Both goldbugs and crypto enthusiasts alike are in agreement that monetary policy and fiscal stimulus are out of control. Where they differ is on what strategy to implement to protect oneself in this current environment. There are the goldbugs who suggest stockpiling precious metals such as gold and silver, and then there are the crypto enthusiasts who suggest holding Bitcoin and other cryptocurrencies.

While gold has been accepted as a store of value for centuries, that doesn't necessarily mean it will forever be considered the hardest form of money. A new type of money, cryptocurrency, has been invented that is relatively easy to store, transfer and divide when compared to gold. However, despite crypto's advantages, very few people have come to accept this "magical Internet money" as something of value. If we observe the overall increase of the entire market cap of cryptocurrencies though, the trend towards greater acceptance is clear.

Storage Problems

Gold is typically stored in the secure vaults of custody providers, and the owner is issued some type of certificate to prove that they own it. If you think about it, the gold isn't truly yours if you are not in physical possession of it. There exists a possibility that the government could confiscate it, or that in a very rough economic situation the owners of the vault could run away with it.

For peace of mind, it's a better idea to store your precious metals at home so that you maintain full possession over them. The problem is that they are heavy, bulky, and a target for robbers. Additionally, moving them from one location to another is inconvenient, and taking them with you out of the country is often not feasible.

In the case of crypto, as long as the owner protects their private keys, their digital assets are safe from confiscation or theft. Traveling with crypto is also a breeze because all you need to carry are your private keys, which can be stored electronically or in your head as a seed phrase.

Payment Issues

Paying for goods and services with gold is also cumbersome. Imagine taking a gold bar, chisel, and scale with you to the shopping mall and shaving off the precise amount required to pay for an $80 pair of shoes. Paying with precious metals is simply not practical.

Some gold advocates have suggested launching a digital currency backed by gold. However, the problem with tokenizing gold, or any physical asset for that matter, is that counter-party risk still exists, meaning that we still must trust the company holding the gold, and the government of the country where the gold is stored. In the event of an economic collapse or hyperinflation, that trust could quickly evaporate.

Value Appreciation

When it comes to choosing precious metals or cryptocurrencies, we must also consider the current market cap of gold and silver (~9 trillion) compared to the cryptocurrency market, which is valued at only 375 billion. The room for growth in cryptocurrencies is much greater than precious metals.

Since the 2008 financial crisis and subsequent banker bailouts, people are increasingly losing faith in traditional financial institutions. Cryptocurrencies, starting with Bitcoin, have re-introduced trust and accountability into a corrupt system, and provide a means to preserve wealth with no counter-party risk. As people come to realize that cryptocurrency is far more trustworthy than any centralized institution, they will gradually start to prefer it over other forms of money, including precious metals.