The Hype: Bitcoin vs Gold

Online you can find whatever kind of comparison analysis between gold and bitcoin you can ever imagine. “Is it better to invest in gold or bitcoin?”, “Why bitcoin is digital gold?” and so on. These click-bait blog titles are really common nowadays.

The scarcity of these two elements, the lack of a central authority and the need of “mining” to be extracted link the Bitcoin to Gold are three of the most meaningful similarities (Satoshi used Gold as an example in his famous paper https://bitcoin.org/bitcoin.pdf ).

One huge difference between them is the time they are in circulation:

  • Gold is established and is trusted by the whole society. It is the safe heaven by definition.
  • Bitcoin has less than ten years and is the rebel answer to the recent crisis fueled by the actions of central authorities.

In other words, we are comparing a mature market to an emerging one. The hype in the bitcoin market plays a fundamental role and explain the price explosion in the recent years. To visualize it, let’s compare Google Trends searches and asset prices:

goldgoogle

“Gold price” searches increased on disruptive events (as the 2008 financial crisis) and on against-trend movements. It is a liquid market with buyers and sellers so both high and low prices are of interest. 

btcgoogle

“Bitcoin” searches followed the upswings in Bitcoin price. Stable Bitcoin price = low number of searches. Explosive uptrend of Bitcoin price = Explosive uptrend of Bitcoin searches.