Since time immemorial, gold has been the best medium of exchange. Many kings and dynasties have won wars just with the power of gold. But, in the current scenario, most people are comparing bitcoin with gold.
No doubt, gold is one of the most valued assets on the earth, but its comparison with bitcoin is gaining prominence. The value and the price of gold have risen over the last few years. But, bitcoin has also seen a meteoric rise. It has surpassed all records since its investigation. As a result, most investors are now comparing gold to another cryptocurrency. But, the comparison is more valid in the case of bitcoin.
We know that gold was a haven asset when we look at history. Even in the case of substantial financial recessions like that of 1929 and 2008, it has been used as a hedge. Bitcoin has also been used to hedge against volatility in the stock market. Most people consider bitcoin digital gold. If you are still not sure why bitcoin is compared to gold, this article can be of great help.
Both assets, gold and bitcoin, have similar characteristics that make them beneficial compared to fiat money. A significant part is that none of these assets can dilute. In addition to this, they are also a fantastic investment opportunity when you aim to diversify your investment portfolio.
Currently, we all know that bitcoin is not a safe-haven investment. But we can’t be sure that bitcoin won’t be a safe investment in future. This is because the value of bitcoin will increase over the years, and it won’t be affected by economic turbulence due to its uncorrelated nature.
As per a study by experts, most investors feel that digital assets should have an essential part of your portfolio. In addition, most people also feel that digital assets are appealing. Thus, you can say that digital assets have a positive review.
Coming to the point of gold, most important establishments like banks and government organizations invest a part of their assets in gold. Most central banks keep a proportion of their assets in gold to fight off volatility. But, if we look at the other side, bitcoin is taking steps towards widespread adoption. Banks worldwide have realized that customers are now investing their money in different cryptos. Thus, many large banks like Morgan Stanley are now offering different bitcoin funds to combat this situation.
Currently, you might think that bitcoin and gold are pretty different. But, both these assets have lots of commonalities. Some of the commonalities include:
Rarity
Gold, as well as bitcoin, is quite scarce. It means that, unlike fiat currencies, you can’t print gold or bitcoin in case of scarcity. As per predictions, by 2140, 21 million bitcoins will be in circulation.
Transparency feature
Gold offers one of the best systems of trading. In terms of weighing and tracking, it offers a great option. In addition to this, it is difficult to counterfeit or corrupt metal. The same goes for bitcoin. Because of the encryption and decentralized system of bitcoin, it is one of the most secure modes of investment.
Liquidity
No doubt both these assets are volatile, but they are also liquid. Thus, you can easily exchange bitcoin and gold for fiat money.
The baseline
Gold offers multiple applications. Thus, you can use it as a luxury item and, in dentistry, electronics. The same baseline application goes for bitcoin. Billions of people globally can use bitcoin in the absence of banking infrastructure.
Bottom line: Which is a better investment?
Most people want to know whether bitcoin is the new investment rush. The answer to this question is not as straightforward as it seems. While gold is also used as jewellery, you can’t use bitcoin for the same purpose. No doubt, both these assets offer promising investment avenues, but both are pretty distinct. Gold has not performed as expected in the last few years, while bitcoin has outshined. Cryptocurrencies like bitcoin are offering annual returns of close to 230%. Therefore, it is vital to have all these significant factors in mind before moving towards the investment. You can also try the Auto-trading Robot app to get more details.
