Has the digital gold narrative collapsed? Why did the world choose gold over Bitcoin during the global crisis?

Original authors: Castle Labs & Vincent

Compiled by: LlamaC

(Portfolio: Burning Man 2017, About Tomo: Illustrator for the eth Foundation)

Recommendation: This article primarily explores Bitcoin's positioning as "digital gold," comparing its value as a store of value and its liquidity with that of traditional gold, and discusses Bitcoin's place and future prospects in the financial system.

From the legend of the search for the Golden Fleece to the mines of South Africa, humankind has been endlessly pursuing this sublime and mysterious treasure.

It resembles captured sunlight, perhaps truly originating from the depths of space, as scientists believe gold is born from the collision of dying stars, a phenomenon known as a supernova explosion. While the vast majority of gold on Earth is trapped within the Earth's core, the remainder was brought to the surface by meteorites.

Throughout human history, gold has always been a core hard currency in commercial activities.

If all the gold ever mined by humankind were collected, it would only be enough to form a cube with sides of about 20 meters, weighing approximately 176,000 tons.

It is truly perplexing that such a vast amount of wealth could be housed in a single warehouse. While stocks, art, oil, or collectibles require enormous geographical space or management resources, gold possesses the unique characteristic of portability.

Gold has become the ultimate store of value because it carries no counterparty risk. It is the only asset not owned by anyone else's debt. JP Morgan famously said, "Gold is money, everything else is credit." Its extremely high stock-to-flow ratio not only ensures its scarcity but also protects it from arbitrary fiat currency devaluation. From ancient Lydian coins to modern central bank reserves, for millennia, gold has consistently upheld its status as a store of value, acting as a highly liquid and immutable stabilizing force amidst financial, political, and social upheavals.

However, recently, a new contender has emerged who wants to take the title of "currency".

Despite being different from traditional precious metals due to their volatility and cryptographic properties, cryptocurrencies like Bitcoin are still known as "gold killers".

Bitcoin is often referred to as digital gold. Can it replace gold in the future? If so, is it wise to abandon this ancient asset?

This article examines gold and Bitcoin within the context of modern economics, decentralized finance (DeFi), and monetary attributes. We then conduct a comparative analysis to determine whether these two assets can coexist in a highly competitive macroeconomic environment and analyze current trends to determine whether Bitcoin possesses the attributes of "digital gold."

Ultimately, asset diversification will only benefit the global economy. Fiat currency—an asset whose value depends primarily on arbitrary monetary policy—is very likely to be replaced by a purer form of money. Whether it's gold or some new asset yet to be invented, it has the potential to escape the inherent devaluation fate of fiat currency, which, in our current debt-dependent economic system, suffers from fatal flaws.

The historical legacy of gold in the financial field

For centuries, gold has been the cornerstone of this system, the sole reserve asset. This status was not established by legislation, but rather solidified by the physical laws of the universe. As former Federal Reserve Chairman Alan Greenspan famously testified in 1999: “Gold still represents the ultimate form of payment in the world. In extreme circumstances, no one will accept fiat currency, but gold will always be accepted.”

Gold's widespread acceptance stems from its inherent qualities that distinguish it from all other materials. These very qualities established its enduring status as a store of value, what Aristotle termed "sound money."

• Durability: Gold is a precious metal, which makes it virtually unaffected by most chemical reactions. Unlike silver, it neither oxidizes nor tarnishes, ensuring its physical properties remain stable over long periods. This unique chemical property makes it highly reliable in economic reserves and high-tech infrastructure such as electric vehicles, drones, defense systems, and rockets. Furthermore, gold does not rust.

• Interchangeability: Because gold is soft and malleable, it is easy to shape, cast, and cut. This allows gold to be standardized into interchangeable coins or bars, as long as the weight (traditionally measured in ounces or grams) and purity (most commonly 14k, 18k, and 24k) are the same, one unit of gold is essentially identical to another.

• Stability: Gold is a reliable store of value. Its scarcity and practicality (remaining the preferred choice for critical industrial applications despite its high cost) allow it to retain its value over time, unlike fiat currencies which are generally eroded by inflation. Furthermore, gold is the ultimate store of value because it is free from counterparty risk.

• Portability: As a dense and expensive metal, gold is highly valuable even in small quantities. This exceptionally high value-to-weight ratio makes it easy and efficient to transport large sums of wealth, unlike silver, art, or other bulk commodities. A person can easily carry half a kilogram of gold in their pocket.

• Identifiability: Gold's unique physical properties make it relatively easy to verify its authenticity. Modern instruments like Sigma can detect fake gold instantly.

