Over the last eleven years since its birth, Bitcoin has steadily increased in value, and more and more people are owning Bitcoin. As of today, Bitcoin currently has a market capitalization of around 161 billion dollars. That's a lot of money! On the other hand, though, it doesn't look like much when compared to gold, at 8 trillion dollars. But let's start off with why gold has value? Gold first has value because it has industrial uses such as in dentistry, jewelry and medals, and electronics. But this use is not enough to justify an 8 trillion dollar market. What gives gold its high price per ounce is that its a scarce commodity that is not easily reproducible. Similar to gold, Bitcoin is a scarce commodity, but instead of it being a physical asset, it is a digital one. The downside of being a digital asset, though, is that it could theoretically disappear if all the Bitcoin miners decide to turn off their computers and leave. Whereas gold, is tangible in nature. But what gives Bitcoin its value is the belief that so many other people ascribe it to have value. And the same goes for gold. If no one believed gold had value aside for what it would get on the market for fillings and jewelry, the price would probably be much lower than what it is now. In this aspect, Bitcoin is similar to gold.
So, is Bitcoin the new gold? It's hard to say. Some believe so, while others believe that it is a Ponzi scheme or that it might eventually become outlawed by governments who want to control money flows. We'll just have to see.
I think the main appeal of the Bitcoin that has not been discussed in this post is its security, which gives it stability and reliability. An important factor of currency is its reliability; in fact, the value of a currency is dependent almost solely on its credibility. This issue has been drastically improved with the digitization of our currencies (through online banking systems). The decentralized system of Bitcoins provide an even more secure method of transaction, which is why many see Bitcoins as the next currency, hence the investments. I personally believe because of this, Bitcoins need no physical, tangible value. They are a viable method of transaction that can be adapted to our current money system rather than replace it.
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