Why Bitcoin Is NOT Equal to Gold

On March 6, 2025, U.S. President Donald Trump signed an executive order establishing a strategic Bitcoin reserve and digital asset stockpile for the United States government. Within this executive order, Trump refers to the notion that Bitcoin is akin to “digital gold.” 

Cryptocurrency enthusiasts often refer to Bitcoin as “digital gold” and consider both as equal forms of sound money. In reality, gold and Bitcoin are quite different in asset quality and in terms of their hierarchy as sound money. 

Digital Assets vs Real Assets

According to Investopedia, a digital asset, such as Bitcoin, is generally anything created and stored digitally, is identifiable and discoverable, and has or provides value. 

And, a real asset, such as gold, has a tangible form, and a large part of its value derives from its unique physical qualities. 

Bitcoin, the most popular digital asset for the past decade, is usually a speculation used as a means of acquiring more fiat currency (Federal Reserve Notes, i.e., dollars).  

Gold, the most popular real asset for five millennia, is mostly used for savings diversification and as a core holding by central banks, financial institutions, and individuals seeking an ongoing hedge against inflation.

Although there is no current gold standard, nearly all central banks around the world use gold as a method of fiat currency stabilization, inflation hedge, geopolitical safeguard, and foreign exchange (FOREX) risk reduction.

Why Is Gold More Valuable Than Bitcoin?

Real assets tend to have higher value when compared to digital assets due to such things as historical precedence, security, and utility. 

Gold has been used as a stable form of currency for over 5,000 years -- nearly universally --  through all types of struggles and conditions, giving it a sense of value based on this historical precedent. 

Gold cannot be fabricated, counterfeited, or tarnished given its physical nature, lending it a sense of real security. 

Gold has many natural qualities that give it real-world use-value or utility. 

Gold is the most malleable metal, it is highly ductile, one of the densest metals, resistant to corrosion, highly reflective of visible and infrared light, possesses low reactivity, and is an excellent conductor. 

Gold does not rely on anyone else’s performance and thus has no counterparty risk. It is final payment in and of itself.

You may have heard people erroneously call Bitcoin “digital gold” while preceding to equate the two, or even go as far as claiming Bitcoin is more valuable than gold. 

But gold’s value is not dependent on another element, while Bitcoin’s value is dependent on other real-world conditions and limitations to exist or be used, including electrical grids, internet connections, computers, etc.. 

Furthermore, cryptography experts are warning of the coming threat of quantum computing in eventually cracking many forms of encryption, including blockchains like Bitcoin. At minimum, they warn the cryptocurrency may become disabled for months while a protocol upgrade is implemented.

Ultimately, the use value is quite different between these two forms of assets, and their end goals are not the same. 

The Hierarchy of Sound Money

Sound money refers to money, or currency, that possesses marginal value based on its validity and reliability, much like a sound argument in logic. 

Sound money establishes its validity through trust, non-counterfeitability, universal acceptance, and marginal use value. Sound money preserves purchasing power, economic stability, genuine transactional trust, it acts as a store of value, enables long-term planning, and is much more resistant to manipulation, giving it reliability. 

Sound money has such qualities as durability, portability, fungibility, divisibility, acceptability, inflation resistance, established historical value, and independence of government.  

Gold is not only a real asset, but it is also the ultimate form of sound money as it possesses each of these aforementioned qualities and characteristics, and then some.

Gold, as sound money, is in direct contrast with Federal Reserve Notes and other forms of fiat currency. 

Fiat currency, unlike gold, obtains its subjective value through perceived trust, market manipulation, legal counterfeiting, political redistribution schemes, and government decrees based on coercion. 

Even the Federal Reserve openly believes that the U.S. Dollar (USD) should lose at least 2% every year, and it works intentionally to achieve this result. 

When comparing gold and Bitcoin, we have already established that gold has a higher real value than Bitcoin. Gold also has a higher sound money value than Bitcoin. 

The price of Bitcoin can be manipulated more easily than the price of gold. For example, Bitcoin has seen massive and sudden swings via big whale purchasing and selling, wash trading, spoofing, media and government propagation, mining centralization, bot trading, and algorithmic trading. 

In contrast, gold is universal, well-established, and a real asset, so its price fluctuations are less volatile in the short, medium, and long term.  

All that said, Bitcoin does have many of the qualities of sound money and is a superior form of currency when compared to government fiat currencies. 

Unlike most fiat currencies, Bitcoin is naturally scarce, has a generally predictable price, and is widely accepted. Bitcoin is also durable, portable, and divisible as a digital asset.

So, if we were to rank these three forms of currency in order of most sound to the least sound, gold would be the superior form of sound money, while Bitcoin would be second, the U.S. dollar third, and the remaining fiat currencies at the bottom.

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