Why Bitcoin Hasn't Become "Digital Gold" Yet

Author: Vincent Source: Castle Labs Translation: Shan Ouba, Jinse Finance

From the legend of the Golden Fleece to the gold mines of South Africa, humanity's pursuit of this sublime and mysterious treasure has never ceased.

Gold, like captured sunlight, may indeed originate from the universe. Scientists believe that gold was produced by the collision of dying stars (i.e., supernovae). Most of Earth's gold is deep within the Earth's core, while surface gold was brought to Earth by meteorites.

Throughout human history, gold has always been a core commodity in commercial activities.

If all the gold mined by humankind throughout history were collected, it would form a cube with sides approximately 20 meters long, weighing approximately 176,000 tons.

It is truly puzzling that such a huge amount of wealth could be contained in a single warehouse.

Stocks, art, oil, or collectibles require vast geographical or administrative spaces, while gold possesses unique portability. The core reason gold is the ultimate store of value is that it is free from counterparty risk. It is the only asset not subject to the liabilities of others. JPMorgan Chase once said, "Gold is money; everything else is credit." Its high stock-to-flow ratio ensures scarcity, protecting it from arbitrary devaluation of fiat currencies. From ancient Lydian coins to modern central bank reserves, gold has played the role of a store of value for millennia, serving as a highly liquid and immutable anchor of stability amidst financial, political, and social upheavals. However, recently, a new currency competitor has emerged. Despite differing from traditional metals, cryptocurrencies like Bitcoin, due to their volatility and cryptographic properties, are touted as gold killers. Bitcoin is often called digital gold. Can it replace gold in the future? If possible, is it advisable to abandon this ancient asset? This article will analyze the characteristics of gold and Bitcoin by combining modern economics, decentralized finance (DeFi), and monetary attributes. Through comparative analysis, it will ultimately explore whether the two assets can coexist in a highly competitive macroeconomic environment and, based on current trends, determine whether Bitcoin possesses the attributes of "digital gold." Ultimately, asset diversification may only benefit the global economy, while fiat currencies, whose value largely depends on arbitrary monetary policies, may indeed be replaced by purer forms of currency. Gold, or some asset yet to be invented, has the potential to escape the inherent erosion of fiat currencies, which have fatal flaws in the current debt-dependent economic system. Gold's Historical Legacy in the Financial Sector For centuries, gold has been a pillar of the financial system. As the sole reserve asset, this status was not established by law but stemmed from the physical laws of the universe. As former Federal Reserve Chairman Alan Greenspan stated in 1999, “Gold remains the ultimate form of payment in the world. In extreme cases, fiat currency may be unacceptable, but gold will always be accepted.” Gold’s universal acceptance stems from its unique intrinsic properties that distinguish it from all other substances. These properties underpin its enduring status as a store of value, possessing the qualities of sound money as described by Aristotle: Durability: Gold is a precious metal, virtually unaffected by most chemical reactions. Unlike silver, it does not oxidize or lose its luster, and its physical properties remain stable over long periods. This chemical uniqueness makes it suitable for storing economic value, as well as for high-tech infrastructure (electric vehicles, drones, defense systems, rockets), and it does not rust. Interchangeability: Gold is soft, malleable, and easily shaped, forged, and divided. This allows it to be standardized into interchangeable coins or bars, with units of identical weight (traditionally ounces or grams) and purity (most commonly 14K, 18K, and 24K) being essentially identical. **Stability:** Gold is a reliable store of value. Its scarcity and practicality (remaining the preferred choice for critical industrial applications despite its high cost) ensure its long-term preservation of value, unlike fiat currencies which generally face inflation. Furthermore, its lack of counterparty risk makes it the ultimate store of value. **Portability:** As a dense, high-value metal, even small amounts of gold contain immense value. This high value-to-weight ratio allows for the efficient transport of large sums of wealth, far exceeding other commodities such as silver and art—one can carry half a kilogram of gold in their pocket. **Identifiability:** Gold's unique properties make it easy to verify; modern instruments like Sigma can instantly detect counterfeit gold. Therefore, gold is a near-perfect store of value, with one exception: it's not as convenient to use as a credit card or