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Gold is undoubtedly one of the best precious metals in which to invest. It is easy to buy and easier to sell, has excellent price stability, and has a proven inflation hedge. However, with the arrival of cryptocurrencies, investors can’t help but ask: is bitcoin is the new gold?
The number one cryptocurrency in the world continues to move ahead, breaking trends and expectations. While we can’t know for sure whether bitcoin will continue to increase in value, we do know that cryptocurrencies are here to stay. As an investor, it is essential to learn more about bitcoin and what sets it apart.
Gold: A Safe-Haven Asset
You don’t need to be an experienced investor to know that gold has been around for decades and remains the go-to precious metal for diversifying your portfolio and protecting your assets. In addition, people value gold because it offers a source of security that has been tested over time. Bitcoin wasn’t around during major economic or financial crises such as the Great Depression from 1929-1939 or the financial crisis of 2007-2008.
Investors see gold as a well-regarded asset. Central banks, pension funds, and governmental institutions use it due to its steady value and performance in critical times. Others think of gold as insurance for their hard-earned money, and since we live at a time with a lot of market volatility, it makes sense to allocate a portion of your portfolio in gold.
Experts say if you are interested in investing in a safe-haven asset, look no further than gold. The most popular precious metal plays an essential role in the balance of your investment portfolio. It acts as a capital preserver and a diversifier, both benefits that can result in high returns over time.
Bitcoin: The Digital Gold
Bitcoin is the first and largest cryptocurrency. One of the key features of the top crypto is that it has a fixed supply, meaning there will only be 21 million bitcoins to buy and sell. Similar to precious metals, such as gold, bitcoin derives its value from the limited supply and high consumer demand.
The price of bitcoin goes through extreme changes. Over the past few years, we have seen bitcoin’s prices fall from highs of $60,000 to lows of $32,000, another sign that we can expect anything to happen at any time.
Another problem is that bitcoin hasn’t been widely accepted. That keeps investors wondering about the future of this digital currency and whether it is a smart move to allocate the assets to crypto instead of gold.
Bitcoin vs. Gold: What’s a Better Option for Your Portfolio?
Before we make statements like “bitcoin is the new gold,” it is essential to have all facts to make well-informed decisions regarding your financial future. As inflation looms, central banks around the world are having a debate over their currencies and investment strategies.
Both beginner investors and those with more experience know what inflation means. We also have to consider the inflation hedging strategies, which comes down to bitcoin vs. gold. Here are some of the main differences you should know.
Gold has been a reliable source of value for decades, whereas bitcoin is a relatively new currency. However, despite all trials, ups, and downs, bitcoin is still standing, giving us hints that it is here to stay. The longer bitcoin stays on the market, the more people will trust it.
As a commodity, gold has high inherent value as there is an increased demand for it in several industries, including electronics, jewelry, medicine, and more. Bitcoin, on the other hand, doesn’t have an inherent value.
Some investors think that having no inherent value can be a positive characteristic. Since it has no other uses, it isn’t subject to supply chain collapses. It all depends on how you view these aspects and what your financial goals are.
Having an unlimited supply doesn’t make a currency or a precious metal a good store of value. Throughout history, gold has always been deficient, but it also has seen increases in its supply.
Bitcoin, on the other hand, is limited to 21 million.
Gold has been around for centuries, proving its worth in many ways, especially during economic and financial crises when other precious metals and currencies dropped in value. Even in the most difficult times, gold remained a precious metal of value and a significant asset for investors.
In terms of durability, it is still early to comment on bitcoin. There are differing opinions — some claim that bitcoin shows signs of economic resistance and durability, and others believe the network is still unstable and regulatory actions might disable it.
For a currency or precious metal to be convertible, it must have a replacement. For example, you can exchange a gold bar for another gold bar. The process is easy and simple.
Despite having the exact same value, you can’t convert bitcoins that easily. The biggest problem is that some governmental institutions link bitcoin to illicit trading. Due to these disagreements, some merchants don’t accept bitcoin as a payment method.
Gold retains its value and is accountable. The Bitcoin network needs to achieve convertibility in a similar way.
When it comes to transportation and logistics, bitcoin is the apparent winner. Moving gold coins or bars from one place to another is time-consuming and risky. Bitcoin, on the other hand, can process transactions in just a few minutes.
It doesn’t mean that it is impossible to move your gold bars from your home to a depository; it’s just that the process requires lengthy organization and planning to ensure safety.
You can easily verify gold’s authenticity. While there are tools that prove its authenticity, you can also test gold at home.
All you need to do is place the gold coin or jewelry in water. Due to its high density, genuine gold will sink to the bottom. If it is fake or plated, the gold piece will float.
Bitcoin’s authenticity is a bit more difficult to understand. Experts verify bitcoins by mathematical formulas and cryptographic signatures, which is challenging to do at home, especially if you don’t know how this decentralized network works.
Gold Investment Benefits
Gold is a luxury good and an excellent investment opportunity. It can play a crucial role in building a strong portfolio. Here are some of the main reasons why investors decide to invest in this precious metal:
- It is a good way to increase your fortune and save money for the future.
- It doesn’t require much maintenance (you can keep gold in a safe depository for years.)
- Gold has excellent price stability.
- You can pass it to the next generation.
- It is easy to get a loan against gold.
- It is the best supplement to real estate investment.
- Gold is a secure investment when compared to other precious metals.
- It doesn’t deteriorate with time.
Bitcoin Investment Benefits
Some agree that bitcoin is the new gold, but others still doubt the cryptocurrency network. Despite the disagreements, many people decide to invest in the number-one cryptocurrency for the following reasons:
- User anonymity and transparency
- Independence from the central bank
- High return potential
- Protection from payment fraud
- International transactions
- Immediate settlement
Should You Invest in Bitcoin or Gold?
As new cryptocurrencies appear and move toward a cashless era, it is reasonable to wonder whether investing in new asset classes is worth it. While bitcoin has many investment benefits, it also is highly volatile, has no government regulations, is irreversible, and has limited use.
If you wonder which asset to choose — bitcoin or gold — you have to ask yourself what your financial goals are. Some say that bitcoin is the strongest money form ever created, while others believe it is risk-prone and not everyone can understand its technology.
For those who are looking for wealth preservation and safety, gold is the obvious choice. People who aren’t afraid to experiment can expand their portfolio by investing in both gold and bitcoin.
Contact Oxford Gold Group
Oxford Gold Group is the industry leader in precious metals and specializes in converting your 401(k) or IRA into gold and other precious metals. Our goal is to give clients comprehensive information so they can make an informed decision regarding their investments and financial future.
We are here to answer all of your questions and address your concerns, including if Bitcoin is the new gold and if you should add it to your portfolio. We stand behind our clients every step of the way and work to help them reach the financial freedom they envision for themselves.
Whether you want to invest in precious metals for the first time or are an experienced investor who wants more options to expand your portfolio, our qualified team is here to help. Contact us today at (833) 600 – GOLD to schedule a consultation and learn more about our services.