Gold and Bitcoin

Abstract

Bitcoin is often viewed as a potential competitor to gold as a safe-haven asset. But is it? While gold and bitcoin share similarities - decentralized supply, low inflation, costly mining, and no cash flows - they have important differences. Bitcoin faces two risks that gold does not: the threat of a quantum-computing attack and the more serious possibility of a 51% attack wherein an entity seizes control of the network by amassing sufficient computing power. Gold, in turn, faces its own unique set of risks tied to potential supply growth from "modern alchemy," among other new on-and off-world sources. By contrast, bitcoin's supply is limited by its algorithm. 

Keywords: Gold, Bitcoin, Safe-Haven Asset, 51% Attack, Quantum Attack, Quantum Computing, Qubits, Logical Qubits, Physical Qubits, Post-Quantum Cryptography, Near-Earth Asteroids, Chrysopoeia, Nuclear Fusion, Gold-197

JEL Classification: G11, G12, G13, G15, G01, G23, G21, G28, G51, H63, H87, E44, E52, E58, F24, F31, F32, F42