Therefore, gold is the perfect store of value, with only one exception. Gold is not a replaceable credit card, nor is it a code. Transporting gold, even for ordinary citizens carrying a small amount of gold bars, is as troublesome as transporting uranium; if declaration documents are forgotten, customs officials have the right to seize the gold and confiscate most of it as a fine. It can be stolen, cut, hidden, misappropriated, and so on. And because humans are prone to error, it can also be lost.

Operation Fish, launched in 1940, is a famous example of this logistical nightmare. With Nazi Germany closing in, to prevent its gold reserves from being seized by the enemy, Britain was forced to secretly move £2.5 billion worth of gold to Canada, becoming the largest transfer of physical wealth in history. Today, trillions of dollars can be transferred instantly with a simple click of the mouse.

The most infamous example of state plunder is none other than Executive Order 6102 of 1933, issued by Franklin D. Roosevelt, which made it illegal for U.S. citizens to hold monetary gold. Unlike passwords or mnemonic phrases, you cannot store gold in your memory; it must be physically held, and once found, it can be stolen. Gold not only yields no interest and pays no dividends, but it also incurs exorbitant storage and insurance costs. Most of the world's gold is stored in vaults in London, Switzerland, Singapore, or Manhattan, like an ancient and forgotten mythical sphinx, lying dormant in the shadows.

Admittedly, because humans are both prone to error and possess remarkable ingenuity, they are bound to devise a better alternative than that "relic of the primitive era." While gold itself is near-perfect, the astonishing speed of evolution in our financial system necessitates the creation of a modern alternative. Driven by disillusionment with and a desire to revive the outdated access mechanisms of traditional finance, Bitcoin was originally invented to challenge the existing system. However, it quickly pioneered a powerful new paradigm far exceeding its initial intentions: the potential equivalent of digital gold!

The advent of cryptocurrencies

In 2008, during the global financial crisis, Satoshi Nakamoto published a white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System." This paper proposed a solution to the double-spending problem without the need for a centralized trust institution.

If gold is naturally a form of currency, then Bitcoin is a currency created through computer engineering. It is scarce, difficult to mine, has a limited total supply, and is virtually indestructible. The invention of blockchain has triggered a "Cambrian explosion" of various digital assets, some fascinating, others utterly worthless.

While Bitcoin quickly established itself as “digital gold” due to its fixed supply of 21 million, other tokens have emerged, filling different economic niches.

In 2011, Litecoin positioned itself as "Bitcoin gold, Litecoin silver," promoting its faster, lower-cost transaction features. Four years later, in 2015, Ethereum introduced the concept of a world computer, replacing gold's passive store of value with active, programmable smart contracts. Today, it is the second-largest cryptocurrency by market capitalization, and its position remains unshakeable despite disappointing price performance. Privacy tokens like Monero (XMR) and Zcash (ZEC) attempt to replicate the anonymity of physical cash and gold, a feature lacking in Bitcoin's public ledger. This year, driven by the privacy narrative, they have surged alongside the collapse of traditional tokens.

While altcoins, mainstream coins, and Bitcoin all declined, ZEC, and subsequently Monero, began a surge, costing many bears dearly. However, the total market capitalization of these tokens remains negligible and insufficient to pose a serious challenge to Bitcoin.

Finally, high-performance blockchains such as Solana or MegaETH sacrificed decentralization for speed, aiming for transaction processing speeds comparable to Nasdaq, rather than the speeds of traditional wire transfers (internet capital markets). While they have successfully attracted entrepreneurs, investment institutions, and banks, the current L1/L2 landscape has become so vast that it's difficult to predict which will ultimately survive. The core narrative of the 2010s was not coexistence, but mutual destruction, as every new trend erased the old.

The industry's obsession with erasing precious metals was perfectly exemplified in Grayscale's controversial 2019 Drop Gold campaign, which portrayed gold investors as weary suited men dragging heavy stones (shiny rocks) while trendy millennials whizzed past them with their digital wealth.

Gold is heavy, tangible, and primitive, while cryptocurrency is lightweight and digital—in short, it's the currency of the future. However, touting the "death of gold" when Bitcoin was still largely a fringe geek asset was likely just a cheap and ill-considered marketing gimmick, but the public blindly followed this narrative after the COVID-19 pandemic. While it took Grayscale some time to clear its name, the next Bitcoin cycle has given them a reason to believe it.

This new appetite for risky assets suggests that scarcity can be designed, not just mined.

It remains unclear whether such man-made, artificially designed goods should replace physical assets in the eyes of sovereign states, but the performance in the 2020s suggests that investors have taken it for granted.

