Bitcoin (BTC -0.06%) is, as you may have heard, often called by the catchy moniker “digital gold.”
But there are a handful of key differences between Bitcoin and real gold, which has long been used as a store of value and as a hedge against inflation. Here are three of the most important ones to know.
1. It isn’t a proven asset for the task yet
For Bitcoin to be an equally good hedge against inflation as buying gold, it needs to maintain its purchasing power in fiat currency over time. That way, as the fiat currency becomes more and more devalued, holders can buy the same amount of goods and services when they decide to convert their coins into fiat.
Consider this chart:
US Consumer Price Index: Purchasing Power Of the Consumer Dollar data by YCharts
At first glance, Bitcoin actually looks better than gold over the last five years when it comes to holding value against declining purchasing power…
