Investors hold a large portion of their wealth in assets. Usually, these assets are precious metals like Gold, but recently, Bitcoin has become one of the assets that investors are utilizing to hold their portfolio. Bitcoin can be invested in from many websites like Bitcoin Code. However, many discussions have resulted in the opinion that Gold is better than Bitcoin in holding value. Here’s why.
Bitcoin was launched in 2009, and with its launch, a new phase in finance and investing ushered in. This decentralized technology was only attractive to some of its niche enthusiasts at the start of Bitcoin. Still, in the year 2010, investors who had initially purchased Bitcoins for fractions of a cent suddenly had grown to $0.09 per Bitcoin.
As the years went by, Bitcoin mining became popular on a large-scale and then emerged the Cryptocurrency exchanges. When the Covid-19 pandemic hit, all stock prices fell except for Bitcoin. This led the investors and speculators to start investing a lot of money. Institutional investors discovered ways to build instruments for investment and funds from it. With this, Bitcoin’s value rose spectacularly, and on April 21, it rose to $61,000 per Bitcoin.
Even if we trace back to history, Gold has always held its own during market recessions. This is because it holds its value. Gold’s price is known to stay somewhat steady, and when there is a market recession, its prices tend to rise as investors are shifting their investments from Stocks to Gold. This is why Gold is instrumental as a hedge against recessions in the market. Hedge refers to an asset that moves in a direction opposite to another, which is what Gold does against market recessions.
Even though many investors turned towards Bitcoin in the Covid-19 pandemic, many continued following the traditional strategy they followed in such recessions and shifted their funds to Gold. This transition led to a rise in the price of Gold from $1,300 in 2019 to almost $2,100 in 2020. The cost of Gold dropped slightly as the economy recovered, but it still held its prices higher than the recession levels before the pandemic.
Difference Between Bitcoin and Gold
The key differences between Bitcoin and Gold to understand which one is better than the other is divided into several aspects.
Gold has a pre-established system for its weighing, trading, and tracking. It is also tough to steal Gold or to fake it. There are regulations in several countries that do not allow travellers to cross their border while carrying Gold without permission. Gold can most commonly only be purchased from registered dealers and brokers. Gold should only be bought when it can safely be stored. Bitcoin is hard to steal and fake because of its decentralized technology. Bitcoin’s anonymity also makes it challenging to regulate.
The Bottom Line
Gold is also very easily liquefiable compared to Bitcoin. It can quickly be moved in or out. This can also be done without losing much value. Bitcoin is also a very volatile asset, and its volatility makes Gold a better option.
These are all the reasons that Gold is a better option than Bitcoin for investment or storing value.