The formative period of Bitcoin

Between 2010 and 2025, Bitcoin emerged from the mystique of the cypherpunk world and became a hot topic in Wall Street offices, transforming from a worthless novelty asset into a trillion-dollar behemoth. These fifteen years were not without their challenges, but every time Bitcoin crashed, it ultimately recovered and reached new all-time highs.

The media has consistently expressed deep skepticism, declaring Bitcoin "dead" approximately 450 times. Therefore, this narrative arc is far from straightforward. The story begins with the retail investor frenzy of 2017, when some even sold their homes to buy more. At that time, driven by the retail frenzy, ICO speculation, and perhaps a general sense of recklessness, Bitcoin surged from less than $1,000 to nearly $20,000. But ultimately, it crashed that same year, dragging down the entire cryptocurrency market (which at the time certainly looked like the end). The era of macro hedging in 2020…

Driven by legends like Paul Tudor Jones and Michael Saylor, this controversial asset has been revitalized. Bitcoin has found the voice it needed, becoming a macro asset capable of challenging gold. The real breakthrough came in January 2024 when the U.S. Securities and Exchange Commission (SEC) approved a Bitcoin spot ETF.

In just 15 years, Bitcoin has evolved from a libertarian internet token into an ETF (Exchange Traded Fund) capable of stirring up billions of dollars in regulated funds. BlackRock, Fidelity, and VanEck have become Bitcoin's spokespeople; those geeks who once lived in basement apartments may now be billionaires, their anti-capitalist ideologies perhaps forgotten in the pursuit of a yacht or two. Institutional acceptance propelled Bitcoin past the psychological barrier of $100,000 in December 2024, ultimately reaching a frenzied peak of $125,000 in October 2025. At that moment, the supercycle theory seemed irrefutable. The US's exploration of a strategic Bitcoin reserve sent cryptocurrency traders into a frenzy.

However, in October, a pricing loophole appeared in Binance's USDe, causing all leveraged long positions to collapse. Although the market rebounded shortly afterward, the previous price shadows were eventually filled, and Bitcoin began a slow, steady decline, sliding towards a potential key level; whispers began circulating that it could fall to 67k. What should have been an endless cycle suddenly took a completely different turn at the end of 2025.

While Bitcoin hit new highs, the rest of the market, including blue-chip projects like Aave, Ethereum, Solana, and Ethena, has yet to recover. Bitcoin remains resilient, but its relative strength hasn't translated into a broad-based market rally. This divergence reinforces Bitcoin's position: it's not just a novel asset, but a reliable and durable one. Through its absolute scarcity, and especially its first-mover advantage, it has successfully replicated the monetary premium of precious metals. Unlike fiat currencies, which are easily and endlessly devalued, Bitcoin offers a beacon of decentralization, characterized by durability, divisibility, and instant portability. Despite its inherent volatility due to its immaturity, it has effectively digitized the inherent qualities of gold and achieved a near-monopoly among its peers.

By November 2025, a brutal correction had sent Bitcoin back to $80,000, dragging down the rest of the market. To everyone's dismay, stocks, gold, silver, collectibles, and everything in between were experiencing parabolic rallies. This time, is cryptocurrency, especially the portion excluding Bitcoin, truly finished?

Did we exchange a genuine monetary commitment for an ETF code and a farce of pump-and-dump? Was the narrative of that institutional investor's involvement just a marketing gimmick? An asset that is regulated, taxed, and closely monitored can now not even keep up with the market, appearing even more boring than gold.

Gold prices have surged in a parabolic fashion, followed closely by silver, and even copper—a cheap metal used in the manufacture of electronics and weapons—has seen its price spiral out of control.

Has gold always been the only stable currency?

Gold's Triumph in 2025

Although Bitcoin meets the standards of sound money, recent developments suggest that it has not yet exhibited the characteristics of digital gold.

In 2025, gold outperformed Bitcoin as a hedge against inflation, geopolitical turmoil, and war, and most importantly, as an excellent investment.

The global gold rush is characterized by large-scale accumulation of official reserves, spearheaded by aggressive buying by the National Bank of Poland, and continued purchases by the Reserve Bank of India, Turkey, and China. Brazil also joined in at the end of the year to diversify its assets. Despite central banks shifting their gold strategy focus from the West to the East, China and India still have the highest demand for jewelry and physical gold bars, followed by the United States, Turkey, and Iran, whose citizens view gold as a preferred asset to hedge against currency devaluation and economic instability.

