Bitcoin vs. Gold (Surprise Winner 2024)

Let's dive into the key differences between Bitcoin and gold and break down the best store of value in 2024. 

Quick look: Gold vs. Bitcoin

Why invest in Bitcoin: Best for investors looking for the possibility of high returns, and interested in a digital store of value with capped supply. 

‍Why invest in gold: Best for investors looking for an asset with physical properties and a long history of stability in the face of economic and political crises.

The history of gold and Bitcoin 

Gold's Millennia-Long History as a Store of Value

For over 5,000 years, gold has been a symbol of wealth. Civilizations across the globe—from ancient Egypt and the Incan Empire to modern economies—have prized gold for its rarity and durability. 

For centuries, fiat currencies were backed by the value of gold. Today, countries around the world continue to hold gold in their reserves, and gold continues to be a valuable commodity commonly used in jewelry and manufacturing. 

The global value of gold is estimated to be more than $14 trillion. 

Bitcoin’s 15-Year Journey and Rapid Rise as a Digital Store of Value

Bitcoin is only 15 years old. The asset was created in response to the 2008 financial crisis by an anonymous individual or group known as Satoshi Nakomoto. Bitcoin used blockchain technology to create a new digital currency completely free from government control. 

Bitcoin’s supply is capped at 21 million units. The cryptocurrency was designed to be easily bought, sold, and transferred. 

Despite its relatively short history, Bitcoin has already attracted millions of investors across the globe. Bitcoin’s market capitalization is more than $1 trillion. 

Bitcoin and Gold: What’s the superior store of value? 

Why is BTC a superior store of value? 

Absolute Scarcity: Bitcoin’s supply is capped at 21 million coins — which may make it an ideal hedge against inflation. Meanwhile, gold’s supply increases by about 1.5–2% annually, as new deposits are mined.

Portability: Transferring gold, especially large amounts, can be costly and time-consuming. On the other hand, large amounts of Bitcoin can be transferred across borders in minutes, with very small fees. This makes Bitcoin a more convenient store of value in an increasingly digital and globalized economy.

Divisibility: Bitcoin can be divided into fractions as small as 1/100,000,000 (satoshis), making it easy to use for small transactions. Meanwhile, it’s more difficult to divide gold for small transactions. 

Verifiable: Some argue that the blockchain makes it easy to verify BTC. Meanwhile, counterfeit gold is relatively common — with 41.2% of US coin dealers reporting customers trying to sell them fake gold American Eagle bullion coins. 

Why is gold a superior store of value? 

Proven Track Record: Gold has a long history as a valued asset. It has weathered countless economic crises, wars, and political upheavals, and is trusted by central banks, financial institutions, and governments around the world.

Physical Nature: While Bitcoin’s digital nature offers numerous advantages, it does rely on access to the internet and electricity. The fact that gold is a physical good means that it can be held and stored without technological infrastructure. 

Real-World Use Cases: Gold has intrinsic value beyond its role as a store of wealth. It’s used in industries like electronics, dentistry, and jewelry. This gives gold a degree of practical utility and demand that Bitcoin, as a purely digital asset, does not possess. 

Energy consumption & environmental impact

Winner: Bitcoin 

While Bitcoin has been criticized in recent years due to its environmental impact, it is more energy efficient than alternatives like gold. 

• Bitcoin’s Energy Use: Bitcoin mining, which involves solving complex cryptographic puzzles to verify transactions, consumes around 110 Terawatt hours (TWh) per year. However, recent reports suggest that over 50% of Bitcoin’s energy comes from renewable sources, helping to reduce its environmental footprint.
• Gold’s Energy Use: Gold mining consumes about 240–250 TWh per year, significantly more than Bitcoin. Beyond energy consumption, gold mining also causes environmental damage through deforestation, water pollution, and habitat destruction.

While both assets have environmental impacts, Bitcoin’s transition toward renewable energy sources position it as the more environmentally sustainable option in the long run.

Technology 

Winner: Bitcoin 

Bitcoin’s technological innovations give it unique advantages. 

Censorship Resistance and Decentralization: Unlike gold, which is often stored in centralized vaults, Bitcoin operates on a decentralized network. This makes it resistant to government control, providing a level of autonomy that traditional assets like gold cannot offer.

Blockchain Transparency: Bitcoin’s blockchain provides a transparent, verifiable record of all transactions. Every Bitcoin transaction is stored on a public ledger, making fraud or manipulation nearly impossible. However, BTC in a hot wallet may be more likely to be lost in a hack or digital scam. 

Lightning Network: Bitcoin’s scalability has been improved by the Lightning Network, a protocol designed to enable faster, cheaper transactions with minimal fees. This advancement helps Bitcoin compete with traditional payment systems and improves its potential as a global currency.

Market Performance and Volatility

Winner: Bitcoin 

Bitcoin has seen significantly higher market returns in recent years. Over the past decade, Bitcoin has outperformed gold by a significant margin. Between 2012 and 2022, Bitcoin achieved a 3,700% inflation-adjusted return. 

Meanwhile, gold achieved a modest 30% return during the same time period.

However, gold is more stable and tends to perform well during periods of economic uncertainty, meaning it may be a better choice for investors who want to minimize volatility. 

Institutional adoption and investment trends 

Winner: Gold 

While Bitcoin has been picking up institutional adoption in recent years, gold has been considered a trusted asset by governments and financial institutions for centuries. 

