V god is arguing about the digital gold attributes of Bitcoin, or is the comparison with gold from the beginning a fallacy?

Bitcoin developer Zack Voell recently claimed that Bitcoin was, is and will always be digital gold. However, this statement was strongly opposed by V God, the co-founder of Ethereum.

V God retorted: "I joined the Bitcoin land in 2011, and I remember a clear vibe at that time, that Bitcoin is a P2P cash first, and gold second."

He also said that the original intention of Bitcoin was to serve as a peer-to-peer electronic cash. And Satoshi Nakamoto's description of Bitcoin in the Bitcoin white paper released in 2008 also reflects his own statement.

The first line of the white paper reads: "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."

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What Satoshi Nakamoto Thinks Bitcoin Is Fading

In 2008, a global financial crisis broke out, and this sudden financial tsunami is about to sweep the world.

When the "Wall Street giant" Lehman Brothers filed for bankruptcy protection, the collapse of Wall Street investment banks followed one after another. Goldman Sachs Group and Morgan Stanley turned into commercial banks, and the glorious "Wall Street investment banks" came to a permanent end. The domino effect led by the United States is destroying the last line of defense of traditional finance.

The times make heroes. Satoshi Nakamoto, who was still completely unknown at the time, realized that the world that relies on the authority of the government is collapsing. With admiration for liberalism, a new decentralized world is coming.

For this point-to-point electronic cash system that does not require any trusted third party, Satoshi Nakamoto calls it "block chain". In the genesis block, Satoshi Nakamoto wrote this sentence: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks". "January 3, 2009 Chancellor on brink of second bank bailout".

Satoshi Nakamoto has great expectations for Bitcoin. He wants to create a financial system that is not regulated and absolutely free. In the "Collected Works of Satoshi Nakamoto", there are about Satoshi Nakamoto's views on the direction of Bitcoin in retail payments. Satoshi Nakamoto believes that the node race makes Bitcoin technically suitable for retail payments.

When Bitcoin was created, Satoshi Nakamoto seemed to have written the future of Bitcoin. Civic CEO Vinny Lingham also once said, "I always thought that Satoshi Nakamoto originally intended to use Bitcoin for payment, not for value storage. That is to say, he left Bitcoin, so now, for better or for worse, the community under control."

In the decades of Bitcoin development, its promoters have given him different definitions, and gradually deviated from the track originally defined by Satoshi Nakamoto.

According to the woobull chart, this is a comparison of the velocity of money between Bitcoin and the M1 and M2 dollar money stocks. Bitcoin Velocity is an indicator that analyzes the speed at which Bitcoin is circulating in the digital asset economy. Bitcoin velocity is analyzed by plotting Bitcoin's velocity with M1 and M2 money supply, where M1 equals "approximate cash asset" value and M2 equals "approximate cash asset" and "liquid non-cash asset".

It is clear from the graph that since 2012, Bitcoin has mediated nearly M2 of the money stock in USD, rather than M1, suggesting that it has been used primarily as savings or investment rather than as a payment instrument.

And the narrative of “bitcoin as a means of payment” seems to be “close to death.” It is undeniable that although Bitcoin is currently used more as an investment or savings, as V God said, Bitcoin is a P2P cash first, and gold second.

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Similarities and Differences Between Bitcoin and Gold

The first point is that both are currencies, but neither is currency, because they can be used to buy goods and services, so they can be called currencies.

But by definition, money is a medium of exchange and a widely accepted means of payment in circulation. Gold's classification as commodity money dates back largely to the early days of capitalism. Gold is not directly linked to any currency.

Although Bitcoin is becoming an acceptable means of payment both offline and online, and many countries have accepted it, it is still not widely accepted around the world.

The second point is that gold is a commodity, but Bitcoin is not. Gold is a basic commodity or hard asset that can be used in commerce, and can be used as a material for the production of other commodities. While Bitcoin can be stored, it is not physical and cannot really be felt and held.

The third point is that both bitcoin and gold have corresponding hedging properties. Both bitcoin and gold are rare, or have fixed circulation, and their prices fluctuate. An alternative investment of confidence.

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Why Bitcoin Is Called "Digital Gold"

In fact, in the history of Bitcoin's development, it has surpassed the price of gold many times, so it is called "digital gold". Now many people think that Bitcoin also has a strong hedging property, so more and more people call Bitcoin "digital gold".

So what is a safe-haven asset? Safe-haven assets refer to a class of relatively stable assets whose prices do not fluctuate too much as the market changes, such as gold, US dollars, and so on.

How has Bitcoin been gradually included in the consideration of safe-haven assets?

Earlier, someone conducted a correlation survey between Bitcoin and gold. The data showed that the correlation between Bitcoin and gold was 0.496, and even soared to 0.827 at certain moments. (A correlation coefficient of 1 means assets move in perfect sync, while -1 means they move in exactly opposite directions). According to the data, Bitcoin and gold are moving in the same direction and getting closer.

In this period of economic turmoil, the following attributes of Bitcoin can also attract customers to invest.

Bitcoin transactions do not require third-party certification, and the blockchain and its network itself keep a public record of all transactions; Bitcoin is currently free from the control of governments or banking systems around the world; Bitcoin users can use computers or mobile devices for instant transactions ; Bitcoin is a world-recognized currency that can be used to order goods from one country to another.

And the number of bitcoins issued is limited, which is more scarce than gold, and more and more people have now recognized the existence of bitcoins. Perhaps Bitcoin cannot be considered a stable safe-haven asset for the time being, but it can be used as a safe-haven tool to avoid the possible depreciation of the national currency.

Although Bitcoin is not yet at the level of gold in terms of hedging properties, there is one point that Bitcoin is actually better than gold in terms of anti-counterfeiting. To prove that gold is not fake, it needs very complex technical equipment and professionals. It is difficult for ordinary people to distinguish the authenticity. Compared with Bitcoin, it has an advantage.

During this period of time, due to the epidemic, global finance has been in great turmoil. The number of confirmed cases in the United States has exceeded 240,000. Everyone is in a state of extreme anxiety. When everyone frantically buys gold for hedging, gold, as a rare item, must not be sold at the same time. Satisfy a large number of people to buy, and in the next financial market, Bitcoin is likely to become a substitute for gold, and it is bought by everyone for hedging.

Under normal circumstances, gold does have a relatively good hedging property. But we can also see that when the liquidity is relatively dry, gold can't really play a role in hedging. Therefore, such a thing as a risk-avoidance attribute is something like a mysterious code. We should not be too superstitious, and we still need to analyze it in detail.

Bitcoin was born in a period of social turmoil, and it has already buried its own hedging advantages at the beginning of its birth. With the passage of time, as Bitcoin is recognized by more people, coupled with policy support for Bitcoin and blockchain technology, Bitcoin may grow into a real safe-haven asset in the future. Of course, we must not forget Bitcoin Another property of coins is that they can be used for payment.

Perhaps in the near future, Bitcoin and gold will become comparable existences.