On March 6, 2025, U.S. President Donald Trump signed an executive order establishing a Bitcoin strategic reserve and digital asset pool for the U.S. government. In this executive order, Trump refers to the idea that Bitcoin is similar to "digital gold."
Cryptocurrency enthusiasts often refer to Bitcoin as "digital gold" and consider the two to be equivalent solid currencies. In reality, gold and Bitcoin differ quite a bit in terms of their asset quality and their hierarchy as a solid currency.
Digital assets vs. real assets
According to Investopedia , a digital asset, such as Bitcoin, is generally anything digitally created and stored, that is identifiable and detectable, and that has or provides value. And a real asset, like gold, has a tangible form and much of its value derives from its unique physical qualities.
Bitcoin, the most popular digital asset over the last decade, is often a speculation used as a means to acquire more fiat currency (Federal Reserve Notes, i.e. dollars).
Gold, the most popular real asset for five millennia, is primarily used to diversify savings and as a primary asset for central banks, financial institutions and individuals seeking a steady hedge against inflation.
Although there is currently no gold standard, almost every central bank in the world uses gold as a method of fiat currency stabilization, inflation hedging, geopolitical safeguarding and foreign exchange (FOREX) risk reduction.
Why is gold more valuable than Bitcoin?
Real assets tend to be more valuable compared to digital assets due to factors such as historical precedence, safety and utility.
Gold has been used as a stable form of currency for over 5,000 years (almost universally) through all sorts of struggles and conditions, giving it a sense of value based on this historical precedent. Gold cannot be fabricated, counterfeited or tarnished due to its physical nature, giving it a sense of real security. Gold has many natural qualities that give it value or utility in the real world.
Gold is the most malleable metal, is highly ductile, one of the densest metals, corrosion resistant, highly reflective of visible and infrared light, has low reactivity and is an excellent conductor. Gold is not dependent on the performance of third parties and therefore has no counterparty risk. It is a final payment in itself.
You may have heard people mistakenly call Bitcoin "digital gold" while previously equating the two, or even going so far as to claim that Bitcoin is more valuable than gold.
But the value of gold does not depend on another element, while the value of Bitcoin depends on other real-world conditions and constraints to exist or be used, including power grids, Internet connections, computers, etc.
In addition, cryptography experts warn of the imminent threat of quantum computing, which could crack many forms of encryption, including blockchains such as Bitcoin. At the very least, they warn that the cryptocurrency could be disabled for months while a protocol update is implemented.
Ultimately, the use value is quite different between these two forms of assets and their end goals are not the same.
The hierarchy of sound money
Sound money refers to money, or currency, that possesses a marginal value based on its validity and reliability, much like a sound argument in logic.
Sound money establishes its validity through trust, non-counterfeitability, universal acceptance, and marginal use value. Sound money preserves purchasing power, economic stability and genuine transactional trust, acts as a store of value, allows for long-term planning and is much more resistant to manipulation, making it reliable.
Sound money has qualities such as durability, portability, fungibility, divisibility, acceptability, resistance to inflation, established historical value, and independence from government.
Gold is not only a real asset, but also the ultimate form of sound money, as it possesses each of the above qualities and characteristics, and then some. Gold, as sound money, is in direct contrast to Federal Reserve Notes and other forms of fiat currency.
Fiduciary currency, unlike gold, derives its subjective value through perceived trust, market manipulation, legal counterfeiting, political redistribution schemes, and government decrees based on coercion.
Even the Federal Reserve openly believes that the US dollar (USD) should lose at least 2% each year, and intentionally works to achieve that outcome.
In comparing gold and bitcoin, we have already established that gold has a higher real value than bitcoin. Gold also has a solid monetary value greater than bitcoin. Bitcoin's price can be manipulated more easily than that of gold. For example, bitcoin has experienced massive and sudden fluctuations due to big whale buying and selling, asset laundering, impersonation, media and government propaganda, centralized mining, bot trading, and algorithmic trading.
In contrast, gold is a universal, well-established and real asset, so its price fluctuations are less volatile in the short, medium and long term.
Having said all this, Bitcoin has many of the qualities of sound money and is a superior form of currency compared to government fiat currencies.
Unlike most fiat currencies, Bitcoin is naturally scarce, has a generally predictable price and enjoys wide acceptance. Bitcoin is also durable, portable and divisible as a digital asset.
So, if we were to rank these three forms of currency in order from most sound to least sound, gold would be the top form of sound money, while Bitcoin would be second, the U.S. dollar third, and the remaining fiat currencies at the bottom.
Joshua D. Glawson, Money Metals