Bitcoin or gold: What should you invest in? Author’s opinion

Why Bitcoin was created

Bitcoin did not appear by accident, nor was it originally designed as an investment vehicle. It emerged as a technical solution to a long-standing problem discussed for decades within a narrow circle of cryptographers, hackers, and libertarian-minded technologists known as the cypherpunks. Their core belief was straightforward: in a digital environment, individual freedom and property rights cannot exist without cryptography.

In the physical world, ownership and rights are protected by borders, safes, and legal systems. Online, however, everything depends on who controls servers, databases, and communication channels. By the early 2000s, the internet had become a global space for communication and commerce, yet it lacked a universally trusted medium of exchange. Digital information can be copied endlessly, which meant that any form of “online money” required a central authority — a bank, payment processor, or government — to maintain records and validate transactions.

This dependence made digital money vulnerable to censorship, freezes, and arbitrary rule changes. While the internet itself was decentralized and borderless, the financial layer built on top of it was not. Bitcoin was an attempt to solve this contradiction by creating money for the internet that does not require trust in any single institution. Trust was transferred from centralized intermediaries to open-source code, a public ledger, and economic incentives. Anyone could independently verify the rules of the system, the transaction history, and the authenticity of coins. For the first time, a form of digital money existed whose reliability was based not on authority, but on mathematics and consensus.

Why humanity needed gold

Gold became money long before formal markets existed. Around seven to eight thousand years ago, societies reached a scale at which clan-based economies — built on personal relationships and mutual obligations — no longer worked efficiently. As cities grew and the division of labor expanded, people increasingly needed to exchange value with strangers. The same core issue emerged that would later appear on the internet: how to trade with those you do not personally trust.

Gold proved to be a near-ideal solution. It is naturally scarce, difficult and time-consuming to extract, divisible, portable, durable, and resistant to decay. Unlike most goods, it is not consumed through use. The labor invested in extracting gold remains embedded in it indefinitely. These properties made gold suitable not only for exchange, but also for long-term wealth preservation.

Crucially, gold did not become money by decree. Its monetary role formed organically through repeated exchange. People did not need to trust a specific individual — only the shared understanding that others valued gold as well. Over time, a global social consensus emerged: gold became a universal store of value, transcending borders, cultures, and political systems.

Why gold and Bitcoin are no longer full-fledged money

In classical economic theory, money performs four key functions: it serves as a medium of exchange, a unit of account, a means of payment, and a store of value. Over centuries, gold gradually lost most of these functions. It moved from jewelry and coins in daily circulation to bars stored in vaults and state reserves. Paper and digital fiat money replaced it in everyday transactions, leaving gold primarily as a store of value.

Bitcoin followed a similar, though much faster, trajectory. While it was originally conceived as internet money, in practice it is rarely used for daily payments today. Instead, it functions mainly as a long-term savings instrument, a speculative investment, and a tool for transferring value across borders without intermediaries.

Why investors choose Bitcoin and gold as stores of value

The appeal of both assets is rooted not in ideology, but in fundamental economic principles. Their supply is limited and predictable. Gold production grows slowly, while Bitcoin’s issuance is strictly defined by protocol. As economies expand and fiat currencies increase in supply, assets with fixed issuance tend to gain purchasing power over time.

Another factor is behavioral. When multiple forms of money coexist, people typically spend what they consider weaker and save what they consider stronger. Fiat currencies are convenient for payments but depend heavily on government policy, monetary expansion, and political stability. As a result, they are often spent rather than saved. Gold and Bitcoin, by contrast, are accumulated.

There is also a resource-based perspective. Gold embodies the labor and resources spent on mining and refining it. Bitcoin represents the energy expended on computation and network security. Neither is destroyed through use; both preserve the resources invested in their creation.

This system works as long as global consensus exists — and it does. Hundreds of millions of people worldwide own gold, and tens to hundreds of millions hold Bitcoin. Gold has served as a store of value for most of human trading history. Bitcoin, while young, has existed for more than half of the internet’s lifespan and has not been displaced despite constant competition and skepticism.

Risks and limitations

Neither asset is without risk. Gold’s scarcity could theoretically be undermined by future extraction technologies or extraterrestrial mining. Bitcoin faces technological uncertainties, including potential advances in quantum computing and long-term questions about miner incentives as issuance declines.

Still, despite vast differences in age and form, gold and Bitcoin occupy remarkably similar roles today. Neither derives value from law or decree. Both rely on social consensus and global markets. Both allow value to move across time and space with reduced reliance on institutions.

Gold is accumulated human labor cast in metal.
Bitcoin is expended energy recorded on a blockchain.

What this means for a private investor

Traditional investment models treat gold as a diversification tool rather than a growth engine. Depending on the strategy, recommended allocations range from a few percent to as much as a quarter of a portfolio. The purpose is protection, not aggressive returns.

Bitcoin is increasingly viewed through a similar lens. Large financial institutions see it as a complementary asset rather than a replacement for traditional investments. Typical recommendations suggest a 1–5% allocation, adjusted for risk tolerance. Within this range, Bitcoin offers asymmetric potential: exposure to broader adoption alongside protection against monetary instability.

From this perspective, the idea of Bitcoin as digital gold appears well-grounded. Different eras and technologies, but the same underlying goal — preserving value in a world where trust is limited and uncertainty is constant.

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