Learning from Antiquity
In the crypto industry, it’s common to hear Bitcoin (BTC) described as digital gold, leading many to ask: what is the analogue for Ethereum (ETH), the second most valuable digital asset by market cap at $310 billion? Some draw comparisons to silver, being less rare and less valuable than gold, while others equate it to oil, reflecting its utility within the digital economy. During an informal coffee conversation with a prominent Web3 leader—often regarded as the "father" of proof of stake—this very question arose. Our conclusion? If Bitcoin is gold, then Ethereum is salt.
Throughout history, gold and salt have each held immense significance. Gold, treasured for its enduring value, has been sought by civilisations as a stable store of wealth, whereas salt, once a precious commodity, has transitioned into an affordable and essential staple of daily life.
Bitcoin: Digital Gold
Gold’s value comes from its scarcity, durability, and historical role as a hedge against inflation and economic downturns. It has been a reliable store of value for centuries, with a finite supply and unique properties. Similarly, Bitcoin is often called "digital gold" due to its capped supply of 21 million coins, its appeal as a hedge against inflation and currency devaluation, and hence arguably safe-haven status. Like gold, Bitcoin is primarily a store of value rather than a medium of exchange, offering protection during uncertain times through value retention rather than utility.
Ethereum: Essential Staple
Salt was once as valuable as gold. The word "salary" even originates from "salarium," payments Roman soldiers received partly in salt. As global supply increased and transportation and infrastructure costs decreased, the value of salt dropped. Yet, it remains vital in daily life. Similarly, Ethereum is becoming a crucial part of the digital world, powering decentralised apps, smart contracts, and NFTs. Although essential for digital infrastructure, widespread use does not necessarily guarantee that Ethereum’s value will soar, much like salt’s practical importance despite its low market value. The recent upgrades to the Ethereum network, since its transition from proof of work to proof of stake—such as the Merger, Dencun, Shanghai, and the upcoming Pectra—have marked significant infrastructure advancements, reducing production costs, particularly energy consumption, by approximately 99.95%, while improving scalability, efficiency, and adoption. However, Ethereum’s utility may prove to be its greatest asset, rather than its speculative value.
Conclusion: The objective of our coffee conversation in Brussels was not to discuss trading strategies or long/short positions as Tagus does not invest in either BTC or ETH. But the comparison of Bitcoin to gold and Ethereum to salt was useful to understand how two digital assets, despite their prominence, serve very different functions within the blockchain ecosystem.
Ultimately, both assets are crucial to the emerging digital economy, yet their futures will follow distinct paths—one as a store of wealth, the other as a utility for everyday transactions. Bitcoin may serve as a safe haven, while Ethereum could become the indispensable utility driving blockchain adoption. However, as history teaches us, value isn’t always linked to how much something is used—it’s also about how scarce and desired it remains.
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