Why I think Bitcoin is currently like gold

I happen to think that Bitcoin is analogous to gold at the moment. Although the initial idea behind Bitcoin was that it should be a currency to buy and sell services and goods, what I've read about Bitcoin transactions shows that most Bitcoins are being held as an investment. Of the coins that are actually circulating, a few are being used to buy stuff, some are being used for gambling (mainly at Satoshi Dice), and the rest are being traded on exchange sites such as Mount Gox.

Similarly, most gold is stored in jewelry (50%), in vaults (40%) and only a little is used in industry (10%) according to Wikipedia, which as we all know is an irrefutable fount of knowledge. And although jewelry is attractive to look at (usually), most of it sits in jewelry boxes in cupboards, where no one can see how pretty it is. A gold plated necklace looks just as good as the 18 carat real deal, but people still buy the solid gold one, presumably because they get a kick out of knowing that it's valuable. As for usage - we have ten times what we need.

In uncertain times people transfer their money to safety - historically gold has been one of these safe havens. We've seen the gold price soar over the last five years with the arrival of the global financial crisis. Many pundits attribute the sudden rise in Bitcoin over the last few months to an increase in Southern European investors seeking somewhere to put their money in the light of recent threats by the Cyprus government to levy a 10% "tax" on all Cypriot bank accounts as a rather drastic measurement to overcome their deficit.

A Bitcoin private key that unlocks a hundred Bitcoins has little use if you're stuck on a desert island. But neither does a bar of gold. Both only have value in a society, and both only have value if that society thinks they are valuable. Gold has a long history as being considered precious - Bitcoin is a lot lot younger, but looks like it's heading the same way.

Then there's the obvious stuff - there is a limited supply of gold, and there's a limit supply of Bitcoin. Both are fungible - one gram of gold is like the next, one Bitcoin is like the next, and both can be subdivided (with the fractions retaining the fractional value and functionality of the whole),

So what's the real difference between gold and Bitcoin at the moment?

1. Bitcoin is a lot more volatile (but gold has been known to be volatile too)
2. Bitcoin is virtual and intangible, gold is real and tangible (more on that later though)
3. You don't have to worry that you've being sold a bar of tungsten coated in a thin layer of Bitcoin