# Bitcoin is the basis for a new gold standard
The neo-metallist claim is that bitcoin can operate as a new asset class which exhibits similar financial properties to [gold](../concepts/gold.md).  The strong version of this claim asserts that a new [gold-standard](../concepts/gold-standard.md) can be built on top of bitcoin and that this can form the basis for a market economy.

These claims do not stand up to scrutiny as bitcoin has no consistent track record of being a reliable store of value, it's price movements are extremely volatile and thus is not a reliable place to store value on long time scales. Bitcoin's price behavior is uncorrelated with gold and is largely correlated with the broader stock market making it an unreliable safe haven in times of market volatility since it is directly exposed to the price action of the Nasdaq.

Bitcoin has no historical track record of being a store of value and lacks the millenlia of history that [gold](../concepts/gold.md) as a [commodity](../concepts/commodity.md) has achieved. Unlike gold it also lacks a [use-value](../concepts/use-value.md) for the physical asset which consistently generates demand. Bitcoin also has a upkeep cost in the form of [mining](../concepts/mining.md) which forces the asset to behave like a [negative-sum](../concepts/zero-sum-game.md) [speculative](../concepts/speculation.md) asset instead of a store of value.

Even if bitcoin could function as a new gold standard. The [gold-standard](../concepts/gold-standard.md) and the notion of [sound-money](../concepts/sound-money.md) are undesirable foundations for a [currency](../concepts/currency.md) and were subject to extreme shocks and deflationary spirals, and as such were abandoned in the mid 20th century in favour of the [central-banks](../concepts/central-banks.md) and fiat monetary system.

## References
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1. Bernanke, B. S. (2004). Essays on the Great Depression. Princeton University Press.
1. Caferra, R., Tedeschi, G., & Morone, A. (2021). Bitcoin: Bubble that bursts or Gold that glitters? Economics Letters, 205, 109942. https://doi.org/10.1016/j.econlet.2021.109942
1. Doctorow, C. (2022, February 3). Pluralistic: 03 Feb 2022 – Pluralistic: Daily links from Cory Doctorow. https://pluralistic.net/2022/02/03/liquidation-preference/
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1. Wang, G., Tang, Y., Xie, C., & Chen, S. (2019). Is bitcoin a safe haven or a hedging asset? Evidence from China. Journal of Management Science and Engineering, 4(3), 173–188. https://doi.org/10.1016/j.jmse.2019.09.001