code. Transporting gold, even for ordinary citizens carrying small amounts of gold bars, is comparable to transporting uranium: forgetting the necessary documentation can lead to customs officials confiscating the gold and imposing hefty fines. Gold can be stolen, cut, hidden, misappropriated, and lost due to human negligence. Operation Fish of 1940 is a famous example of this logistical nightmare. During the Nazi German invasion, Britain had to secretly move £2.5 billion of its gold reserves to Canada to prevent seizure—the largest physical wealth transfer in history. Today, trillions of dollars can be transferred with a single click. The most notorious example of state plunder remains Franklin D. Roosevelt's Executive Order 6102 of 1933, which criminalized the possession of monetary gold by U.S. citizens. Unlike passwords or mnemonic phrases, gold cannot be remembered, must be physically held, and can be looted if discovered. It yields no income, pays no interest, and incurs high storage and insurance costs. Most of the world's gold is stored in vaults in London, Switzerland, Singapore, or Manhattan, lying dormant in the dark, like a forgotten ancient mythical Sphinx. Naturally, while humanity has its flaws, it is also incredibly intelligent, and will inevitably seek better alternatives to this "barbaric relic." Although gold is nearly perfect, the rapid development of the financial system necessitates a modern equivalent. Bitcoin was born out of disillusionment with and a desire to innovate within the traditional financial system. Its initial purpose was to rebel against the existing system, but it quickly created a new paradigm far exceeding its original intent—potentially becoming "digital gold"! The Rise of Cryptocurrencies During the 2008 global financial crisis, Satoshi Nakamoto published a white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System," proposing a solution to the double-spending problem without a central trusted institution. If gold is the natural currency, then Bitcoin is a currency created by computer engineering. It is scarce, difficult to mine, has a limited total supply, and is indestructible. The invention of blockchain triggered a "Cambrian explosion" of various digital assets. Some are quite valuable, while most are meaningless. Bitcoin, with its fixed supply of 21 million coins, quickly earned the title of digital gold, while other tokens emerged to fill different economic niches: In 2011, Litecoin positioned itself as "the silver of Bitcoin," emphasizing faster and cheaper transactions. In 2015, Ethereum proposed the concept of a "world computer," using programmable smart contracts to replace gold's passive value storage function, becoming the second-largest cryptocurrency, remaining strong even with underperforming prices. Privacy coins such as Monero (XMR) and Zcash (ZEC) attempt to replicate the anonymity of physical cash and gold, a feature lacking in Bitcoin's public ledger. In 2025, driven by the privacy narrative, these tokens surged against the trend of traditional token crashes, although their total market capitalization was still insufficient to rival Bitcoin. High-performance public chains like Solana and MegaETH, sacrificing decentralization in pursuit of speed, aimed to process transactions at Nasdaq-level speeds, attracting entrepreneurs, institutions, and banks. However, the public chain (L1/L2) ecosystem is vast, making it difficult to predict who will ultimately prevail. The core narrative of the 2010s was not coexistence, but rather mutual annihilation—each new trend replaced the previous one. Grayscale Investments' controversial "Drop Gold" marketing campaign in 2019 perfectly illustrated the industry's aversion to precious metals: the ads portrayed gold investors as weary office workers dragging heavy gold bars, while fashionable millennials sped by with digital wealth. Gold is heavy, tangible, and analogous, while cryptocurrency is lightweight, digital, and virtual—in short, the currency of the future. However, while Bitcoin was still largely confined to a niche cypherpunk community, declaring "gold is dead" might have been a cheap and ill-considered marketing tactic, but the COVID-19 pandemic sparked a frenzy. Grayscale Investments, though fraught with difficulties, has been validated by the next Bitcoin cycle. This emerging surge in risk asset enthusiasm demonstrates that scarcity can be achieved through design, not just mining. It remains unclear whether sovereign nations are willing to accept man-made virtual goods replacing physical assets, but trends in the 2020s suggest that investors have already taken the bait. The Development of Bitcoin: Between 2010 and 2025, Bitcoin emerged from the niche world of cypherpunks to become a hot topic in Wall Street offices, growing from a worthless novelty asset to a trillion-dollar asset. These 15 years have not been smooth sailing; each Bitcoin crash has been followed by a remarkable recovery, repeatedly reaching new