usability—specifically divisibility and portability. Gold’s physical nature has always been a limitation, which is exactly why paper currency was invented in the first place. The earliest example of paper money date back to goldsmiths. When people quickly realized how difficult and unsafe it was to carry gold around everywhere, they sought to store it where it would be safest, which at the time was in a goldsmith's vault. People would then be given receipts for their gold deposits. When it came time to transact for goods and services, it also didn't take people long to realize it was easier to simply pay with the golldsmith's receipts instead of going to the vault, withdrawing gold stores, taking the gold to the vendor to transact, only to have the vendor take the gold back to a goldsmith for safe storage. So people developed the first pay money, goldsmith receipts, backed by the gold stored in vaults (notice the lack of a governing authority involved in money, as humans settled upon the best method to transact on their own). This method worked quite well until the third party risk that had been introduced reared its head, namely when goldsmiths starting creating receipts out of thin air which had no corresponding gold stored in the vault. This went relatively unnoticed for some time, because most of the gold stored in vaults never moved, only the corresponding paper receipts. But, wouldn't you know it, once word got out their were more receipts in circulation than gold stores, the first bank (or goldsmith) runs occurred.

Beyond the third party risk introduced by the safe storage of gold, the precious metal also isn’t infinitely divisible—you can’t easily cut a gold bar into smaller pieces and, if you did, the shavings would no doubt lose relative value as compared to gold bars or coins. And moving it across long distances? Good luck. Transporting gold internationally involves logistics, security, insurance, and often hefty fees. Countless shipwrecks containing stores of gold are among the many reason why gold-backed paper certificates became a thing in the 17th century—just like with the goldsmiths, the certificates were easier to trade than the metal itself.

Bitcoin, by contrast, is infinitely divisible and effortlessly portable. The smallest unit of Bitcoin is a satoshi, named after its creator—one Bitcoin equals 100 million satoshis. Need to send 0.00000001 BTC? No problem. This divisibility makes Bitcoin practical for transactions of any size, from buying a coffee to transferring millions. And portability? Bitcoin moves at the speed of the internet. You can send it across the globe in minutes, with no physical barriers, no customs checks, and no armored trucks. In 2024 alone, the Bitcoin network settled over $2 trillion in transactions, according to CoinMetrics, proving its ability to handle value transfer on a massive scale. Gold’s limitations in divisibility and portability are precisely what Bitcoin was built to overcome.

The “Digital Gold” Narrative: Helpful, but Flawed

Despite the glaring issues we've covered about the comparison, I get why people call Bitcoin “digital gold”—it’s a shorthand to help newcomers understand its role as a store of value in a world of fiat inflation. Both assets are seen as hedges against currency devaluation, especially as central banks keep printing money (global M2 money supply is skyrocketing at the time of writing in 2025). Gold has held that role for centuries, with its price climbing from $35 an ounce in 1971 to around $3,300 in mid-2025. Bitcoin, meanwhile, has soared from a few cents in 2010 to about $93,000 today, often spiking during inflationary periods like 2021–2022. But the comparison stops there. Gold’s value is tied to its physical properties—its relative scarcity, its shine, its use in jewelry, its role in electronics, but the very physical properties which drive its inherent value are also at the heart of its problems as a store of value. Meanwhile, Bitcoin’s value comes from its digital properties: its perfectly fixed and finite supply, its decentralization, and its ability to transfer value without intermediaries. Gold is a relic of the past, rooted in and limited by a physical world; Bitcoin is a tool for the future, built for a digital one. The “digital gold” label might help bridge the gap for newbies, but it undersells what Bitcoin really is—a revolutionary system that addresses gold’s core limitations.

Final Thoughts: Bitcoin and Gold Serve Different Purposes

Bitcoin and "physical Bitcoin" (gold) aren’t enemies—they just serve different needs. Gold has a 5,000-year track record as a store of value, and its tangible nature gives it a cultural weight Bitcoin can’t match (yet). But Bitcoin’s absolute scarcity, self-custody model, and infinite divisibility make it a fundamentally different asset, one that solves problems gold can’t. In a world where fiat currency is abundant and value is scarce (as I discussed in my Scarcity vs Abundance post), Bitcoin offers a new way to preserve wealth without the baggage of the old system. For some this may seem like a distinction without much of a difference. But anytime you remove a third party's involvement while also improving every other monetary attribute, it merits a call out of the oversimplified comparison. Bitcoin isn’t digital gold and gold isn't physical Bitcoin—Bitcoin is far superior and, as a result, its adoption over time will inevitably eclipse gold as a store of value in our increasingly digital world.

Jake Galt