If you’re searching for information on gold vs. bitcoin, you have come to the right place. Both these assets are on the radar of investors. While gold has been a valuable asset for thousands of years, bitcoin is just a decade old and has quickly become one of the more popular investment options. This article will compare these two assets to help you choose the right one for your portfolio.
One of the most important things you need to remember is that gold has been there for thousands of years. It is widely accepted as a valuable currency all over the world. It’s not easy to steal or corrupt gold. On the other hand, bitcoin is also difficult to fake as it has an encrypted system. However, you cannot say the same thing about its safety as there have been several examples where criminals have stolen bitcoin through various means. Also, the legal framework isn’t really established for bitcoin theft or other issues with this asset. Due to the very nature of bitcoin, it’s challenging to track the stolen bitcoin, and this is why gold has the upper hand over bitcoin when it comes to transparency and safety.
As well as the rarity is concerned, both these asset classes are rare. There is a limited supply of gold available in the market. On the other hand, bitcoin is also available only in limited quantities. A total of only 21 million bitcoin are going to be available ever, and the last bitcoin is not expected to be mined before the 22nd century. As far as the uses of both these assets are concerned, some part of the annual supply of gold is used in various industrial applications. The electronics you see all around you use some gold in multiple forms.
On the other hand, bitcoin is just a token of value and doesn’t have other uses. While the underlying blockchain technology has shown the potential to be used in various areas, bitcoin itself doesn’t have any other use. The most significant advantage of bitcoin over gold is that the transaction fees are almost non-existent as compared to gold. In terms of liquidity, both bitcoin and gold are highly liquid though bitcoin has a lot of restrictions in certain jurisdictions. This is because bitcoin is challenging to track, and there are concerns regarding the payments made with this cryptocurrency. Bitcoin has also gained a lot of notoriety as hackers usually ask for payment in bitcoin.
One of the most important factors that matter for investors is the volatility in the prices of assets. Gold is not volatile when you consider its value over the long term. However, bitcoin is highly volatile. You can never be sure what bitcoin is going to be valued at in the next few weeks. Its value can go high in a few weeks, but it can also fall quickly in the next few weeks. In short, there is high volatility when it comes to bitcoin, but gold has shown no such volatility. In fact, it would be correct to say that gold has gone up in value over the long term. This is because there is a limited supply of gold and no new supply is likely to come. Also, bitcoin might be concentrated in the hands of a few, which makes it not as safe as gold.
Overall, both bitcoin and gold are valuable assets, but bitcoin is far more volatile than gold. If you have a high-risk appetite, you might want to include bitcoin in your portfolio, but be prepared for high volatility. On the other hand, gold is always likely to be stable, and it’s always going to increase in value even though it might not provide as high returns as some of the other riskier assets.