In 2025 alone, the currencies of Turkey, Argentina, and Iran all fell to historic lows. If you think this rally is over, institutional sentiment has shifted from "gold is dead" to "gold will rise to $5,000." VanEck has now published an article stating that ongoing geopolitical turmoil, fiscal instability, and inflation could push gold prices to $5,000 per ounce by 2030, inevitably leading to explosive growth in undervalued gold mining stocks. JPMorgan Chase, the Wall Street giant, predicts that driven by a non-temporary structural shift, the average gold price will reach $5,055 per ounce by the end of 2026.

The bank pointed to two main reasons driving this rise:

First, central banks are accelerating their gold purchases (continuing the trend from 2025) to diversify their assets and reduce their dependence on the US dollar.

Second, the Fed's interest rate cuts triggered a return of funds to Western ETFs.

Gold is being actively traded as an inflation hedge against currency devaluation, once again proving that ancient customs may indeed stem from wisdom. Gold is indeed a way to bet on fear. For cryptocurrencies, increasingly stringent global regulations, from the full implementation of the EU's Crypto Asset Markets Regulation (MiCA) to the US Treasury's aggressive crackdown on privacy coins and illegitimate stablecoins, all demonstrate this. Ultimately, the illusion shattered.

Assessing the current situation is quite difficult given that we are still in a turbulent period of transition. One might cynically conclude that Bitcoin's test as "digital gold" has failed, and we are merely reverting to the mean. After a long period of experimentation, Bitcoin has not passed the test of "sound money" in the eyes of both public and private institutions. While these institutions hold a positive view of the "digital gold" concept, they ultimately tend to revert to a familiar, reliable asset that is already heavily held by central banks worldwide.

For risk-averse investors, the relatively stable price of traditional gold may be another advantage over Bitcoin; while precious metal prices fluctuate with global economic conditions, they rarely experience sharp declines. This is partly because influencing the price of such a massive asset is extremely difficult, even for institutions with enormous capital capable of leveraging the precious metals market through derivatives. Moreover, a large portion of gold's market value remains dormant (e.g., in jewelry, central bank vaults, private hoards) and does not circulate in the market.

Conversely, Bitcoin is naturally leveraged by both retail and institutional investors to capture intraday volatility. Indeed, compared to physically inert commodities, it is much easier to manipulate an asset whose direction is determined by dynamic liquidity. Despite investors' belief in the anti-inflation narrative, Bitcoin has behaved like an immature asset, characterized by high volatility and unpredictable price swings. The performance expected of a reserve asset does not match Bitcoin's actual performance. The de-pegging panics of various stablecoins remind us that you don't truly own something if you can't actually hold it.

On the one hand, gold is the ultimate physical asset; but on the other hand, it is difficult to store.

It would be too hasty to completely deny Bitcoin, but it would be short-sighted to regard gold as the only sound currency in the digital age.

Currently, the bulls have retreated and taken their leave, while the baby boomers have captured all the profits. It's fair to say that no one could have predicted that after 15 years of mature development and frenzied adoption, Bitcoin would fail to exhibit the attributes expected of a reserve asset. Meanwhile, a Titan that has dominated our imagination, senses, and desires for millennia is destined to awaken from its slumber one day.

Denigrating Bitcoin: A Difficult Task

The idea that privacy tokens or Bitcoin forks could replace gold as the global store of value resurfaced at the end of 2025, but data reveals a different reality: while gold has a total market value of approximately $32 trillion, the combined market capitalization of Monero and Zcash is unlikely to break the $20 billion ceiling—an amount that is equivalent to a tiny fluctuation in Nvidia's stock price on its hourly chart.

In the fourth quarter of 2025, Zcash briefly attracted the attention of CT (the cryptocurrency Twitter community), not because of its stablecoin attributes, but because of a shift in narrative: amidst a wave of crackdowns on privacy assets on compliant exchanges, Zcash successfully survived under the EU's MiCA framework and the US GENIUS Act thanks to its auditable nature. Furthermore, the founders of Solana launched a marketing campaign that triggered a degree of spontaneous ZEC buying frenzy.

Compared to gold, silver, stocks, or private equity, ZEC's price movement hardly represents a stable currency; rather, it seems more like a "pump-and-dump" scenario. Conversely, privacy coins became regulatory censorship in 2025. They cater to niche markets with short-lived narratives but are likely insignificant in the current boom-and-bust cycle. Even if fears of surveillance and potential aversion to state intrusion trigger sporadic rallies, these tokens are unlikely to attract the sustained institutional capital that cryptocurrencies are currently trying to absorb.

Ironically, tokens designed to circumvent institutional overtures may only survive by relying on funds held by these institutions, but their long-term survival comes at the cost of transparency. It's inconceivable that funds and banks would back an asset designed to bypass them. These alternatives are utterly incapable of withstanding the test of sound currencies: Bitcoin Cash, for example, lost its narrative as a "store of value" years ago; it's a payment network, more or less forgotten by institutions and retail investors. With the rise of stablecoins, Bitcoin Cash has become irrelevant, replaced by well-capitalized tokens specifically designed for payments.

