While gold is a tangible object of value, many people like the idea of digital currency, also known as cryptocurrency. Cryptocurrency is a digital or virtual money system, usually in the form of virtual tokens or coins, that exists outside of any national government currency system and that people utilize in international transactions. Common cryptocurrencies today are Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH), to name a few.
Under a pseudonymous name, Satoshi Nakamoto created bitcoin in 2009 after the 2008 recession. His goal was to construct a cash system that removed third parties and a single authority from taking control of monetary transfers. Not dependent upon (or backed by) banks or a national government, cryptocurrencies are a blockchain technology. Blockchain is a decentralized public ledger technology, not under the control of one single authority, that holds transactional records.
Many online retailers that accept credit cards and PayPal now also accept bitcoin as a form of payment. However, it took about a year for bitcoin to have value and begin to become accepted, although it’s still not widely adopted. In 2010, 4 bitcoins equaled 1 penny in U.S. Dollars. By 2017, bitcoin’s value had increased to $10,000 USD. Now, it is worth $48,000 USD.
Even though these numbers seem positive, and bitcoin may be a smart investment, think again. Its roller coaster ride has had a choppy, unstable trading history. It was off to a rocky start in the beginning, and from 2013 to 2017, its value flatlined. By 2018, it had skyrocketed, but halfway through 2018, it declined once again. Investing in bitcoin could be a very risky move. Who knows what its value will be in six months?
Bitcoin is only a valid payment if both parties agree to use it in a transaction. No government recognizes it as a legal tender. The Internal Revenue Service (IRS) considers bitcoin and other cryptocurrencies as property, just like a stock investment.
Unlike paper bills, precious metals, and other currency assets, bitcoin only exists in computer data. Since it falls outside the realm of a government or a larger power, it’s not official. That doesn’t mean it’s illegal to use, but it’s not authorized, either.
Bitcoin’s value is not stable, so risks come with it, as with any investment. Since you may only use bitcoin as a form of payment if both parties in the transaction agree to it, then its only value is negotiable—that is, what the parties agree upon what they’re selling and buying.
If you consider investing in bitcoin, think about this: “Investing” in bitcoin is merely translating your money into bitcoin at an arbitrarily-set rate. If it crashes, you lose your whole “investment.” Remember the proverb, “It’s better to be safe than sorry.”
The animals bull and bear are symbols in the stock market to reference the condition of the economy. In a bull market, the economy is on the rise, and everything looks promising. In a bear market, the economy is receding, leaving many stocks and companies to deteriorate and lose their value.
No one saw the pandemic approaching 2020. Because of COVID-19, the United States entered a bear market after spending a decade in a bull market. With an unpredictable future ahead of us, 2021 may possibly continue the path of a bear market while trying to recover from 2020. With that said, now may not be the wisest time to invest in a cryptocurrency such as bitcoin.
If we venture back to the dawn of historical records, gold was a precious metal for creating idols of worship in ancient empires. Gold and silver were both common metals for currencies, such as Persian coins and shekels. The Incas referred to gold as the “tears of the Sun” because of its striking color. Precious metals have existed since the beginning, but their values have fluctuated over time.
Gold as an asset of wealth never went away. In fact, in the early 19th century, gold was worth around $20 per ounce. That rate held steady for a century, but it increased to $30-40 per ounce in the 1940s and 1950s. It wasn’t until the early 1970s that gold’s value jumped to $100 and continued to increase from there.
The economy saw a decline in gold’s value in the early 2000s, but it started to climb again—and since we’ve been in the bull market for the last 11 years, the value of gold has increased. Today, one ounce of gold is worth $1,800 USD, and many investors predict that the price of gold will increase to $2,300 per ounce in 2021.
While we remain in a bear market and somewhat of an unpredictable economy because of the COVID-19 pandemic, experts are uncertain where the value of gold will end up. We know for certain that gold is still a better investment than cryptocurrencies such as bitcoin.
Gold is not a fad or an imaginatively constructed currency—this valuable metal has been the basis of currencies throughout the generations and across the world. While a cool idea, bitcoin may not be worth the risk of your investment.
Gold has always been a “safe-haven asset.” Historians have documented it as being consistently valuable, with much less of an erratic pattern than bitcoin has recently demonstrated. In other words, you will incur much less risk when it comes to investing in gold.
In today’s era, we need the least amount of risk we can get our hands-on. Our country has seen its fair share of economic strife and struggles recently. It’s smart to invest in something that will gain you profit. After all, that’s the whole point of investing.
Bitcoin is a rookie in the currency world. Like the new kid in town, bitcoin makes its presence known to the surrounding community. However, gold is already long-settled and well-established. Gold has a deeper, more trusting relationship with people that is evident through hundreds of generations.
Besides, gold is a physical object. Bitcoin is virtual—you can never see or hold it. With gold, you can still diversify your portfolio. Whether in bullion, coins, bars, jewelry, or ETFs, you have many options.
Our world has seen many technological inventions, but not all of them improve our lives. For example, some may argue that smartphones have not been an improvement—perhaps they’ve been a hindrance for our development due to programs such as autocorrect, or maybe they’ve hurt our ability to engage with each other face-to-face.
Bitcoin isn’t necessarily an improvement, either. Genius Satoshi Nakamoto created bitcoin and blockchain technology, which some people use as a form of payment in some places. But that doesn’t mean it’s something in which we should necessarily invest a lot of our hard-earned wealth.
Don’t waste time investing in a virtual currency that you can’t even see or hold. Wouldn’t you much rather trust a precious metal that has been valuable for millennia and is still valuable in the economy today? Here at Oxford Gold Group, we have your best interests at heart.
Protect your retirement savings and thrive financially when you invest in gold at Oxford Gold Group. Learn how we’ve helped thousands of people boost their IRAs, 401Ks, and other retirement accounts by reading our customer reviews.
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INSIDE THIS INVESTMENT GUIDE YOU WILL LEARN:
• How Gold & Silver can protect your savings & retirement accounts
• Types of Gold & Silver products available for Home Delivery
• How a Gold & Silver IRA can protect your Retirement account