Bitcoin vs. Gold: Which is a Better Long-Term Investment Opportunity

  • George Shnurenko
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    Do you want to touch and admire your assets? The choice is yours.


Bitcoin vs. Gold: Which is a Better Long-Term Investment Opportunity

In 700 BC, the Lydian merchants saw how gold could be used to make coins. This brought about heavy investment in gold and its value soared. To date, gold remains one of the most valued substances and it has enjoyed widespread adoption due to its aesthetics and other features.

Bitcoin, on the other hand, is one asset which is not tangible. It cannot be held or seen physically and it only appears on a computer screen. Even though it has only been around for less than a decade, Bitcoin has enjoyed a significant amount of exposure and acceptance.

Similarities between Bitcoin and gold

  1. Bitcoin and gold are both safe assets. Although the period of use differs widely, they both serve the same purpose.

  2. Also, they are both speculative. The value of Bitcoin and gold are not determined by external factors like the earnings or the interest to be paid. The values are very complicated to compute.

  3. They are both very similar in terms of value exchange. You can get different grades of gold, you can get different measurements of gold, and you can also exchange gold for an actual currency. All these can also be done with Bitcoin.

Bitcoin vs. Gold

The fundamental difference is that Bitcoin is digital while gold is physical. Gold is a metal which can be gauged and admired while this does not apply to Bitcoin.

There’s a limit to the amount of Bitcoin which can be in circulation. This figure is capped at 21 mln, although we have mined almost 17 mln at present. For gold, we cannot ascertain how much of this metal is still available. In fact, researchers are working on a way to mine metals from space. This means that gold will still be created for years to come.

The tenure of both assets can also be factored in. Gold has been available for over 3,000 years, Bitcoin was first mined in 2009.

Finally, gold is widely accepted as a commodity. Bitcoin, on the other hand, eludes description.

We can only have a more objective approach to this comparison if we consider some important factors. These factors are discussed below.

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Gold or Bitcoin- which currency is prone to inflation?

The supply level of Bitcoin is kept steady and immutable. The implication of this is that there’s no possibility of any inflation which might arise as a result of overproduction of Bitcoin. This is, however, one problem with gold, albeit not prominent.

Gold’s supply rate has increased by about two percent yearly for 100 years now. Although this is not enough increase to cause worry, it cannot be compared to Bitcoin. Asking the question whether to invest in Bitcoin or gold, Bitcoin’s infrastructure makes it prone to inflation as a result of excessive supply.

How long has Bitcoin and gold been in circulation?

Gold has been around for several years and this gives it the advantage of trust and reliability. Many people are of the opinion that any new tech innovation might easily displace Bitcoin as the ultimate cryptocurrency. There are also fears concerning the regulation of the government. Bitcoin is not regulated and if something isn’t done soon, it might be ruled against.

Gold has been around for at least three millennia. Bitcoin has not celebrated its 10th birthday. Who will you be more willing to trust? Also, gold has lasted through the thick and thin. Also, it is important to note that gold is not internet-controlled and cannot just be shut down by the government.

The elemental value of gold

Gold is an element that is immune to any form of tech disruption. It is an ingrained part of our societal values and cannot be eroded easily. In the comparison of Bitcoin and gold, Bitcoin has an advantage in this area. If Bitcoin is able to attract new users and ensure that the existing users are satisfied with the service, this might prove beneficial.

Are gold and Bitcoin complementary?

The question so far has been Bitcoin vs. gold, however, readjusting our lens to focus on Bitcoin and gold might just help our case. Can they both work together? Is Bitcoin out to unseat gold as the universal means of storing of value? A better question might even be to ask if Bitcoin is able to replace gold.

Consider the fact that we are shifting to a digital age where the Internet is a primary means of carrying out daily operations. There are serious issues to address before you consider investing in gold.

The points are well presented, evidence, both compelling and dismissible, has been considered, we can only propose some reasons to choose one over the other.

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Reasons to choose Bitcoin over gold

1. Bitcoin eliminates middlemen

With gold, you have to consult with dealers who probably consulted with dealers who also traded with dealers. This increases the price and makes you pay for what is not seemingly fair. However, with Bitcoin, there’s no human involved. Just smart contracts and automated operations.

2. Bitcoin is divisible

You can get a billionth of a Bitcoin just for the sake of purchasing Bitcoin. Can you get a hundredth of an ounce of gold? Maybe. Is the stress of getting this value worth it? Definitely not!

Reasons to choose gold over Bitcoin

1. Gold is easier to understand

Bitcoin is a concept which is not easily accessible to all. Even learned folks might still need to pick up books, settle down and seek professional help. With gold, you can start investing in days.

2. There’s no Internet fraud with gold

Phishing and cybercrime are prevalent issues with cryptocurrencies which are not experienced with good old gold.

Conclusion

Ultimately, it depends on you to make whichever decision you want to. Are you able to take risks? Do you want a more secure investment? Are you willing to diversify? Do you want to touch and admire your assets? The choice is yours.

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