Why Bitcoin Ultimately Falls Short Compared to Gold? Unveiling the Truth Behind the "Durability Defect"

Since its inception, Bitcoin has often been referred to by its supporters as “digital gold.” However, from the perspective of finance and asset pricing, the gap in durability between Bitcoin and gold may determine their success or failure as a store of value in the future.

Vulnerability of Non-yielding Assets

In rational expectations and asset pricing theory, if an asset has no dividends, interest, or other returns, and may lose market demand in the future, then its value should theoretically approach zero.

Stocks: Even without dividends, there are still expectations for future profits and buybacks.

Gold: Although it does not have dividends, it has a physical presence and diverse demands in industry, jewelry, and central bank reserves.

Bitcoin: It has no physical form, and its value completely relies on network maintenance and market consensus. Once that consensus collapses, its value could instantly drop to zero.

The Physical Advantages and Demand Support of Gold

The reason why gold has maintained its value for 6000 years:

Physical stability: will not corrode, degrade, or deteriorate.

Multiple uses: 50% for jewelry, 10% for industrial purposes, 25% as central bank reserves

Substitutability and demand elasticity: can be converted for use across different industries.

In contrast, Bitcoin has no physical presence and relies on technical infrastructure and continuous community maintenance, which poses a risk of “path dependence.”

Technical Substitution and Sustainability Risks

History shows that over 99% of new technologies will eventually be replaced by updated technologies.

Precious metals like gold and silver have not been replaced for thousands of years.

Bitcoin must assume that future technology will never be replaced and that the network will always be secure.

Once the network maintenance costs are too high, miners exit, or market interest shifts, value may collapse rapidly.

Failure as a payment system

Bitcoin struggles to compete with existing systems in terms of payment efficiency:

Slow transaction speed: A transaction needs to wait about 10 minutes for confirmation.

High fees: higher than wire transfers, credit cards, and some cryptocurrencies.

Poor scalability: unable to handle large-scale daily transaction volumes

So far, Bitcoin lacks a stable pricing benchmark and widespread application scenarios in the global economy.

Bubble and Value Misalignment

Unlike the internet bubble of the 1990s, where companies at least promised future earnings; the value of Bitcoin comes more from speculation and price inflation rather than actual usage. Additionally, miners and early holders primarily profit from price increases, along with a lack of stable underlying transaction demand support.

Conclusion

The value of gold comes from its physical durability, diverse uses, and long-term demand support; Bitcoin, on the other hand, relies entirely on technological fundamentals and market consensus, lacking physical residual value and industrial demand. This means that if market enthusiasm wanes or technology becomes obsolete in the future, the value of Bitcoin could quickly drop to zero.

The title of “digital gold” may be more like an unverified financial experiment rather than a historically validated store of value.