Gold and Bitcoin: Why Bitcoin is Better

By  //  July 6, 2020

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In this article, we will not explain how to get rich in a couple of months, and not why we do not want it, but why it would be unwise to invest in the cryptocurrency market with that premise.

In this article, we will not explain how to get rich in a couple of months, and not why we do not want it, but why it would be unwise to invest in the cryptocurrency market with that premise.

You have to understand that those who made fortunes were people who invested money when the perceived risk was high, few people knew bitcoin, it was associated with terrorism and arms trafficking, the future of these coins.

It is very easy to think that it should have been invested, but those who decided at that time were not so clear, and in many cases, the motivations were more sociocultural than non-economic. 

Not mention falls practically 90% that had to endure unsold to achieve the returns amaze us. Gold is one of the oldest known investment commodities.

Knowing the comparison between gold and cryptocurrency is the first step to find out the appropriateness of bitcoin and another cryptocurrency as an investment commodity. In this article, we will focus on bitcoin and not other cryptocurrencies.

Gold and Bitcoin could not be more opposite. One is physical, very heavy, and in a liquid state can harm anyone. Bitcoin instead is virtual, generated by computers, which only exists in digital format, in ones and zeros. Gold shines and is very attractive; Bitcoin must be imagined; it represents something virtual.

Beyond their profound differences, many investors worldwide retain part of their wealth in gold. They are open to considering other options that could potentially replace it, such as digital currencies. 

But there are not a few who are convinced that Bitcoin is, or has a chance to be, “gold 2.0”, or the digital version of gold metal.

Gold has been used as a store of value for over 2000 years, and its total market value is currently $ 8 trillion. Bitcoin was instead invented only 10 years ago and is worth 90 times less than the metal.

Each Bitcoin must be worth 450,000 dollars, so multiplying by the 18 million that will be in existence in a few years (the 21 million total Bitcoins that will exist will be finished in the year 2140) to equal the current total market value of gold. 

Of the $ 8 trillion total value of gold in stock, an estimated 25% is earmarked for investment, also called a store of value. 50% is given industrial use, either for jewelry or electronics (it is a great conductor of electricity).

Every year, the offer expands by 1 or 2%, given that the main reserves of this metal are more difficult to continue digging, making it more expensive to mine, limiting the offer.

Gold is already a mature financial asset, with fairly stable and predictable fluctuations in value. Instead, Bitcoin is pure potential, which includes a large share of risk, which makes it extremely volatile for years to come. This volatility allows us to imagine very attractive financial returns.

Investing in gold is now very easy for purely financial investors. You can buy derivatives and financial products like futures and ETFs, for example, which naturally channels additional demand.

For those who want to buy/invest in Bitcoin, it is still complex, difficult to understand the operation, and its financial derivatives are still very incipient or non-existent.

In the 2000 years that gold has a store of value, history has shown that in situations of high economic instability, such as major recessions, world wars, or severe crises of some important national currency, it serves as a haven of value. 

On the other hand, Bitcoin, in its only 10 years of existence and although it has not yet been proven to be a store of value, sends positive signals.

For example, it grew in the collapse of fiat money in Zimbabwe, in Venezuela, and – to a lesser extent – inflation and devaluation in Argentina. In all these cases, the number of followers and transactions emerged strongly. 

Bitcoin has yet to demonstrate a concrete trend, and the fact that it is uncorrelated with other financial assets makes it even more attractive to any investor’s portfolio.

It also triggers the creation of tools for cryptocurrency trading and investing, such as the Bitcoin revolution. Click https://learnbonds.com/bitcoin-revolution to get more information.

Even though at the beginning of the brutal financial fall of 2008, gold accompanied the drop, it ended the positive year. And in the following three years, it doubled in value.

Metal is generally used to diversify from global economic risk and to seek refuge in, especially chaotic and volatile times.

Bitcoin has yet to demonstrate a concrete trend, and the fact that it is uncorrelated with other financial assets makes it even more attractive to any investor’s portfolio.

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