Thousands of years ago people began to use gold to making coins to conduct trade with. However, gold quickly caught the eye of investors, primarily due to its usefulness and the liquidity it provides for trade. Since that time, its value has been increasing against fiat currency. Due to its versatile usage in the industry, gold has stood the test of time while retaining its uniqueness and good reputation as a reliable precious metal to invest in.
Bitcoin, on the other hand, has only been around for less than a decade. It appears on the computer screen as a digital code and is not tangible nor physically present. However, because this is an age of digitization and technology, Bitcoin has enjoyed every privilege of being a trustable investment despite its immaturity and limited applications.
Let’s take a look at some of the matching and contrasting features of both these things and make it easier for you to choose one of them for investing your hard earned money in.
Some Similarities:
Despite the physical and behavioral differences, Bitcoin and gold have some things in common. For example:
- The market value of both these assets is speculative. They change over time and do not depend on any of the external factors. Predicting the future value of gold and Bitcoin is a complicated process.
- Gold and Bitcoin are now considered as safe assets. The time you choose to hold them and investment strategies may differ widely, but they both promise a good return and hence serve the same purpose.
- Gold and Bitcoin can both be bought in fractions - you can buy as many of them as you want. You can mine both of them (though the processes differ widely). You can also exchange Gold and Bitcoin for fiat currency.
Some Contrasting Facts:
Here are some uncommon features of these assets that make a huge difference between their applications.
- You can mold the Gold into any shape and size. It can be used to make gold bricks, ornaments, coins, and even wires. But you can’t do that with Bitcoin. After all, Bitcoin is not a physical asset that you can keep in your pocket.
- Technology has its limits. The maximum amount of Bitcoin that can be mined is 21 million (17 million has already been mined), while the total amount of gold that is still unmined is unpredictable. Being too predictable has its consequences and can damage the market trust of an asset.
- Gold is thought of as a commodity. It has been around as such for almost 3000 years (since 700 BC). Bitcoin is still less than a decade young (started in 2009).
We will have to consider some facts before crafting a conclusion. These are some of them.
Inflation: Which One is More Prone?
Inflation can be a serious problem for any asset’s value. As far as Bitcoin is considered, its supply is kept limited to maintain a balance between supply and demand.
Gold's supply rate, however, has been increasing at 2% yearly for over a century now. But this is not a considerable problem keeping in mind the number of incoming investors. So, we can conclude that Bitcoin is more prone to inflation than gold.
Elemental Value of Gold:
Gold has an important role to play in our social lives. It is immune to erosion and is a chemically stable element. Bitcoin, on the other hand, will have to keep its existing users in the circle while attracting more people from outside to compete Gold it this area. Considering this fact, Bitcoin is at an advantage over Gold in terms of value.
The Final Word:
Both of these assets are dependable and useful to invest in. But the final decision depends on whether you choose technology over convention or not. Here are some reasons you can consider to prefer each one of these over the other.
Bitcoin Over Gold:
- More divisible: You can buy a billionth fraction of Bitcoin. This makes it more distinguishable than Gold which has a minimum value you can buy due physical restraints.
- No middleman: You can buy Bitcoin anywhere in the world if you have access to the internet. But in the case of Gold, you have to buy bullion via a the dealer.
Gold over Bitcoin:
- No hacking, no online frauds: Gold eliminates all the risks of you being phished by some hacker. Which is a possibility when you are looking to buy or trade Bitcoin. Cybercrimes are on a rise these days.
- Easy to learn: You may not need any help learning the Gold trading process. It is very simple and you can start in a short time. While Bitcoin is not everyone's cup of tea. Even well-educated and technologically adept people find it difficult to understand Bitcoin.
These were some facts we arranged to make the comparison clear. After all, the decision is yours to make. Trading is a better financial option overall. It just takes a sharp mind and good strategy to master this art.