historical highs. The media has declared Bitcoin "dead" nearly 450 times, and its development narrative has been anything but smooth: In 2017, driven by retail investor frenzy, ICO speculation, and a pervasive risk-taking mentality, Bitcoin surged from less than $1,000 to nearly $20,000, only to crash that same year, dragging down the entire crypto market (which at the time seemed to be completely over). In 2020, the era of macro hedging led by legendary investors like Paul Tudor Jones and Michael Thaler revived this controversial asset. Bitcoin gained the public support needed to become a macro asset challenging gold. In January 2024, the U.S. Securities and Exchange Commission (SEC) approved a Bitcoin spot exchange-traded fund (ETF), marking a true breakthrough. Over 15 years, Bitcoin has transformed from a libertarian internet token into a regulated ETF managing billions of dollars. Institutions like BlackRock, Fidelity, and Vanda have become Bitcoin's "spokespeople." Perhaps those geeks who once toiled in their basements are now billionaires, their anti-capitalist ideologies forgotten, replaced by yacht purchases. This institutional embrace propelled Bitcoin past the psychological $100,000 mark in December 2024, reaching a frenzied peak of $125,000 in October 2025. For a brief moment, the supercycle theory seemed irrefutable: the US discussed establishing a "strategic Bitcoin reserve," and crypto traders were ecstatic. But then, in October, a pricing vulnerability in Binance's USDe stablecoin caused all leveraged long positions to collapse. Despite an initial rebound, Bitcoin failed to recover its losses and began a slow decline, with market rumors suggesting a potential drop to the key $67,000 level. By the end of 2025, the seemingly continuous cycle abruptly reversed. Bitcoin repeatedly hit new highs, but blue-chip crypto assets like Aave, Ethereum, Solana, and Ethena never recovered. Bitcoin remained undefeated, but this relative strength did not translate into support for the entire market. This divergence further solidified Bitcoin's position as not only a novelty asset but also a reliable and durable one. Through absolute scarcity, especially its first-mover advantage, it successfully replicated the monetary premium of precious metals. Unlike fiat currencies, which are prone to unlimited devaluation, Bitcoin offers a beacon of decentralization. It is durable, divisible, and instantly portable. It effectively digitizes the intrinsic properties of gold and forms an absolute monopoly among similar assets, although its immaturity leads to high volatility. In November 2025, Bitcoin experienced a brutal correction, falling to $80,000 and dragging down the entire market. Frustratingly, all assets, including stocks, gold, silver, and collectibles, were in a parabolic upward trend. Has the rest of the crypto market completely collapsed this time? Have we traded the promise of real money for ETF tickers and pump-and-dump schemes? Is the narrative of "institutional entry" just a marketing gimmick? This regulated, taxable, and highly monitored asset is now even less appealing than gold, failing to keep pace with other markets. Gold, silver, and even copper, a cheap metal used in electronics and weapons manufacturing, have all seen runaway price increases. Has gold always been the only sound currency? Gold's triumph in 2025. While Bitcoin meets the criteria for a sound currency, recent developments suggest it has not yet demonstrated the qualities of digital gold. In 2025, gold is expected to outperform Bitcoin as a hedge against inflation, geopolitical instability, war, and especially as a premium investment. The core of the global gold rush was the massive accumulation of reserves by central banks around the world: the National Bank of Poland made large-scale gold purchases, while the Reserve Bank of India, the Central Bank of Turkey, and the People's Bank of China continued to buy, and Brazil joined in at the end of the year to diversify its holdings. As central banks promoted a strategic shift of gold from West to East, China and India remained among the world's leading consumers of jewelry and physical gold bars, followed closely by the United States, Turkey, and Iran. People in these countries viewed gold as a key tool to hedge against currency devaluation and economic instability. By 2025, the Turkish lira, the Argentine peso, and the Iranian rial had all fallen to historic lows. If you believe the gold rally is over, institutions have shifted from "gold is dead" to "gold will rise to $5,000 per ounce." VanEck believes that continued geopolitical volatility, fiscal instability, and inflation could push gold to $5,000 per ounce by 2030, inevitably leading to a surge in undervalued gold mining stocks. Wall Street giant JPMorgan Chase predicts that driven by a structural shift that is not yet over, the average gold price will reach $5,055 per ounce by the end of 2026. The bank points to two main reasons for the rise: central