Is Bitcoin the new gold?

What is Bitcoin, really?

The episode opens with a question that sounds simple but turns out to be genuinely contested: what is Bitcoin? Haroon Baig’s answer is precise and deliberate. Bitcoin, he argues, is not a currency in the strict definitional sense. It was designed as a peer-to-peer electronic transfer of value — and the word “value” is doing all the work in that sentence. Not gold. Not a note. Not a commodity. Value.

This matters because most of the confusion around Bitcoin, Baig argues, comes from people forcing it into existing categories. “Bitcoin is a completely new digital asset class,” he says. “It is not a currency by the strict definition.” Over the years, the way people have defined Bitcoin has evolved — from digital currency to store of value to medium of exchange — and that evolution itself tells you something. The asset is versatile enough that no single label has stuck.

Muzamil pushes on this early in the conversation, and Baig’s response sets the intellectual frame for everything that follows: before you can evaluate Bitcoin, you have to understand what gives any asset its value in the first place.

The trust problem with gold

To explain Bitcoin’s value, Baig goes back to gold — and makes a point that most people find uncomfortable. Gold, he argues, has almost no intrinsic value in the traditional sense. A hundred and fifty years ago, gold had very limited practical use. It was not feeding anyone, building anything, or running any machinery. Its value was, and remains, almost entirely a function of collective trust and cultural agreement.

“If you go back a hundred and fifty years, what was gold’s intrinsic value?” Baig asks. Today, gold has some industrial use in electronics and luxury goods, but that use is marginal relative to its market price. The real reason gold holds value is that governments once backed their currencies with it, and a culture developed around treating it as a store of wealth. That culture persisted even after the gold standard ended.

Baig’s point is not that gold is worthless. It is that gold’s value is built on the same foundation as Bitcoin’s — trust, scarcity, and collective agreement. The difference is that gold has centuries of history proving that the trust holds. Bitcoin is newer, and its track record is shorter. But the underlying logic is identical.

Real estate has intrinsic value because it produces something — agriculture, shelter, rent. Stocks have intrinsic value because companies behind them are working to generate revenue. Gold and Bitcoin, Baig argues, sit in a different category: their value is real, but it is socially constructed rather than productive.

Why Bitcoin is volatile — and why that will change

Later in the discussion, Muzamil raises the obvious objection: if Bitcoin is a legitimate asset class, why does it drop fifty percent in a matter of weeks? Baig’s answer is structural, not defensive.

Volatility, he explains, is a function of market size and liquidity. A small market is inherently more sensitive to large transactions. If one big buyer or seller enters a thin market, prices move dramatically. As more participants enter, as liquidity deepens, and as the ratio of buyers to sellers stabilises, volatility naturally decreases.

He uses a mango market analogy to make this concrete: in a small local market, one large buyer can move the price significantly. In a national market with millions of participants, the same buyer barely registers. Bitcoin is still in the small-market phase. “As more people use it, as more adoption comes, the volatility will keep decreasing,” Baig says. He points to the data: the percentage drawdowns in each successive Bitcoin bear market have been smaller than the one before. 2013 was more volatile than 2017, which was more volatile than the current cycle.

This is not a guarantee that Bitcoin will stabilise. But it is a coherent explanation for why volatility is a phase, not a permanent feature.

Trading versus investing — and why the distinction matters enormously

One of the sharpest moments in the conversation comes when Baig draws a hard line between investing in Bitcoin and trading it. He is not gentle about this.

Trading — taking long and short positions, betting on price movements without owning the underlying asset — is, in his framing, a zero-sum game. “When you make money trading, you are not creating any productive value,” he says. “You are taking money from someone else.” He extends this to forex trading, derivatives, and leveraged positions across all asset classes. The 2008 financial crisis, he argues, was a direct consequence of this logic taken to its extreme: people betting against assets they did not own, with no productive activity underlying the transaction.

Baig is careful to say that some trading is necessary for market liquidity — you need buyers and sellers to make a market function. But speculative trading, particularly with leverage, is something he describes as fundamentally extractive. “It is exactly pump and dump,” he says. “Someone has to lose for you to win.”

