After playing poker recreationally for the past twenty years, I recently went to my local poker room and left a winner. Let me clarify: I’ve won in the past, but in hindsight, my prior wins were mostly due to luck. A couple of days later, I returned and won again, much to my surprise! Now, my poker ego is on fire, and I’m looking forward to playing again in the next couple of weeks. 

I attribute my recent successes to listening to about three hours' worth of podcasts about poker strategy. Some of the things I heard on the podcasts were things I already knew: play strong hands, sometimes you have to fold good hands, and being on or closer to the (dealer) button improves your odds. However, after listening to the podcasts, I made a couple of tweaks to my game, such as raising more frequently pre-flop, always making continuation bets, and finding patterns in player types. 

I’m amazed that a few hours of casually listening to a poker pro has outweighed hundreds of hours of poker play. If you are or have considered investing in gold, my goal is that this article will give you the extra push to invest in Bitcoin. If you see the value in gold, you are 95% of the way to seeing value in Bitcoin, and I’m hoping to provide the extra 5% here. 

Why Investing in Gold Made Sense Before Bitcoin 

Before Bitcoin, owning gold was a smart investment. It provided portfolio diversification, protection against monetary devaluation and inflation, and allowed self-custody of wealth, reducing counterparty risk. For example, if you owned and stored your gold and the bank was closed or went broke, you still had your wealth. No institution could keep you from accessing your wealth stored in gold. 

Further, gold has a long history, maintaining nearly universal value for centuries. During these centuries, fiat currencies have all been devalued to nothing, while gold maintains its buying power. For some people living in countries experiencing hyperinflation, gold was often the best accessible way to conserve and protect their wealth. 

Many financial advisors recommend(ed) having 5–10% of a portfolio in Gold. Launching in 2004, the gold ETF, GLD, added billions in liquidity to the gold market. Gold experienced a massive bull market for the following eight years. It outperformed most assets in the 2008 financial crisis and made many wealthy. 

Why Gold Doesn’t Shine as Brightly With Bitcoin Around 

Bitcoin offers many of the same benefits as gold- portfolio diversification, a hedge against governments’ inability to responsibly manage their budgets (leading to national debts, inflation, and monetary debasement), and it’s something everyone can own and custody themselves. You don’t need a bank or trading institution to access, store, or send your Bitcoin. 

If Bitcoin solves many of the same problems that gold ownership solves, why has it massively outperformed gold over the past ten years? First, I will share reasons why Bitcoin is a superior store of value to gold, and then I will explain why Bitcoin’s value will continue outpacing any gains gold may have. 

Fundamental reasons why Bitcoin is better to own than gold: 

Bitcoin is exponentially more divisible. Every Bitcoin is divisible into 100 million units, called Satoshis. Meanwhile, each ounce of gold can be reduced into grams. There are 453 grams in 1 pound. Therefore, the smallest denomination of gold is worth around $86, while 1 Satoshi is currently worth $0.00064. 

If you buy or sell physical gold, expect to pay high fees in both directions. Further, if you own a significant amount of physical gold, you may want to pay someone else to keep it secure, which can cost a minimum of 0.5% annually. Unfortunately, sacrificing safety comes with an additional cost of counterparty risk to whomever is vaulting your gold. Meanwhile, Bitcoin can be held indefinitely in a digital hardware wallet, typically a one-time $100-$400 charge. 

Bitcoin’s total supply (21 million Bitcoins) is known, while gold’s is unknown. Bitcoin’s current inflation rate is 0.84% and will only decrease. Gold miners can find ways to mine more gold as gold prices increase. It’s also possible that significant gold deposits exist that we don’t know about today. 

Bitcoin is transportable and easily verifiable. Try traveling with a significant amount of physical gold. 1) It’s unsafe, 2) It’s often illegal and requires reporting if you are crossing national lines, and 3) It’s heavy and bulky, limiting how much you can carry. Additionally, gold is relatively easy to fake. Here’s a story about 83 tons of gold that turned out to be painted copper: China’s biggest gold fraud, 4% of its reserves may be fake: Report. You don’t have to worry about these issues with Bitcoin. 

Bitcoin is easier to spend. Although buying a coffee is inefficient today, 15,000 businesses worldwide accept Bitcoin. If you take a step and learn about decentralized finance, you can get a collateralized loan from your Bitcoin in minutes. Meanwhile, no legitimate business accepts gold for the reasons above. 

The Smart Reasons for Owning Bitcoin Instead of Gold 

Now that we’ve concluded that Bitcoin ownership makes more sense than physical gold for the self-custody of one's wealth let’s explore why Bitcoin’s price will continue to outpace gold over the next decade. 

Price appreciation. Bitcoin has performed spectacularly compared to gold. Even if you were to purchase Bitcoin at its highest price each year for the past five years, the performance would obliterate buying gold on the cheapest day of each year. 

Money flows and momentum. Money is moving out of gold and into Bitcoin. This transition is because speculators want to invest for greater gains, and as more wealth passes to younger people, we should expect Bitcoin to gain even more market share. 

Manipulation. Multiple banks, including JPMorgan, Barclays, and The Bank of Nova Scotia, have been fined for manipulating gold markets. Investing in an asset that banks have a history of controlling doesn’t sound ideal. 

Bitcoin has a dual narrative. Its store-of-value story was reflected in last March’s banking crisis. It also has a technology narrative and can easily tie in with hot topics such as artificial intelligence. Try using physical gold in the digital world.