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Was bitcoin modelled on gold?

The cryptocurrency bitcoin has been said to resemble gold because its code, held on the blockchain, means only 21 million bitcoins can ever be mined ...

14 April 2021

Martin Cozens

The cryptocurrency bitcoin has been said to resemble gold because its code, held on the blockchain, means only 21 million bitcoins can ever be mined – like gold, it is finite and cannot be printed. Many investors were drawn to bitcoin because they saw it as ‘digital gold’: a currency that had all the value of gold which could be spent electronically. Conversely though, the reality has been somewhat different.

Bitcoin is unregulated and repeated hacks have showed it as vulnerable and while gold is subject to market prices, bitcoin has seen volatility in extremis. It is also difficult to spend and slow to transact in. By contrast gold is now fully integrated with the digital payments system via an FCA regulated firm (Glint) which keeps your legally allocated gold physically in a Swiss vault.

Like bitcoin though, gold has also been seen as an alternative currency, giving users independence from the financial system and the opportunity to spend a money that can’t be printed. But while there are parallels, gold and bitcoin are different and it is difficult to translate a model from gold to cryptocurrency.

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