- The recent discovery of 83 tons of counterfeit gold brings into perspective Bitcoin’s advantage in that it cannot be falsified
Bitcoin is often called ‘Digital Gold’ since it has similar properties to gold such as being a safe haven asset and being a scarce and highly coveted commodity. However, Bitcoin is perhaps even better than gold, since it cannot be counterfeited. This is unlike gold, which can definitely be counterfeited, as shown by the events of this past week where 83 tons of fake gold, which was used to obtain billions of US dollars of loans, was discovered in China.
Although there are plenty of tests to determine the authenticity of gold, and people certainly perform all of these tests especially when transacting huge amounts of gold, these tests can be fooled. For example, the most common test is to scratch a little bit of the gold off, and then to drop a chemical onto the little bit of gold, and if the chemical changes into a certain color then it is known that it is actually gold.
However, this sort of test only works for the surface of a piece of gold. When dealing with kilogram gold bars, there is plenty of room inside of the gold bar to put something that is not gold. Apparently copper and black tungsten are the most common substances used to create fake gold bars, and these substances are enshrouded in a layer of real good to throw off the tests. The only way to truly defeat counterfeit gold is to take ultrasounds to ensure that the entire bar is pure gold.
In the case of the 83 tons of fake gold in China, Wuhan Kingold Jewelry created massive amounts of fake gold bars which were actually gold-plated copper, and over the course of 5 years, they used the fake gold to take out USD 2.8 billion of loans from more than dozen Chinese financial institutions.
Literally, this fake gold fooled more than a dozen financial institutions for years, showing just how dangerous the gold trade can be, since this incident is proof that even trained professionals can be fooled by fake gold.
Notably, this was such a big counterfeiting job that it is the size of 4% of China’s entire gold reserves, and China has one of the biggest gold reserves in the world. Ultimately, this has shaken up the entire global gold industry, and banks and other institutions which hold gold are scrambling to perform specialized tests to identify any counterfeit gold.
Fortunately, Bitcoin doesn’t suffer from this sort of counterfeiting problem. The reason Bitcoin cannot be counterfeited is because all Bitcoin transactions can be checked on a block explorer, and if the Bitcoin shows up on the block explorer, then it is 100% certain that it is real Bitcoin.
Further, the block explorer cannot be tampered with, since the Bitcoin blockchain is immutable and secured by a decentralized network of thousands of computers and mining machines worldwide.
In other words, transactions on the Bitcoin blockchain are immutable and verified to be authentic, which is why it is impossible to counterfeit Bitcoin.
Also, one of the main reasons physical gold is so popular is because it is a highly valuable asset that can be stored in someone’s house, but Bitcoin has the same characteristics, and in-fact Bitcoin is even better because it can be completely encrypted, secured, and concealed, unlike physical gold which could be taken by robbers.
Thus, investors who are seeking out a bulletproof safe haven asset should strongly consider Bitcoin, since gold can be counterfeited, but there is no way to counterfeit Bitcoin.
Image Courtesy: Pixabay