In the 21st century, we have seen the world around us revolutionize into a digital age. In most countries of the world, many are embracing technology faster than ever. The world is rapidly transforming everyday and we are forced to blend with our environment. Human life has become a lot easier and we are able to find solutions to daily problems with the aid of technology. Everyday, something new evolves and solves a particular problem in the society. In the last decade, it has been the evolution of money. Before now, a centralized exchange had to be put in place to regulate a country's monetary system through a set of policies with the aim of steadily increasing the GDP of the nation. We all had to go to the bank to deposit or withdraw money. And that is where the evolution of money sets in. The rise of cryptocurrencies in the last decade has made our world more decentralized. That is right. You've probably heard of bitcoin, ethereum, solana. These are all cryptocurrencies or digital currencies. We have discussed all about cryptocurrencies in an earlier article so do well to check that out. So with the aid of digital currencies, individuals can manage and control their finances without the intervention of centralized exchanges. That is the major reason why there had been so much hype around digital assets quite recently.
In case you weren't aware, this financial evolution has stared up a global debate which has constantly been argued among the prominent and other classes of individuals in the society. Billionaire magnates such as Bill Gates and Warren Buffet still argue that digital assets have no tangible value compared to physical assets such as gold, a farm and so on. So that brings us to a major debate of the 21st century.
We decided to bring it to a more familiar setting using gold(physical assets) and bitcoin(digital assets) as case study. So after tons of research, we developed a sample debate on this topic. We have two teams:
Team A will represent Gold
Team B will represent Bitcoin
So below is the sample debate:
Team A: All you are doing is loosing people's money.
Team B: Why do you want people to invest in gold and not make any money.
Team A: The only people who make money out of bitcoin are those few people at the beginning. Everyone else is not making money right now.
Team B: 92% of people that have invested in bitcoin have made money at the current market prices.
Team A: You're just saying for people to invest in bitcoin because you're one of the early people. You are getting people to invest so that you can make money!
Team B: I got to be honest with you, I have no idea why we are having this debate. If you look at the price appreciation of bitcoin in the past ten years, Bitcoin has appreciated over 700,000%
Gold has depreciated over 15%. Gold's market cap is 12 trillion dollars but bitcoin's market cap is 600-700 billion dollars which means that bitcoin still has a lot of room for growth. Team A: Gold has actually appreciated. The price of gold in 2001 was 300 dollars. The price of gold today is 1800 dollars. So if you had heard unto gold in 2001, you will have made an 8% annual return.
Team B: The price of gold is actually a speculation. The year 1730 and 2010 have one thing in common. The price of gold did not change. If you had invested a 100 dollars in the year 1730, you will still have a 100 dollars 280 years later. If you had invested that amount in stocks back then and you got an index based return 8% per annum, you would have 4 billion dollars after 280 years.
Team A: Gold has proven to stand the test of time. It was used in ancient times by the Greeks, Romans and Italians and we still use it today. Bitcoin has only stood the test of time for 13 years and has not even been through a major economic recession yet.
Team B: You are right. Gold has a very long history of doing nothing. If you are an investor looking to make returns on your investment, then gold is a terrible asset class.
Team A: So this is where I think you are wrong. When people look at investing, they also think about preserving what they own. During any economic recession over the past 200 years, people have invested their wealth in gold. Gold provides the stability that the everyday person needs in order to preserve their wealth. Just focusing on long term returns is not what you need to pay your bills. You need that money available to use.
Team B: So it is interesting, you mentioned something about long term stability. If you look at the graph of the gold prices over the years, you will see major drops in the prices multiple times including in the 80s and in the 2000s.
So how can you say that there is long term stability when you see 80% price depreciation over these time periods. In fact, if you bought gold in the early 1980s, you still haven't made any money and frankly if you want something safe and secure, just buy inflation adjusted government bonds which is what most rational well-versed investors will do.
Team A: So let's talk a little about what bitcoin was created to do. Bitcoin was created to be a cryptocurrency but we don't see it being used as such today. Interestingly, gold has been used as a currency. It has so many other uses such as jewelry, electronics and so on. I can't see the things bitcoin has been used for.
Team B: Well it is funny that you say that. Just the other day, I saw a headline where we sent 100 million dollars to Ukraine to help fight the war through cryptocurrencies including bitcoin. One of the thing that amazes me about bitcoin is that it travels the world in an instant. Now, I understand your point. It is not a currency but it will be over the next hundred years as bitcoin grows and plateaus and gets a stable price, eventually it could become a currency. Until then, enjoy the price appreciation.
Team A: So there is one point you are not mentioning about bitcoin which is it is amazing that you can send bitcoin across borders and help people. But the truth is that today, you cannot withdraw bitcoin in large amounts. In fact a lot of crypto exchanges only allow you to withdraw below 50000 dollars. By the way, the price of bitcoin was higher than 50000 dollars at some point so that means you can't even withdraw one bitcoin so what is the point of transferring all this money around the world if you can't even withdraw it and use it.
Team B: You know it is said like someone who has never actually transacted cryptocurrencies before. As somebody who does, I can tell you that centralized exchanges allow you to withdraw more than 50000 dollars a day. Not all of us have 50000 dollars a day to withdraw from our bank accounts and I think that is one of the really important points.
Team A: I think when people sit down today and think about bitcoin or gold, what they are really thinking about is what do I have access to today? And I think today the challenge is, if I want to start investing in bitcoin, there are many different hoops that I need to go down in order to start. Gold today, I can walk into my bank and have an ability to start investing in gold.