banks accelerating gold purchases to diversify their dollar exposure (a trend continuing into 2025), and the Federal Reserve's interest rate cuts triggering a return of funds to Western ETFs. The active trading of gold as a hedge against currency devaluation once again proves that ancient customs may be rooted in wisdom, and gold is indeed a way to "go long on fear." For cryptocurrencies, global regulatory pressure has intensified further: the EU's Crypto Asset Market Regulation Act has come into full effect, and the US Treasury Department is cracking down on privacy coins and non-compliant stablecoins. Ultimately, the illusion of digital gold has been shattered. We are currently in a period of dramatic change, and the situation is difficult to assess. Some may pessimistically believe that Bitcoin has failed the digital gold test and the market is reverting to the mean. After long-term experimentation, in the eyes of both public and private institutions, Bitcoin has not passed the robust currency test. While they endorse the narrative of digital gold, they still tend to revert to familiar and reliable assets already heavily held by central banks. The relative stability of gold prices is perhaps another major reason why risk-averse investors favor it over Bitcoin: although precious metal prices fluctuate with global economic conditions, they rarely experience sharp declines. This is partly because even institutions with sufficient funds to influence precious metal prices through derivatives find it difficult to shake the price of this massive asset. Much of its market capitalization is "dormant" (jewelry, central bank vaults, private hoarding), and it doesn't easily circulate. Bitcoin, on the other hand, is naturally used by retail and institutional investors for leveraged trading, capturing intraday fluctuations and influencing assets whose direction is determined by dynamic liquidity—far easier than influencing physically stationary commodities. While investors accept Bitcoin's "inflation hedge" narrative, it still exhibits characteristics of an immature asset: high volatility and unpredictable price movements. The stability expected of a reserve asset falls far short of Bitcoin's performance. The panic over various stablecoins decoupling reminds us: "If you can't hold it, you don't truly own it." On the one hand, gold is the ultimate physical asset; on the other hand, it is difficult to store. While hastily dismissing Bitcoin is rash, elevating gold to the status of the only stable currency in the digital age is equally short-sighted. Currently, bulls have returned to safe-haven assets, and the baby boomer generation has once again reaped all the gains. It can be said that no one could have predicted that after 15 years of maturation and frenzied adoption, Bitcoin would still not exhibit the characteristics of a reserve asset. Meanwhile, this giant that has dominated human imagination, senses, and desires for millennia is destined to awaken from its slumber one day. The arduous task of replacing gold: By the end of 2025, the notion that privacy coins or Bitcoin forks might replace gold as the global store of value has resurfaced, but data reveals a different reality: gold's market capitalization is approximately $32 trillion, while the combined market capitalization of Monero and Zcash is unlikely to exceed $20 billion, equivalent to only a fraction of the hourly fluctuations in Nvidia's stock price. In the fourth quarter of 2025, Zcash briefly attracted the attention of the crypto community, not because of its sound monetary attributes, but because of a narrative shift: its auditable nature allowed it to survive the privacy asset cleanup of compliant exchanges under the EU's MiCA framework and the US Cryptocurrency Regulation and Innovation Act. Furthermore, a marketing campaign launched by the founder of Solana sparked spontaneous enthusiasm for Zcash. By the standards of gold, silver, stocks, or private equity, such price volatility is not characteristic of sound monetary currencies, but rather fits the category of pump-and-dump schemes. Conversely, privacy coins became a regulatory no-go in 2025. While they can occupy a niche market with short-term narratives, they are unlikely to gain traction in the current volatile cycle. Although fears of surveillance and potential aversion to state intervention may trigger sporadic price increases, these tokens cannot attract the sustained institutional funding that the crypto industry is currently trying to attract. Paradoxically, tokens designed to circumvent institutional restrictions may only survive by relying on funds held by these institutions, but their sustainability comes at the cost of exposure; funds and banks are unlikely to support assets designed to bypass them. Other alternative assets have completely failed the robust currency test: Bitcoin Cash lost its store-of-value narrative years ago, becoming merely a payment network, largely forgotten by institutions