Gold vs Fiat vs Crypto Traits

There have been many forms of money in history. Gold vs Fiat vs Crypto Traits are considered the main ones at the moment. Some forms have worked better than others because they have characteristics that make them more useful. There are several characteristics of money, mainly these are durability, portability, divisibility, uniformity, limited supply, and acceptability. There a few more below to compare against Gold, Fiat (Money) and Cryptocurrency.

Always a big debate over which is superior, but they may all be able to work together in harmony depending on their use cases and individual properties. Only time will tell.

Fiat (Government) Currency

Fiat money is money issued by our governments and regulated by a centralised Authority. Governments around the world for each country declare this as legal tender.

The monetary system is not backed by gold anymore. In 1971 President Nixon stopped money being backed by Gold. The Bretton Woods system became inoperative, part of the ‘Nixon Shock‘ series of events for economic reasons.

Since then the world monetary system and the Federal Reserve does not tie the dollar to anything. It can essentially print as much or as little money as it deems appropriate.

While there are many advantages of fiat money for regulators and governments, there are also many disadvantages as well.

All Fiat currencies suffer from inflation. Governments therefore are able to print money when they need to. This results in a loss of value/purchasing power of a currency over a period of time. It can also be catastrophic for countries that have major economic problems such as Venezuela and Zimbabwe.

Gold

Gold has been valued as long as human civilisation. No monetary system has lasted longer than gold, and most of it that has been mined is still in existence today.

Transporting large amounts of gold can be difficult to do due to its weight. It is also hard to break large amounts of gold down into divisions.

This alloy will continue to be part of the monetary exchange systems due to its purchasing power and a great commodity in retail and industrial circumstances. As well as a store of value.

Cryptocurrency

Cryptocurrency is sound money. Defined as “money that has purchasing power determined by markets independent of governments and political parties.”

It is considered a better form of money than fiat currencies and that of gold as well. Cryptocurrency coins all have scarcity which neither gold nor fiat currency has (a limited supply). While gold is scarce and hard to find, it can increase in supply as technology develops and new methods of mining gold become available like deep sea diving. Its true also that Fiat Money can be printed in an unlimited supply.

Bitcoin, the first Cryptocurrency has only been around for 11 years. Derived from the 2008 financial collapse. Many from society agreed that fiat money could not be trusted long term. Cryptocurrencies have to some extent better qualities than ‘Fiat Currency’. Bad actors can be found out due to strict decentralised consensus methods. No single entity can shut Cryptocurrencies down, not even Governments. Have a look at the graph to see the properties of the three in question.

Gold vs Fiat vs Crypto Traits

Traits of MoneyGOLDFIAT MONEYCRYPTO
Fungible (Interchangeable)HighHighHigh
Non-ConsumableHighHighHigh
PortabilityModerateHighHigh
DurableHighModerateHigh
Highly DivisibleModerateModerateHigh
Secure (cannot be counterfeited)ModerateModerateHigh
Easily Transact-ableLowHighHigh
Scarce (Predictable Supply)ModerateLowHigh
Sovereign (Government Issued)LowHighLow
DecentralisedLowLowHigh
Smart (Programmable)LowLowHigh