Bitcoin vs. Gold: Which is the Better Asset?
It can be argued that there has never been a better time to be an investor. With so many different investment opportunities available on the market to choose from, every individual can construct a top-quality investment portfolio containing everything they need to help bolster their future financial prospects. From exchange-traded funds (ETFs) and real estate to bonds, stocks, and mutual funds, there is no limit to the range of options people can choose to invest in as part of their portfolios.
This article intends to explore one of the more modern investments to come into the market over the past decade, Bitcoin, and how it compares to one of the oldest physical investments that humans have been getting involved in for centuries; gold. Please continue reading to learn everything you need to know about Bitcoin vs. gold investments, which one would be best for your portfolio, and why it may be better not to choose between them at all. If you’d like to learn even more about the exciting world of investments, feel free to check out the range of expertly written resources and top-quality crypto services provided by the industry professionals at Unbanked today.
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What Factors Favor Gold?
From ancient times to the current day, gold has served as a critical component of currency for societies the world over. In this day and age, investors typically put their money into gold to help hedge against the effects of inflation and political unrest throughout much of the world. Additionally, many investors choose to include gold in their portfolios as part of their commodities allocation because gold investments tend to help lower overall portfolio risks.
Another benefit of gold investments is the sheer range of ways that investors can include them in their portfolios. From directly purchasing physical gold bullion (bars) and coins to investing in mining companies, futures, and mutual funds dedicated to the performance of gold, there are many ways for investors to get in on the gold game. However, it’s important to state that investing in gold bullion, coins, futures, and a small selection of specialized investment funds are the only way to invest in gold directly, as other methods receive part of their overall value from other sources.
Aside from that, a few fundamental factors make gold an exceptionally favorable investment opportunity for those looking to include the asset as part of their overall investment portfolio. This includes the fact that gold is a precious metal used for a massive range of consumer goods– like jewelry- but it is not available in abundance.
This scarcity makes it increasingly valuable compared to other goods that are more widely available in the market. Even with high demands, the supply of gold remains very low, driving up its overall value in the eyes of the market and investors. Finally, the fact that gold is unable to be widely manufactured artificially means that its supply is entirely dependant on people being able to find, dig up, and process more gold.
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What Factors Favor Bitcoin?
Bitcoin (BTC) is a form of decentralized digital cryptocurrency developed and launched into the online world just over a decade ago. Since its inception, Bitcoin has grown massively in terms of its value and popularity within the investment market, and it’s currently ranked as the most popular and widely accepted form of crypto available. As of September 25, 2021, the value of a single Bitcoin is worth almost $43,000, and there are 18.8 million Bitcoins currently in circulation with a market cap of approximately $803.5 billion.
The history of Bitcoin’s value and success has been relatively turbulent, as it has gone through several bust and boom cycles over the years. However, it has still provided investors with a massive range of benefits, especially for those who could obtain large amounts of it before its substantial increase in value. This popularity and success have led to the development of more than 5,000 different cryptocurrencies that people can also choose to invest in and include in their portfolios.
Interestingly enough, Bitcoin has often been referred to as the new “digital gold” due to its massive value and relatively weak relationship with other types of assets- most notably stocks. Many investors have chosen to add Bitcoin into their portfolios because this separation can increase the effectiveness of investment portfolios as a whole.
However, it also adds a level of risk to portfolios, though this is expected with any crypto investment. Also, similarly to gold, only a limited number of Bitcoin will ever be available within the market, and this scarcity has helped to bolster its value over time as people scramble to acquire it through exchange trading, purchasing, and crypto or Bitcoin mining. It should also be noted that cryptocurrency like Bitcoin has produced much better returns for investors over the past several years than gold, leading to it become a primary source of focus for many operating within the cryptocurrency segment of the investment realm.
Do you want even more information regarding the potential risks and rewards that come with using cryptocurrency investments? Take a look at Unbanked and their selection of expertly written education articles to find out more.