Having undergone two forks and lacking community attention, Bitcoin Cash pales in comparison to Bitcoin. Zcash's value lies in its confidentiality. No sovereign nation can build its reserves on assets that global regulators are trying to stifle or that are highly susceptible to sentimental fluctuations. This token is a tool for private transactions, not for public treasuries, because it lacks the liquidity and stability necessary to replace the $32 trillion gold market.

While Zcash also has a cap of 21 million tokens, it remains in Bitcoin's shadow despite this alluring and familiar feature. Monero is an alternative to Zcash, but its privacy is mandatory. Regarding scarcity, because the number of newly minted XMR is fixed (0.6 per block), while the total supply is constantly increasing, the inflation rate steadily declines, tending towards 0% but never quite reaching it.

At least in this respect, Monero is more like physical gold than Bitcoin because it has a stable and low annual inflation rate, similar to gold (miners dig for new gold). However, XMR cannot replace gold as a reserve asset because it lacks auditability. Its ledger is opaque, and proof of reserves cannot be demonstrated to the public without revealing private keys or compromising the privacy features upon which the token depends. Instead, central banks require public trust and transparency regarding their reserves, even though the actual accountability of monetary reserves in the US and China remains controversial.

Based on the above analysis, we can conclude that, structurally speaking, only Bitcoin can theoretically replace gold. It has withstood the test of a sound monetary system, is well-capitalized, and has gained widespread acceptance at both the institutional and individual levels.

Despite facing constant competition, it has clearly established itself as a core cryptocurrency. It is the only digital asset to receive legal recognition from the U.S. government: in March 2025, the U.S. issued an executive order formally designating over 200,000 confiscated BTC as national assets, rather than auctioning them off, thus establishing a Strategic Reserve for Bitcoin (SBR).

This grants Bitcoin legal legitimacy, and other countries like El Salvador (with approximately 6,000 BTC) and Bhutan (which has mined approximately 13,000 BTC through hydroelectric power) have also established SBRs that are more or less officially recognized. Currently, no asset enjoys the same level of government support as Bitcoin. However, replacing gold remains an unrealistic and fanciful dream, not only because of Bitcoin's extremely high volatility (in 2025, Bitcoin's annualized volatility hovered around 45%, three times that of gold's 15%), but also because its current market capitalization pales in comparison to gold and silver. Sovereign nations require deep liquidity and substantial buffers to support their monetary policies, and unless Bitcoin resumes its growth and reaches $1 million per coin, it will never possess the same dominance as gold.

A win-win situation?

For fifteen years, the most intense debate has revolved around the clash between the massive precious metal and the ambitious digital asset—the gold vs. Bitcoin debate. A series of events in 2025 temporarily set this debate ablaze: gold remains real money, while Bitcoin remains a risk asset. If Bitcoin's historically high volatility prevents it from crashing to a point requiring caution, then without exception, the entire ecosystem has suffered enormous losses. Gold has reaffirmed its status as a millennia-old "king's treasure." It is a national asset, the ultimate insurance that requires no electricity, no internet, and no permission.

The massive gold purchases by Poland, China, and Brazil, completely ignoring Bitcoin, demonstrate that gold remains the most sought-after commodity during turbulent times. Bitcoin, on the other hand, has matured into an asset with a high beta and seemingly institutional authority.

First and foremost, this asset is suitable for traders who want to profit from its extreme volatility. Its high volatility, portability, and liquidity allow capital to be transferred across borders "instantly" in seconds, bypassing the outdated and inefficient traditional banking system. While Bitcoin's image as a cutting-edge asset has diminished somewhat, gold's exceptional reputation has become increasingly solidified: it has been the undisputed winner of the past year. The notion of replacing gold, a notoriously difficult task, has never been a mere marketing gimmick. What the entire financial system needs now is for both to coexist, especially considering that Bitcoin has spawned a trillion-dollar industry that relies on its robust growth.

Nevertheless, cryptocurrencies remain the explosive assets we relentlessly pursue. In the turbulent years to come, prudent investors will not choose between gold and cryptocurrencies, as the two are fundamentally incomparable. If gold is the guarantee of generational wealth for building family lineages and empires, then Bitcoin is that peculiar darling asset; it is elusive, sometimes seemingly mad, yet possesses a mysterious and intoxicating allure. Whether it can transform into the reserve asset we aspire to remains to be seen, only through further stress testing and years of trial and error.