Some commentators liken Bitcoin to "digital gold." The point they make is simple enough. Gold is a rare metal, the stock of which has not increased significantly in hundreds of years - the increase in the amount of gold each year is roughly equal to the gold destroyed through industrial use or simply lost. So gold is an uninflating store of value and superior in that way to any national currency you care to name. Nobody can change that.
But hold on a moment. Gold doesn't have an untarnished record. Truth is that from about 1500 through to 1600, prices did inflate because of gold (and silver). It is (roughly) estimated that prices rose 300 percent. This was due to the increase in the supply of gold and silver, which Spain was happily stealing from the Incas and shipping home. And the inflation did not stay in Spain, it spread to many European countries.
It's unlikely that such an increase in gold supply will ever happen again, but it's not impossible. (Science might find some way to alter the balance.)
Bitcoin is not Gold
Like gold, the supply of bitcoin cannot suddenly increase. Right now it is inflating at 4% per year, which is low for a national currency. And roughly every four years that rate will be cut in half to the point where it will, to all intents and purposes, be zero. As far as inflation is concerned, it's better than gold. The software will never allow inflation (an increase in bitcoin supply) beyond what is already locked in.
Bitcoin is very divisible. You can certainly divide gold up, but not quickly and not in a convenient way for the exchange of goods. Bitcoin can be divided up t0 8 decimal places. It has been designed specifically to allow very small payments. Right now (as I write this) 1 bitcoin is worth $680. So 1 satoshi (= 0.00000001 bitcoin) is worth $0.0000067205. And even if the value of bitcoin increased far beyond anyone's expectation (by, say, 1,000,000) a simple software change would be applied to allow more decimal places. Bitcoin was designed to be easy to spend; and easier to spend than any other currency.
Of course, it has not come close to full maturity yet. It is still young. Few retailers quote prices in bitcoin and few people have bitcoin debit cards. But such cards exist. I have one. It allows me to shop (in Bitcoin) anywhere where Visa is accepted. The way it works is simple, what you buy is converted (from dollars, say) to bitcoin and your bitcoin is debited accordingly.
The point is that bitcoin is much more like a currency than gold, and you can use it as a currency almost anywhere in the world.
The question then is "why do commentators refer to it as 'digital gold'?" They would not do that if there weren't a fairly large number of people holding bitcoin as an inflation hedge. And if you are doing that, well done - the record of recent years indicates it was a much better bet than gold. Gold ($1330 per ounce today) is not much different in price than it was about 5 years ago, having climbed about 50 percent and then fallen back. In that time, bitcoin has risen from almost zero to $680. There's no reason to believe it will continue to acquire value at that rate, of course, but its price is almost certainly heading higher. Demand is increasing and the supply is fixed.
Btw, it's also very difficult to steal and costs almost nothing to store.
It's better than gold.
True, dat.