A General Comparison of Gold and Bitcoin Crypto Assets
When considering gold and Bitcoin from an investor’s perspective, gold ranks above cryptocurrency based on its safety, transparency, and overall legality. Because cryptocurrency is still relatively new and continues to expand and change with time, it may not be something that many investors care to deal with. This is especially the case since cryptocurrency carries a higher risk and volatility level than gold because the future of cryptocurrency is entirely unknown.
In terms of both rarity and liquidity, both gold and Bitcoin are suitable investments. However, gold still wins out in terms of liquidity despite Bitcoin being constantly traded on 24-hour markets across the internet with other forms of cryptocurrency. People have fewer ways to turn Bitcoin into cash assets than gold, making it more challenging to unload from an investment portfolio.
Gold also provides an unmatched amount of accessibility for people belonging to any type of economic standing and possessing any amount of technological knowledge. At the same time, Bitcoin can only be accessed by those with the technical expertise needed to obtain it- usually through crypto mining- and use it effectively within the market.
This significantly limits the number of individuals who can include cryptocurrency in their investment portfolio, especially older investors who are less likely to be as technologically inclined as younger, more technologically savvy generations. Out of all of these factors, however, perhaps the most essential one for investors to consider is that gold is a historical asset that serves as the ultimate form of currency in the eyes of banking institutions around the globe.
All that being said, investors need to look forward and consider the future potential of Bitcoin investments. Since its inception, Bitcoin has registered a 100x improvement over gold in terms of being a store of value, leading to significant impacts on the pricing of digital currency. Additionally, experts largely agree that Bitcoin’s value is more than likely to continue appreciating over the next several years. Some have even suggested that Bitcoin’s market cap will successfully surpass the market cap of gold as soon as 2030.
What Are The Experts Saying?
Regarding investing in gold vs. Bitcoin, investors have come out with a wide range of essential considerations that favor both asset types for various reasons. The following is a range of some of the more common arguments that investment industry experts have provided favoring gold over Bitcoin and vice versa. Please consider these factors as you continue to weigh the pros and cons of gold vs. Bitcoin investments.
In terms of favoring gold investments, several experts have come forth to note both its history as a valuable commodity that has persisted for thousands of years and that it has approximately ⅕ the amount of volatility as Bitcoin investments. Gold also does not face the same extreme competition as Bitcoin does, which is yet another noted factor deemed important by investment experts. Investors have also noted the fact that gold is the ultimate central currency of banks, and its physical presence means that it will never truly be replaced by Bitcoin or any other form of digital currency.
This is especially the case since the introduction of new legislation could eventually cause Bitcoin to disappear from the market altogether. While this may seem farfetched to some crypto-enthusiasts, legislation has already managed to ban several bitcoin derivatives. For example, Facebook has attempted to create a cryptocurrency alongside other companies but has been prevented from doing so. No legislation will result in the sudden disappearance of gold, and its longevity is not in question.
While many investors have expressed their preference for gold, several have also noted the significant advantages of Bitcoin investments, including that its market cap may surpass gold by the year 2030. While this appreciation of Bitcoin’s market cap value is technically uncertain, many investors have shown themselves willing to take the risk and firmly believe in its future potential to surpass gold as an investment asset. Other investors have noted their preference for Bitcoin because it possesses a much more comprehensive range of uses than gold, which primarily exists as a way to hold value- though it does possess a range of benefits in the realm of consumer goods.
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Why is Bitcoin higher than gold?
One of the main reasons why Bitcoin is often higher than gold is because of its limited supply. There will only ever be 21 million bitcoin, and that finite supply makes it a more attractive asset for investors. In addition to this, bitcoin can also act as an inflation hedge in times of economic uncertainty.