Team B: Do you still walk into your bank? What are you? A boomer? Unbelievable!!! I think it is quite clear if you want to invest in assets of any kind whether it is gold or stocks or cryptocurrencies, there are many ways to do that: Cash App, Sofi, Robinhood, Coinbase. There are a lot of places where you can go within a couple of minutes, set up an account and buy these assets. In terms of ease of use and in terms of your accessibility to them, they're all equivalent at this point.
Team A: So you talk about all these different apps. How many people actually use them? How many people have actually heard of them at this stage? You know I think when it comes down to numerous people today, they rely on one or two apps to do everything like when it comes to their money and so the concept of just starting with all these apps they don't know and they don't trust is a big step and I think many people are not ready to do that yet.
Team B: You haven't heard of Paypal yet? No seriously, you might actually be a boomer. I mean. You know there are so many apps. It is so accessible. In fact over 50 million Americans transact with cryptocurrency today. Globally, we are talking about hundreds of millions of users usually have access and use crypto today.
Team A: So one of the important things when it comes to investing for me and for many others, it is about safety. You know when I think about investing my money, I want to ensure that it is somewhere trustworthy that i have a fullback that it is reliable and I think what gold has been able to show is that it has regulations around it. If someone is a broker in gold or a trader in gold, that should have a whole system of how they should behave. Bitcoin does not necessarily have a system in place to hold people accountable and I don't know about you but I want to be able to know that I have a system that I can trust.
Team B: It is funny. The things that you are saying, I am not quite sure you research about them fully a 100%. Many of the gold ETFs(exchange traded funds) are unregulated. You don't actually know that there are gold bars in some vaults backing up what the ETF adult actually says. Additionally, when you are talking about centralized exchanges like Coinbase, Coinbase is a highly regulated company. They have to have all sorts of licenses to operate. They have to work with the SEC(Stock Exchange Commission) actively all the time. When you are talking about safety, when you are talking about security, many of the centralized exchanges are far regulated than this gold ETFs you might be investing in.
Team A: So who founded bitcoin?
Team B: So who founded gold?
Team A: So the fact is that gold physically exists. Gold is here in the world and we can actually find gold. So with bitcoin, we have claims that someone created it but no one is quite sure who that person is. We don't know the ethics of that person. Or whether there was another agenda. And we don't know whether these people who may have essentially accumulated wealth though bitcoin have other purposes or other things that they do. There is no visibility at all over this.
Team B: The beautiful thing about bitcoin is that it stands on its own. It doesn't need a founder. The code is open-source. It is auditable and that is the point that if we want to live in a world that is more decentralized, we need a system that is not reliant on a human being or a set of human beings. It doesn't really matter what the ethics or who this person was. What matters is what the code enables. All of the use cases, that's building a new money. A new digital decentralized money that is tamper proof from centralized control.
Team A: So one point we need to talk about when it comes to bitcoin and when it comes to gold is the number of scams that got reported. Day after day, you read about someone getting scammed. People losing all their savings. There is no accountability with bitcoin when it comes to scams and that is the reason why people need to be careful about bitcoin. That is the reason why there are established ways to invest to eliminate a lot of these frauds and scams. Why should anyone invest in bitcoin when there are so many scams going on?
Team B: Buying and holding bitcoin is an incredibly safe activity. But just like any technology, there are many downsides to it. I get phone calls almost everyday about some expired warranty for my car that I don't have. Right? Scams are prevalent in all areas of our society not just cryptocurrencies. Unfortunately, it seems like you've been brainwashed by headlines and sensationalist news media. Yes there are scams in crypto but there are scams everywhere. Yes you can 100% invest in crypto and be safe.
Team A: So I think that one point we are not talking about is the impact of bitcoin on the environment. You know today when we reimagine things, we think about how we can do things that are better for the environment, not worse. But we can see the carbon footprint of bitcoin. We can see that bitcoin mining hurts the environment so why do you want to contribute to more environmental damage rather than trying to improve the environment?
Team B: So one of the fantastic things about bitcoin is that over half of the energy used to mine bitcoin comes from renewable energy sources. In fact, they are building it in areas that often times are remote villages or places where you wouldn't necessarily see this infrastructure. And one day, many years from now past the year 2140 when all the bitcoin mining stops, that infrastructure will remain and can be repurposed to build local community energy resources and frankly contribute to the energy pipeline of the world.
Team A: So today we've had good points from both sides. And I think from my perspective, I am not saying you can't invest in bitcoin or you can't invest in gold. I think what you really need to decide whether is this: Am I for stability or for volatility? I think day to day when I live my life, I want more stability with the financial assets that I have? And that is what gold and other similar assets bring? That is why I recommend that you vote for gold.
Team B: I definitely agree that you should have goals and if your goal is stability, then you can take a look at the gold graph. It is not stable in terms of price but if you are investing to make money, if you are investing for growth, think about a portion of your portfolio and investing in bitcoin. Now I think some of the things that we have learned today have really dispelled a lot of the myths. Most of this stuff is not like what you read in the headlines and I'm really happy that we have been able to hash this out today and really present the truth to you all.
Finally at the end of the sample debate, Team B won on a scale of 8 to 3 votes.
For me, I think I agree with Team B winning because of the conviction backing Bitcoin. It is a fully decentralized currency and it is the first of its kind ever. I strongly believe in owning digital assets as well as the brain behind all of this which is blockchain technology. I think this is going to reshape the future of the financial sector. Once policy makers and stakeholders fully back this financial innovation, then our world can truly be decentralized.
Thank you all for reading. I will like you to share this with others if you love what you are learning.
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