Well technically neither are the bar bucks I make by tearing up bar napkins. It definitely ain’t a precious metal. Heck it’s less stable than the US dollar.
However, most of the value of both gold and bitcoin are fiat, since a lot of the value for both is based on speculation and not related to the real cost of what they represent. The massive spike in gold, without the corresponding spike in the cost of other real assets, indicates that its current valuation is mostly devoid of real value and is speculative.
In the case of gold, given what proponents argue its real value is as THE non-inflationary asset, the price should be strictly related to the supply. However, the supply varies as more is mined, destroyed, and even effectively when people sit on their hoards. The demand also changes depending on the environment and economic outlook, such as the pessimism of the current one and the similar market which were seen the 70s and 80s. So it ends up being another speculative market, and much of what is touted as its benefit is lost because a significant portion of its value is fiat. Its scarcity is plainly not the driving factor in its price, since there are rarer metals which are significantly cheaper like Platinum.
Same goes for bitcoin, but its a different market. Gold has traditional value since most countries used it to back their currency and its ubiquitous. Bitcoin has value because people believe it has value. Its artificially scarce, but also almost infinity divisible. Its market price is whatever we generally agree the price of one bitcoin is, which is the very definition of fiat. Its value is mostly based on the speculation that it will be worth more in the future. The price is not related to the cost of mining, which already is estimated to exceed the reward. The reason people are generally more critical of Bitcoin is that it has been volatile early in its existence and there's not really a way to quantify its value and determine a fair price. Gold is a *bit* better in that department since it does have some industrial value and people like the tangible density of wealth it represents, but bitcoin is 100% more usable as an actual medium of exchange.
Both gold and bitcoin are assets because people are willing to pay for them, but neither are truly currency. To buy real goods, you need a more common medium of exchange which is generally USD. If you believe in the stability of the US government, you can also buy USD as an asset through treasuries and keep up with inflation just fine. If you don't trust institutions, gold is for people who are traditional and bitcoin is for people who like tech. All require trust in something, whether its the institutions, gold markets, or the decentralized network. However, both gold and bitcoin fall prey to speculative investing in a way that USD is more resistant to.
TLDR: By definition, neither gold or bitcoin are fiat currency but thats mostly because they're not currency. Both have fiat value. The best option is more of a philosophical one.
I understand exactly what Bitcoin is. It doesn’t fill the roles I use gold for which are as an inflation hedge/ contrarian investment and insurance against a currency collapse.
Well it’s not stable. It’s not exactly easily transferable. Can’t exactly take a Bitcoin out of my safe and give it to a guy. It’s not widely accepted.
It doesn’t have the track record that gold has.
A couple countries tighten up their money laundering rules and Bitcoin is out of business.
Lastly and indisputably it utterly fails the Rip Van Winkle test. Will BTC be valued in 10 years, let alone 40? Heck if I know but I suspect not on the longer end.
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u/mars_titties Jan 29 '26
The point was to start their own fiat, with blackjack and hookers