Bitcoin versus Gold

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On the 22nd April 2021, Michael Saylor, the CEO of Microstrategy said the following in an interview on Stansberry Research website:

“When talking about bitcoin versus gold, the real debate is which is the best monetary system in order to pursue the ideals of sound money."

Let´s start with some basic Ideas.

If we look at the history of money, we've started with commodity money, then coinage of those commodities to banks’ notes represented by that money to fiat currency and now we have cryptography as a basis of money.

Bitcoin is 21 million units that are infinitely subdividable trillions and trillions of times each (there are 21 quadrillion Satoshis). You can keep them in a magic space: the Internet, and then you can settle everybody's trades instantly, everywhere on earth in a fair and equitable fashion. And we do so never losing any information.

Bitcoin is the most efficient monetary system; it is the most disruptive force in the century. In 12 years, it grew to 12 to 1 trillion dollars in monetary value that beats Google, Facebook, Amazon, Apple and the like. that's the market sending us a message. It's the next chapter in the mobile wave. We digitized our photos; we digitized our videos, now we're going to digitize our money and our currency and assets are going to flow to billions of people.

Money is collapsing we've got a massive inflation problem. We're losing one percent of our value and currencies every single month. Humanity without an effective strong money is like a type 1 diabetic without insulin. You can't store energy, you can't create fat, you're going to starve to death. Without delivering effective money to humanity everybody's going to either economically freeze or starve to death. Violence and misery are going to follow.

Gold's not a solution.

It's not practical to distribute gold in small quantities to 5 billion people. Bitcoin is a solution. It is spreading at more than 200 percent a year. We're adding 3 million users a week and it is accelerating. If I wanted to give knowledge, music and money to the world in the 19th century, I would have given you books, pianos and gold. They're now antiques for the elite in the 21st century. Today, you’re going to use the internet, platform in bitcoin and you're going to provide ibooks and Google and Youtube. You're going to provide Apple music and Amazon music and Spotify to everybody and you're gonna provide bitcoin as an asset for everybody. Gold used to be the best solution.

It isn't anymore. The time has come to pass the torch from gold to bitcoin. Bitcoin is humanity's first effective engineered monetary system. It's as profound as our rail networks, our road networks our electrical networks, our telephone networks and the Internet. Bitcoin can and will deliver the virtues of strong money. You can't build a computer without silicon, you can't build a skyscraper without steel, you're not going to survive if you don't pick the right element.

Crypto is the steel of the 21st century financial economy. An engineer would say you have to choose wisely. There's a right answer, there's a wrong answer. So, gold is element 79. It's an ideal ornamental metal. It's indestructible, malleable, it's attractive. We love these things. It makes great jewelry; it makes a great ornament. it's just not a perfect monetary asset because you can inflate gold. You can confiscate gold. It's immobile.

It's not easily divisible and you can counterfeit it. It shows up in the economy in a heterogeneous fashion; lots of different types of gold coins; lots of different types of gold bars, lots of different types of gold jewelry and the paper gold itself is sometimes trading at a hundred to one versus the underlying physical gold and there's no trusted protocol to guarantee the integrity or the synchronicity between paper gold and actual physical gold.

If we compare that to bitcoin; bitcoin is not just an asset; it's a network and its protocol, people would say, is the world's first global self-settled, real-time, clearing bearer instrumen. It is decentralized, permissionless, global, immutable, scarce, auditable, instantly transferable, not seasonable, highly divisible, mostly everything that gold can't do. The asset itself is secure, easily divisible. It is deflationary. People might lose some bitcoin. They're never going to add more than 21 million. You can transfer it around the planet. It's transparent, everybody running a node can authenticate it instantly from a hundred-dollar smartphone.

That's that's makes it the most perfected monetary asset of humanity. We've never actually had an asset that clean. It's synthetic gold without the defects of monetary gold. Now the network itself it's global. It is open. Anybody can run a security node or a validating node on the network. It's empowering to billions and billions of people, and it is viral; it is spreading at a rapid rate. Companies, countries, individuals, are adopting it and that makes it “anti-fragile”.

Bitcoin is harder, it's smarter, it's faster and it's stronger than the gold that came before it. I could flash on bitcoin blockchain 10.000 loans for three days, each across a hundred jurisdictions, between ten thousand different companies and fetch them back with laser-like precision. So, in short, bitcoin is more than just a monetary network. It's a trust network allowing millions of applications to serve billions of people and it's going to accelerate global commerce in the 21st century. And it is critical for allowing for safe and efficient operations in cyberspace. That's why the asset is superior to gold.