and retail investors. With the rise of stablecoins, Bitcoin Cash has become even more irrelevant, replaced by well-capitalized tokens designed specifically for payments. Having undergone two forks and lacking community attention, Bitcoin Cash is now vastly different from Bitcoin. Zcash's value stems from confidentiality. Sovereign nations cannot build their reserves on assets that global regulators are trying to block or that are subject to speculative volatility. This token is a private transaction instrument, not a public treasury asset, lacking the liquidity and stability needed to replace the $32 trillion gold market. Despite Zcash's total supply being limited to 21 million coins (an attractive and familiar feature), it still lives in Bitcoin's shadow. Monero is an alternative to Zcash, but its privacy is mandatory. In terms of scarcity, Monero has a fixed number of new coins minted per block (0.6), a continuously growing total supply, and a declining inflation rate approaching 0% (but never reaching zero). At least in this respect, Monero is closer to physical gold than Bitcoin, with its stable, low annual inflation rate similar to gold (miners extracting new gold). However, Monero cannot replace gold as a reserve asset due to its lack of auditability: the ledger is opaque, and reserves cannot be proven to the public without revealing private keys or compromising its core privacy features. Central banks require public trust and transparency in their reserves, although the true accountability of US and Chinese currency reserves remains controversial. In summary, structurally speaking, only Bitcoin could theoretically replace gold. It has passed the sound monetary test, is well-capitalized, and enjoys widespread acceptance at both institutional and individual levels. Despite intense competition, it has clearly established itself as the core of cryptocurrencies. It is the only digital asset legally recognized by the US government: In March 2025, the US issued an executive order officially designating over 200,000 seized Bitcoins as national assets (rather than auctioning them), establishing a "Strategic Bitcoin Reserve," and granting Bitcoin legal status. Countries like El Salvador (with approximately 6,000 Bitcoins) and Bhutan (with approximately 13,000 Bitcoins mined through hydroelectric power) have also established official strategic Bitcoin reserves to varying degrees. Currently, no other asset enjoys the backing of major world powers' governments. However, replacing gold remains an unrealistic and fanciful fantasy, not only because Bitcoin is extremely volatile (its annualized volatility in 2025 is approximately 45%, three times that of gold's 15%), but also because its current market capitalization is far less than that of gold and silver. Sovereign states need deep liquidity and substantial buffers to support monetary policy, and unless the price of Bitcoin rises back to $1 million per coin, it will never possess the same influence as gold. A win-win situation? For 15 years, the most intense debate has revolved around the giants of precious metals versus ambitious digital assets: gold versus Bitcoin. The events of 2025 temporarily halted this debate: gold remains the true currency, while Bitcoin remains a risk asset. Despite historically high volatility, Bitcoin's decline didn't warrant caution, yet the entire ecosystem suffered significant losses. Gold reaffirmed its millennia-old status as the "king of currencies." It is a national asset, the ultimate guarantee without electricity, internet, or permissions. As evidenced by the massive gold purchases by Poland, China, and Brazil (completely ignoring Bitcoin), gold remains the most sought-after commodity during times of crisis. Conversely, Bitcoin has matured into a high-beta asset with a degree of institutional authority. It is primarily an asset for traders, profiting from its extreme two-way volatility. Its high volatility, portability, and liquidity allow for the transfer of capital across borders in seconds, bypassing outdated traditional banking channels. Despite a slight weakening of Bitcoin's image as a cutting-edge asset, gold's perfect reputation has become increasingly solidified, making it the undisputed winner of the past year. The daunting task of replacing gold has always been a false marketing gimmick. The current system requires both, especially given that Bitcoin has spawned a trillion-dollar industry dependent on its healthy growth. However, cryptocurrencies remain the high-growth asset we relentlessly pursue. In the volatile years to come, prudent investors will not choose between gold and cryptocurrencies; the two cannot be assimilated. If gold is the traditional safeguard for building families and empires, Bitcoin is a maverick hot asset: elusive, sometimes out of control, yet mysteriously alluring. Whether it can transform into the reserve asset we desire will only be revealed through further stress testing and years of trial and error.