Gold and Bitcoin are fungible, durable, portable, divisible, & scarce. Both have limited acceptance today: there are few goods & services you can buy directly with gold or bitcoin.
But Bitcoin has six advantages over gold:
1: Bitcoin is far more portable than gold. You can send it anywhere in the world instantly for a trivial fee.
2: Bitcoin transactions can be instantly and remotely verified. It’s impossible to fake a Bitcoin transaction. Verifying receipt of gold bullion is an expensive, error-prone, and physical process that requires either trust or expertise in gold assaying.
3: A bitcoin is divisible into 100 million satoshis. Gold bullion can be expensive or impractical to split into tiny fractions.
4: The supply of Bitcoin is completely independent of the price. The creation of Bitcoin follows a fixed schedule with a hard limit of 21 million. The supply of monetary gold increases when the gold price goes up, due to increased mining and redirection from industrial use.
5: Bitcoin is relatively easy to secure. You can memorize a Bitcoin seed. Bitcoin can only be stolen by improper security & privacy practices. On the other hand, even the most secure gold vault is vulnerable to armed theft by criminals and governments – as has often happened.
6: Bitcoin currently has limited vendor acceptance, but you can use Bitcoin debit cards with point of sale conversion to fiat. Gold can be used as a store of value, but in most of the world, it involves much effort to be exchanged for goods. There is already one country that uses Bitcoin as legal tender (El Salvador) and this number is likely to grow.
So Why is Gold More Valuable Than Bitcoin?
Gold does have one important advantage over Bitcoin:
Gold has been used as a store of value for all of human history, all over the world. Bitcoin is only 13 years old. This is why the market cap of above-ground gold is currently 10x that of Bitcoin. On the other hand, the fact that Bitcoin has grown nearly 200% per year to a market cap of nearly $1 trillion demonstrates that it is rapidly gaining credibility.
Over the long run, I expect the fundamental advantages that Bitcoin has over gold to be reflected in their relative market caps.