Bitcoin is Exactly Like Gold Except When it Isn't

21 Pages Posted: 12 Feb 2021

Date Written: December 14, 2020

Abstract

Bitcoin has been described as digital gold. Bitcoin is exactly like gold except when it isn’t. Over millennia, gold has gained a questionable reputation as an inflation hedge, a store of value and a safe haven. Gold’s price can arguably be decomposed into a “golden constant” fair price and a fair price deviation. Bitcoin has no track record as an inflation hedge, a store of value and a safe haven. Bitcoin’s price can arguably be decomposed into a questionable “bitcoin network” fair price and a fair price deviation. Both bitcoin and gold are about 50% above their “fair prices”.

Keywords: Bitcoin, digital gold, gold, golden constant, inflation, Jastram, Metcalfe's Law, inflation hedge, store of value, safe haven

JEL Classification: G10, G11, G12, G15, G28, G01, G02, E31, E58, N20

Suggested Citation

Erb, Claude B., Bitcoin is Exactly Like Gold Except When it Isn't (December 14, 2020). Available at SSRN: https://ssrn.com/abstract=3746997 or http://dx.doi.org/10.2139/ssrn.3746997

Claude B. Erb (Contact Author)

TR ( email )

CA 90272
United States

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