Bitcoin is Exactly Like Gold Except When it Isn't
21 Pages Posted: 12 Feb 2021
Date Written: December 14, 2020
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: Suggested Citation