• Bitcoin ETF Filings: 2024 was a landmark year for Bitcoin. Bitcoin ETFs became available to American investors for the first time. In addition, the Republican nominee for president Donald Trump promised to hold Bitcoin in the US reserves. However, it’s important to note that BTC is still considered a relatively new and risky asset. 
• Gold Reserves: Gold has been a cornerstone of institutional finance for centuries. China, Russia, and the United States maintain significant gold reserves, highlighting its importance in stabilizing national economies.

Hedge against inflation and financial uncertainty 

Winner: Gold 

Gold has a better track record as a hedge against inflation and financial uncertainty. Because Bitcoin is so new, it seems to behave as a risk asset. 

• Gold: Gold has thousands of years of history as an effective hedge against inflation and financial uncertainty. During the high inflation period of 1973-1979, gold generated an impressive 35% annual return while inflation averaged 8.8%
• Bitcoin: Evidence suggests that Bitcoin behaves more like a risk asset — like a tech stock — than an inflation hedge. A study published in the National Center for Biotechnology Information (NCBI) found that while Bitcoin appreciates against inflation shocks, it declines in response to financial uncertainty shocks.

Geopolitical influence on prices 

Winner: Gold 

Gold seems to offer more stability during uncertain times — such as the start of the Russia-Ukraine conflict in 2022. 

• Gold’s Reaction to Geopolitical Events: Gold prices tend to rise during times of geopolitical uncertainty. For example, during the Russia-Ukraine conflict in early 2022, gold prices surged by 6%, reaching a high of $2,051 per ounce as investors sought safe-haven assets.
• Bitcoin’s Response to Conflict: While Bitcoin also saw an initial price increase during the Russia-Ukraine conflict, it soon experienced volatility. Bitcoin’s behavior during geopolitical events tends to mirror that of other risk assets. 

Regulatory environment 

Winner: Gold 

While governments all around the world are still trying to determine how to regulate and tax cryptocurrencies like Bitcoin, gold exists in a well-established regulatory environment. 

• Bitcoin: Bitcoin exists in a rapidly evolving regulatory landscape. Governments worldwide are still debating how to tax and regulate digital assets. 
• Gold: Gold’s regulatory framework is well-established, as the asset has been traded globally for centuries. 

Can I invest in Bitcoin and gold? 

It’s important to note that many investors choose to invest in Bitcoin and gold. 

Diversification: Both Bitcoin and gold offer unique diversification opportunities within a portfolio. Bitcoin’s high potential returns complement gold’s stability, allowing investors to balance risk and reward.

Risk-Reward: Bitcoin carries higher volatility, which translates to higher potential rewards but also greater risk. Gold’s lower volatility provides steady returns, particularly in times of economic stress, making it a more conservative choice.

The future of Bitcoin and gold

While it’s impossible to predict the future, let’s take a look at how Bitcoin and gold may evolve in the future. 

Bitcoin’s Potential: As Bitcoin’s ecosystem continues to evolve, it has the potential to complement or even replace gold as a store of value. Technological advancements like the Lightning Network and increasing institutional adoption could drive Bitcoin’s long-term success.

Gold’s Enduring Appeal: Gold’s value proposition remains unchanged. Its stability and physical nature make it a reliable asset for investors who prioritize security and stability. 

Shifting Demographics: Younger investors are more inclined to favor digital assets like Bitcoin. As this demographic gains more wealth and influence, Bitcoin’s role as a store of value may grow. 

Prominent Investors on Bitcoin vs. Gold 

Let’s walk through the viewpoints of two prominent investors — Peter Schiff and Michael Saylor. While Schiff has advocated for gold for decades, Saylor has been one of Bitcoin’s biggest evangelists.

Peter Schiff 

Peter Schiff is an investor and founder of Echelon Wealth Partners. A vocal advocate for gold, Schiff argues that Bitcoin’s lack of physical presence and shorter history make it inferior to gold as a store of value. 

“Bitcoin doesn't have any actual use. There's nothing you can do with your Bitcoin. There's no value there that you can store, because you can't do anything with it today. So you won't be able to do anything with it 100 years from now… Just because somebody is willing to buy Bitcoin doesn't mean that Bitcoin has any underlying value." - Peter Schiff 

"Gold has an actual value because of its real-world usage. And because of scarcity, of course, but that's a secondary trait. It has to be combined with the real-world usage and the chemical properties of gold in order for it to have any actual intrinsic value." - Peter Schiff 

Michael Saylor

Michael Saylor is the co-founder of MicroStrategy and a prominent Bitcoin advocate. He’s argued that Bitcoin’s digital nature makes it superior to gold and that investors should be willing to tolerate volatility. 

"Bitcoin is a superior investment to gold, equity, bonds and real estate because it's digital. You can trade it a million times faster than conventional assets using a computer. It's available. Most other assets trade less than 20% of the time. Bitcoin is trading 168 hours a week." - Michael Saylor 

"The volatility is the price you pay for the performance. If you can't handle the heat, you can't handle heaven.” - Michael Saylor 

Conclusion

Bitcoin and gold can both be great additions to your portfolio. 

While Bitcoin’s technological advancements and record of high returns make it appealing, gold’s long-standing history and stability offer reassurance during uncertain times. 

Before you invest in either asset, do your own research and consider your own unique financial situation.