The distinction he draws is between investing — putting capital behind productive assets or stores of value — and gambling on price movements. He is not saying Bitcoin is bad. He is saying that most of what retail investors in Pakistan are being sold as “Bitcoin investing” is actually high-risk speculation dressed up in the language of finance.

The future architecture: Bitcoin as settlement layer

Muzamil asks Baig where he thinks this is all going, and the answer is more specific than most people expect. Baig does not think Bitcoin will become the global currency that its most enthusiastic advocates predict — at least not directly. What he thinks is more likely is that Bitcoin becomes a settlement layer: the base infrastructure on which other financial applications are built.

“Bitcoin will become a settlement layer,” he says. “On top of it, there will be Layer 2 solutions, side chains, and applications for payments, lending, borrowing, and trading.” He points to the emerging decentralised finance ecosystem as evidence that this architecture is already being built. Interest-bearing accounts, lending protocols, equity tokenisation — all of these, he argues, will eventually run on top of Bitcoin or similar blockchain infrastructure.

He draws an analogy to the internet. When the internet first arrived, people thought it was a curiosity. Bill Gates famously underestimated it. But the internet did not replace everything — it became the infrastructure layer on which entirely new industries were built. Baig thinks blockchain technology is at a similar inflection point. “In the next ten years, the innovation in this technology will be equivalent to decades of progress in other fields,” he says.

He also predicts significant consolidation in the crypto market. There are currently hundreds of cryptocurrencies, most of which will go to zero. The survivors will be the ones that solve real problems and capture meaningful market share — much like how the internet era produced a few dominant platforms from thousands of startups.

Money laundering: the case that gets the argument backwards

One of the most counterintuitive sections of the conversation comes when Baig addresses the money laundering argument — the claim that Bitcoin enables financial crime. He inverts it completely.

“The biggest facilitators of money laundering in the world today are private banks,” he says. He points to examples from Pakistan where bank accounts with hundreds of millions of rupees sitting in them belong to people the bank cannot identify. The infrastructure for moving dirty money through the formal banking system, he argues, is far more developed and far more opaque than anything in crypto.

Bitcoin, by contrast, has a public ledger. Every transaction from the genesis block to the present is recorded and traceable. “From the very first Bitcoin transaction to today, every single transaction is on the ledger,” Baig explains. “You can trace where the money came from and where it went.” He cites the example of Silk Road, where law enforcement was able to track and prosecute criminals precisely because their Bitcoin transactions were traceable — something that would have been impossible with cash.

Cash, he argues, is the most anonymous currency in existence. You cannot trace a physical note. Bitcoin is pseudonymous, not anonymous, and that distinction makes it a better tool for financial transparency, not a worse one. The money laundering argument, in his view, gets the technology exactly backwards.

What this means for Pakistan specifically

By the end of the conversation, Baig brings the discussion back to Pakistan — and the picture he paints is both critical and, in a strange way, optimistic. Pakistan, like many developing countries, has a population that already distrusts its own currency. Inflation erodes savings. Capital controls restrict movement. The formal banking system is inaccessible to large parts of the population.

This, Baig argues, is precisely the environment in which crypto adoption happens fastest. He points to Nigeria as an example: remittance costs dropped significantly as people shifted to Bitcoin, and demand grew organically from the bottom up — not because the government endorsed it, but because people needed an alternative.

He is critical of the speculative culture that has taken hold in Pakistan, where people are selling their plots and putting the proceeds into crypto based on screenshots of someone else’s gains. “The people who are most vulnerable are being misled,” he says. His prescription is not to avoid crypto entirely, but to understand it properly — to treat it as the highest-risk tier of a diversified portfolio, not as a replacement for financial literacy.

Muzamil closes the conversation by noting that the technology is still early, and Baig agrees. The comparison to the internet is not just rhetorical. In 2001, most internet companies were worthless. By 2021, they were the most valuable companies in the world. Whether Bitcoin follows the same trajectory is uncertain. But dismissing it because it is new, Baig argues, is exactly the mistake people made with the internet — and they were wrong then too.