This means that bitcoin prices tend to rise when markets become volatile and uncertain, which makes it attractive to investors looking for some protection against inflation. Finally, bitcoin has many advantages over gold investments in terms of accessibility and liquidity. It’s much easier to purchase bitcoin compared to gold and there are far fewer restrictions on bitcoin transactions compared to gold trading. Furthermore, bitcoin transactions can take place anywhere in the world instantly
What would Bitcoin be worth if it replaced gold?
It’s impossible to say what bitcoin would be worth if it completely replaced gold as a store of value. The price of bitcoin is determined by supply and demand, so the price could fluctuate depending on market conditions. However, if bitcoin was able to become a widely accepted form of currency and store of value, then its value could potentially skyrocket in comparison to gold.
What coins will surpass Bitcoin?
It’s hard to predict which coins will surpass bitcoin in the future, as cryptocurrency markets are highly unpredictable. However, some of the most promising altcoins include Ethereum, Ripple, Litecoin and Monero. These coins all have unique features that make them attractive investments for those looking to diversify their portfolios.
It’s important to do your own research into each coin before investing in them. Investing gold and crypto can be a great way to diversify your portfolio and capitalize on market movements. As with any investment decision, it’s important to understand the risks involved before getting started. Do your homework and always invest responsibly!
What does Bill Gates think about Bitcoin?
Bill Gates has made mixed comments about bitcoin. In an interview with Bloomberg, he stated that bitcoin was better than currency because it is “more anonymous and more efficient.” However, he also said that bitcoin could be used for illegal activities like money laundering. He went on to say that bitcoin isn’t a great investment due to its high volatility.
Ultimately, his opinion of bitcoin seems to depend on the context and how it’s being used.
What are the risks associated with gold investing?
Gold investments can come with several risks. For example, gold prices can be volatile, so there’s always a risk of losing money if you buy at the wrong time. Gold investments can also be affected by government policies, central banks, and other economic factors. Additionally, gold investments are subject to storage and security risks.
Will gold ever lose its value?
It’s impossible to predict the future, so it’s difficult to say whether gold will ever lose its value. However, gold has been a reliable store of value for centuries and is unlikely to be completely replaced by bitcoin or other cryptocurrencies in the near future.
What is better than gold to invest in?
Ultimately, the best investments are those that suit your individual goals and risk tolerance. However, bitcoin is often seen as an attractive investment for those looking to diversify their portfolios and capitalize on market movements. Other popular investments include stocks, bonds, real estate, and precious metals like silver and palladium.
Can we live without gold?
Yes, it is possible to live without gold. Gold has been used as a means of exchange for centuries but its use has become largely symbolic in modern times. In fact, bitcoin and other cryptocurrencies are rapidly replacing gold as a medium of exchange and store of value.
While some people may view gold as an essential part of their portfolios, it’s not necessary to live a successful life. Many people choose to invest in bitcoin and other cryptocurrencies instead of gold due to their increased liquidity and accessibility.
Bitcoin vs. Gold: Which is Right For You?
In the end, the investments that anyone chooses to include in their portfolio depend on a vast range of personal factors and preferences, including risk and volatility tolerance, your future financial goals, and more. Gold and Bitcoin offer a massive range of benefits to those who choose to include them as assets within their investment portfolio. Several experts within the industry have come forward to explain why each asset is superior to the other.
That said, several other experts have also come forward to explore the vast range of benefits of investing in both gold and Bitcoin. What’s essential for investors to remember about any argument comparing two types of investments is that there is no rule stating that someone can’t invest in both assets at a single time. Gold and Bitcoin have very similar diversification aspects that would be beneficial as part of anyone’s investment portfolio. However, it largely depends on the preferences and tolerance of every individual investor.
If you want to find out even more information regarding the role of cryptocurrency and other valuable commodities and assets within the investment world and what they have the potential to do for your future financial prospects, please consider checking out Unbanked today. They offer a wide range of expertly written articles and other resources to help you further your crypto and investment education so you can make the most out of your financial future.
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