What is Bitcoin and what is it good for?

Bitcoin is many things but one of the easiest ways to understand it is the concept of digital gold.

Bitcoin has the same properties that made gold a desirable financial asset(scarcity, fungibility, divisibility, durability, portability)

Bitcoin took these properties and improved them even further.

This makes Bitcoin a better and more efficient version of gold.

What is Gold good for as a financial asset? Gold has been historically used as a hedge against trouble in the monetary system and as a safe store of value.

Gold is not backed by anything other than itself. The price is determined by supply and demand alone. Gold allows you to self-custody wealth. Gold can't be inflated so it protects you against the inflation tax of the government. Gold also can't be destroyed. It's not a company or a government that can fail. Holding gold has no counterparty risk.

Gold is universally recognized as money. Despite that virtually no business accepts it as a medium of exchange and it's not backed by governments.

Why is Bitcoin better than gold?

It can be easily divided.

It can be instantly sent to any person on earth.

The inflation rate of Bitcoin is lower.

It can be integrated in any software application. Gold ATMs for example are rare and not very practical and Bitcoin ATMs common. This highlights that it's digital nature makes it very easy to use and integrate it in businesses.

It's easy to verify that your Bitcoin is real.

It's has no storage cost.

You can move any quantity that you want at a low cost.

It's harder to confiscate.

Gold has played an important role in finance for thousands of years. In recent decades it's importance has lessened. Nevertheless it's still a multi trillion dollar asset class.

As gold has been important for thousands of years in finance it can be expected that digital gold will also play a role in our world no matter how small or big that role might be.

One of the reasons why gold has not been more successful in recent history might be that it's slow and difficult to move making it incompatible with a fast-paced modern and global economy.

Bitcoin on the other hand is uniquely suited to a digital global economy and a world where fiat currencies are just melting ice cubes. Even central banks seem to be increasingly turning back to gold after decades. As Bitcoin is better gold for a digital world it may play a bigger role in the future as many might expect.