DAY 022: How BITCOIN can take a PHYSICAL form to increase its security?

As you have probably seen in many articles, BITCOIN and GOLD are so many time compare through their standard form but lets dig in some little-known characteristics of both.

BITCOIN is the digital GOLD. Why?

  • Limited supply. This is true for BITCOIN, there will never be more than 21 millions BTC. For GOLD, it is not really true, we are still able to find many gold and in the next decades we will extract it even from space.
  • Require mining. In both case (create BITCOIN or extract GOLD), you need mining equipment, energy and time. Time after time it becomes more and more expensive to extract gold or generate BITCOIN.
  • Medium of exchange. Both gold and bitcoin are mediums of exchange, because we can trade them for goods and services.
  • Unit of account. We can divide gold into half ounces or quarter ounces, and we can divide bitcoin down to 1 satoshi.

That being said, people will say that Bitcoin is better because it is digital and therefore you can quickly transfer its value from one person to the other.

Yes this is correct, you can transfer quickly with a low transaction fee compare to physical gold. However, do you know that some financial instruments are indexed on the Gold price and therefore you can trade “gold” electronically as well?

Yes, those contracts exists but they are not linked to the real supply of Gold. If all the owner of a gold contract would claim for their physical gold it would not be possible to deliver as the contract are leverage with a factor 100x of the real reserve.

So BITCOIN is better from a pure digital / electronic perspective?

Yes this is correct but there is an important factor that people are not taking into account.

The private key required to access your Bitcoin Wallet is most of the time stored on an electronic device being: a server, a smartphone or a dedicated wallet device. In all these cases your key in store on a place which can be victim of a technical failure.

Do you know that if you lose your private key, there is no way to retrieve the access to your wallet and therefore to all your dear BITCOIN?

So the solution is to store your private key on a physical support which is not exposed to technical failures. Different solution exists such as a paper wallet or specific supports which allows to engrave the private key.

I am using such kind of device to store my main reserve of Bitcoin in a physical place.

Therefore I have the benefits of both world. A physical storage like for the GOLD and an electronic transaction system through the blockchain.

If you don’t want to lose your BITCOIN.

If you want a safe support to store your private key.

I will have shortly a product available for less than 30$.

Stay tuned and subscribe.

Feathercoin Writer.

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