Developed in 2009, bitcoin and other crypto currencies have risen to prominence within just a decade. Compared to gold and other precious metals, bitcoin is quite young. During market correction and recession, both gold and Virtual money can keep your invested value safe.
Just like bitcoin, gold and other precious metals are also used to hedge against market corrections, downturns, and recessions and so on. If you wish to learn which one is a better investment among bitcoin and precious metals like gold, keep reading.
Vivid understanding of Bitcoins
Bitcoin is the most common tern related to the crytocurrency realm. Almost everyone of the 21st century has come across this term once in a lifetime, regardless of the fact whether he or she has been taking interest in the field or not.
It happens to be the number one cryptocurrency among all the 19000 types. Its decentralized network is the one factor that keeps on rolling the dice for the digital currency since 2009. No matter how volatile bitcoin market is, it has always bounced back with a higher price value.
Gold and other precious metals
Gold has been in the capital market for several decades and it has maintained its uptrend value even during market corrections. Gold is still a highly regarded investment element due to its exceptional store of value. When it comes to creating economic stability or economic growth, the one thing that centralized authorities count on is gold. If you are interested in precious metals instead of stock and cryptocurrency, you should go for gold bonds, digital gold, gold as a commodity, and so on.
Comparison between bitcoin and gold
- Regulations- There are several countries in the world like El Salvador, Canada, Australia, Denmark, France, Germany, Mexico, Spain, Iceland, Japan, etc. where bitcoin is legal. When it comes to cross-border transactions, bitcoin is one of the most sought-after options. Due to the volatility, virtual presence and decentralization, it is quite challenging to regulate bitcoin through proper regulatory infrastructure.
You can purchase gold only from registered dealers. But during cross-border transfer, you will face plenty of issues if you are carrying gold. You will have to acquire special regulatory permission for this.
- Utility– Bitcoin is used as a mode of investment and also for online payment as an alternative to cash. Though bitcoin doesn’t have as much utility as gold, due to its limited supply bitcoin also has the potential to be invaluable and useless in coming years. Due to Blockchain technology, today bitcoin has many real-world applications or use cases, as you may say.
When it comes to gold, it has been used across various industries for different applications such as luxury items, currency, and specialized applications in the field of dentistry and so on. With all these functionalities, gold is capable of storing its value when other investment assets show a downturn of price value during the economic crisis.
- Liquidity-The liquidity of bitcoin is totally dependent on the market. There are times when this cryptocurrency is more required than other assets, and sometimes it simply isn’t.
But due to limited volatility, gold is a much better option for you if you are not willing to lose monetary value over a short time period.
- Supply– There will be only 21 million bitcoins in the market and of which around 19 million bitcoins are already in circulation. So, with growing demand, the price value of bitcoin is bound to increase and with bitcoin accumulation, you can easily beat inflation in the future.
On the other hand, gold is as finite as other natural resources. The value of gold will increase in the coming years but it may not show any steep price uptrend like bitcoin in the future.
- Safety and transparency– Due to the encryption, cryptography, and decentralization, bitcoin is a much safer mode of investment for novice investors. Owing to its complex algorithms, there is no chance of corruption of the invested money in bitcoin.
On the other hand, the investment in gold comes with fewer risks of corruption, fake assets etc.
Now that you have learned about both bitcoin and gold as investment elements, you should decide based on your investment strategy, risk tolerance capability, volatility, etc. which one is right for you. Ultimately, if you are investing for your future, you should go for bitcoin. This is because there is forecasting by the market researchers that the bitcoin price value will keep on increasing exponentially leaving behind gold and other investment elements.