One of the hottest controversies in the financial world is that of Bitcoin and Gold enthusiasts. This work is not intended to enter this field of debate. On the contrary, it will be a question of pointing out another of the great similarities between the two assets, mining.
There is no certainty as to whether the creators of Bitcoin did so with Gold in mind, but all indications are that this was the case. Scarcity, divisibility and even the way they are generated, put in these two assets more similarities than could be seen with the naked eye.
Extracting Gold is no longer as easy as before, when adventurers only required a shovel and good intentions to get the metal. Exactly the same goes for Bitcoin in the digital realm. Now it’s not as simple as in the days when you only needed a CPU to get coins. There are a lot of similarities like this.
To what extent does Bitcoin mining look like Gold mining?
Although each of these assets exists in a different sphere of reality, they have much in common. Bitcoin is in the virtual world, within everything related to the network and digital processes, while gold is in the material world.
With development within such different spheres, one could be assured that the similarities between the two could not be so marked. However, reality shows that the parallels go far beyond the rhetoric of digital currency advocates.
As he said, mining Gold and Bitcoin has become complicated over the years. This difficulty is due to the scarcity of both assets, forcing miners to develop better techniques and use increasingly sophisticated and expensive equipment. Achieving them is no longer a matter of will, but of economic capacity.
Both activities began with the passion of handfuls of adventurers. Then they became professional and now they are part of the day of important monopolies that control until the supply available for sale in the market.
A more detailed look
One of the studies that has paid the most attention to this similarity between Bitcoin and gold mining is the one conducted by Arvind Narayanan and Joseph Borneau in their book Bitcoin and Cryptocurrency Technologies.
The work explains the phases that the two processes of extraction of these assets have gone through. «If we consider the evolution of mining, we can see interesting parallels between Bitcoin mining and gold mining.», They explain.
At the same time they point out that in both cases of mining, both Gold and Bitcoin, accessibility is declining. «Large companies have taken over most of the operations (and profits). Other similar patterns are that the main winners of mining have been the sellers of equipment, whether sellers of shovels or ASIC machines.».
Phases of mining development in both cases
- The first step in the development of Bitcoin and Gold mining was through CPUs the first and Gold Pa the second.
- Next, Bitcoin extraction evolved into GPUs. For its part, Gold went on to mine with the Sluice Boxes.
- In the third stage, Bitcoin was mined, albeit with some difficulty, with the Field Programmable Gate Arrays (FPGA). In parallel, the golden metal had its equivalent in the Pleasure Mining.
- The last step in this evolution is Bitcoin undermining the most advanced, the Application Specific Integrated Circuit (ASIC). As for Gold, it is mined with powerful Pit Mining or open pit mining.
A violation of their own principles
While Gold has always served a very clear purpose, to get rich at any cost, Bitcoin was born with a more philanthropic philosophy. The fact that Bitcoin mining is centralized by some monopolies, goes against a consistent philosophy that everyone generates their own currencies from their computers.
Either way, one can be sure that the only realistic way to mine Bitcoin today, is through these ASICs. Small miners are increasingly vulnerable and prone to being kicked out of the game.
For their part, the large mining pools, if almost entirely of Chinese origin, monopolize the generation of Bitcoin in a scandalous way.
Data to consider
- Mining, both Gold and Bitcoin, has gone through an evolutionary process that presents great parallels.
- Among the most striking similarities is the fact that, in both cases, extraction is in the hands of powerful companies.
- The cases of small miners, both Bitcoin and Gold, have gone down in history as a distant memory.
- On the other hand, in both cases of these extractable mining assets, the wealth will end up in the hands of the companies that create the mining tools.