Comment: Gold and bitcoin

Around 4700 BCE, approximately 6,725 years ago, humans began valuing gold after discovering its shiny nuggets in streams and rivers. Back then, gold was prized for its luster, malleability and resistance to tarnish. Back then, gold served as a status symbol and religious artifact (Varna Necropolis in modern-day Bulgaria).

By around 600 BCE, roughly 2,625 years ago, gold evolved into a medium of exchange with the minting of the first coins in Lydia (modern-day Turkey). In 1816, the gold standard was formalised in the UK, anchoring currencies to gold reserves and establishing gold as the backbone of international monetary systems. This system spurred global interest, leading to major gold rushes in California (1848), Australia (1851) and South Africa (1886).

In 1934, America’s then-president Franklin D Roosevelt pegged the US dollar to gold at $35 per troy ounce. In 1971, then-president Richard Nixon ended the dollar’s convertibility to gold, an event known as the ‘Nixon Shock’. Post-1971, gold transitioned to a free-floating asset, no longer backing fiat currencies.

Over approximately 6,725 years, gold has evolved from an ornamental and symbolic asset (c 4,700 BCE) to a medium of exchange (c 600 BCE), the backbone of the gold standard (1816-1971), and a modern investment for diversification (1971-present).

The three primary determinants of gold’s market price are economic uncertainty, central bank purchases, and geopolitical factors. Gold’s market price has propelled to unprecedented heights in 2025, with the spot price reaching approximately $3,817 per troy ounce as of September 29, 2025 — a staggering 45 percent increase from the same date in 2024. This surge is not random; it is a direct response to the three primary determinants: economic uncertainty, central bank purchases, and geopolitical factors.

Bitcoin is digital gold. Like gold, bitcoin has a finite supply. Like gold, bitcoin requires no central authority like a bank or government. Like gold, bitcoin is resistant to physical degradation. Like gold, bitcoin is a hedge against economic uncertainty and geopolitical instability — a safe-haven asset.

Here’s bitcoin’s key advantage over gold: bitcoin can be stored digitally and transferred instantly across the globe with minimal fees, unlike gold, which requires physical storage and costly transportation.

In 1971, the average price of one tola of 24-karat gold in Pakistan was Rs177. As of October 10, 2025, the price of 24-karat gold in Pakistan is Rs430,500 per tola. The rise in gold prices from Rs177 per tola in 1971 to Rs430,500 per tola in 2025 (a 2,432-fold increase) reflects both global gold market trends and the rupee’s depreciation.

Year-to-date, gold has surged more than 54 per cent, crossing the $4,000 per ounce mark for the first time in history. A mix of geopolitical tension, central-bank buying and a flight to hard assets has pushed investors from paper to metal.

Year-to-date, bitcoin is up 64 per cent, outperforming gold, equities, bonds and commodities alike. The rally has been driven by ETF inflows, institutional adoption, and expectations of a renewed liquidity cycle as the Federal Reserve turns dovish.

Together, bitcoin and gold now sit atop the global performance table — the first time the two alternative stores of value have occupied the No1 and No2 spots in the same calendar year. One is mined from the earth; the other is mined from code. Both reflect the same investor instinct.

In 2012, one bitcoin was for Rs450. The current price of bitcoin is Rs32,000,000. If gold’s 2,432-fold increase in Pakistan from Rs177 per tola in 1971 to Rs430,500 in 2025 demonstrates its enduring value as a hedge against inflation and rupee depreciation, bitcoin amplifies this potential exponentially as digital gold. Bitcoin isn’t just a store of value—it has been a proven wealth multiplier.

The writer is an Islamabad-based columnist.