It’s all about market capitalization
Many are comparing the price of Bitcoin to the price of a Gold ounce and conclude that Bitcoin’s price has exceeded the Gold price. But comparing the price of Bitcoin to Gold is entirely misleading. If we would try to give Gold an estimated market capitalization, based on all the Gold that has been mined up to today, we would end up with a total value of about 6.8 trillion EUR or 7.6 trillion USD. Bitcoin’s market capitalization was recently about 38.8 billion EUR (as of June 1, 2017) showing a very clear difference. Comparing Bitcoin’s price to the Gold price underestimates the value (and importance) of Gold by a factor of around 175. So very simply spoken one could argue that, given current market prices, Gold is by factor 175 more important than Bitcoin.
The trend of comparing physical commodities to crypto currencies
Recently, the Bitcoin price has surged and doubled in value in less than four weeks overtaking the “price” of Gold, that is, the price of a Gold ounce. Media outlets started comparing the price of one Bitcoin to the price of an ounce of Gold. This comparison is driven by a fundamental misunderstanding and is in fact not just misleading but even unfair for Gold and all other commodities. Saying Litecoin is digital silver and Bitcoin is digital gold, might sound very romantic and may have some pictorial power. However, any comparison of a crypto currency to a physical commodity is mostly misleading and underestimates the current true value of physical commodities tremendously. Even though this might exchange of course in the far future. Back to the price comparison: It is about market capitalization of an asset, not the pure price.