In the world of currency, gold, fiat currency, and bitcoin are like three distinctly different civilizations: Gold is physical, fiat currency is political, and bitcoin is mathematical. This is not only a formal distinction but also a fundamental difference in value systems and trust mechanisms.
Gold: Credit from nature
Gold is the representative of classical currency, its value comes from the scarcity of the physical world. Scarcity: The total amount of gold on Earth is limited, extraction costs are high, and it is naturally anti-inflationary. Physical existence: You can hold it in your hand, and it can be preserved for millennia without corroding. No need to trust third parties: Gold does not rely on any government or institution's endorsement; its value is a consensus built over thousands of years by humanity. The weaknesses of gold are also obvious: transportation is troublesome, transaction efficiency is low, it is not easy to divide, and it seems cumbersome in the digital age.
Fiat currency: Credit from politics
The value of fiat currency comes from the endorsement of the state and government; it is a form of 'institutionalized credit currency'.
Source of value: Legal status granted by laws, supported by government taxation and economic strength.
Controllability: Central banks can issue or withdraw currency at any time to adjust economic operation.
High circulation efficiency: Easy transfer, mature payment systems. The biggest problem with fiat currency is:
Its scarcity is not natural but determined by politics. Historically, there have been numerous cases of currency over-issuance and inflation from the Roman Empire to contemporary countries. Whether your wealth can maintain its value is not in your hands but depends on the switch of the printing press.
Bitcoin: Credit from mathematics. Bitcoin is a new species in the digital age; its trust mechanism is neither natural nor political but is based on mathematics and algorithms.
Total fixed amount: 21 million pieces, hard-coded in the program, not subject to anyone's will.
Decentralization: No central bank, no company, global computing power jointly maintains ledger security.
Verifiable: Every transaction can be verified using cryptographic algorithms and cannot be tampered with.
Global circulation: No borders, available 24/7, low cost. It is scarce like gold and easy to transfer like fiat currency, but its existence relies entirely on digital networks, has no physical form, and does not depend on national credit but rather on mathematical formulas and cryptographic principles.
Underlying logic of the three currencies:
Gold is physical: The trust basis of gold lies in the physical world.
Fiat is political: The trust basis of fiat currency lies in politics and the state.
Bitcoin is mathematical: The trust basis of bitcoin lies in the unalterable rules of mathematics. When you understand this, you can comprehend why bitcoin is often referred to as 'digital gold': it represents the birth of a third trust system.
Thoughts on investment and cognition
Gold is suitable for value preservation but not for efficient circulation.
Fiat currency is suitable for daily transactions but difficult to maintain value over the long term.
Bitcoin combines scarcity and digital efficiency, but has large short-term fluctuations, requiring a long-term perspective. True mature investors will not just bet on a single form of currency, but understand the underlying logic of the three and allocate reasonably under different economic cycles and risk preferences.
