By Overview
Bitcoin is referred to as digital gold and is a speculative investment for those looking to profit in the short term. On the other hand, gold has been considered a safe asset for investing a long time as it is established and secure. Bitcoin is a digital currency, and gold is a physical asset. Even though gold does not have any restrictive supply, Bitcoin has only 21 million coins that can be mined. The largest cryptocurrency by market cap is the only asset that is often compared with gold. Recently, its price has skyrocketed because of the recent volatility that has made several investors millionaires.
Bitcoin Vs. Gold: Comparison
For several years gold has dominated the market, and it is considered highly safe; While Bitcoin was launched only a decade ago and has achieved recognition digitally. Here are a few pointers of comparison between Bitcoin and Gold.
- Limited Resource
Both Bitcoin and Gold are scarce assets. Bitcoin’s supply is limited to 21 million, and it should be in circulation before the year 2140. On the other hand, nobody knows how much gold can be mined from the earth, making it more valuable.
- Usage
Gold has been used in several applications, from jewelry to luxury items, specialized equipment in electronics, and dentistry. Bitcoin uses blockchain technology with value, and the transactions carried out on it are anonymous and irreversible. It is used as a form of payment and can be transferred globally without any fee.
- Volatility
One of the significant concerns regarding Bitcoin is, it is prone to volatility. The volatility has proved itself, and it reached a record high price in 2017. While this volatility does not affect gold, it is a safe asset even when the economy faces tough times.
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Bitcoin Vs. Gold: Pros and Cons
- Selling
Since gold is a physical asset, it needs more work than exchanging or selling. If the user needs to buy gold, they need to pay for service fees, shipping charges; Bitcoin can be transferred instantly through online exchanges, where a small amount is charged as a fee for transactions by Bitcoin exchanges.
- Storing
As Bitcoin is entirely digital, it allows the user to store the coins in a wallet, and it does not require any physical space. However, gold should be kept in a secure location and may take a lot of room for storing.
- Limited supply
Even though both Gold and Bitcoin’s supply is limited, there is still a rough estimate of gold of about 1,90,040 tons available, which is more than 21 million Bitcoins. Given that gold is a rare asset, Bitcoin is considered much rarer and has made people millionaires who had adopted it earlier.
- Store of Value
Gold has been considered as a store of value for several thousands of years. The value of gold had continued to remain high even when the government had attempted to outlaw it. Throughout civilization, gold has been regarded as a valuable asset, while few people believe that since Bitcoin is virtual, it is difficult to determine the store of value.
- Volatility
With high volatility and risk, a trader can expect heavier price swings. This makes Bitcoin a less stable and speculative asset than a reliable store of currency. Crypto enthusiasts are hoping that Bitcoin might become more stable and the adoption rate might increase in the future. Even though gold is volatile, it may not have experienced the same volatility, just like Bitcoin.
- Security
The Bitcoin system is secured by Cryptography and blockchain technology where the transactions are encrypted, and the personal information is not shown. The blocks make sure that it is impossible to hack Bitcoin, ensuring the bitcoin is unique. To keep Gold secure, the user needs to find a safe location for storing it, which can be extremely expensive and inconvenient.
FAQs
- Will Bitcoin Be Worth More Than Gold?
Currently, Bitcoin’s record high price has become more than its weight in gold. The cost of Bitcoin has skyrocketed in the past few months and has become more expensive when compared to 1 kg of gold.
- Is It Better to Invest in Gold or Bitcoin?
If the user is considering gold for investing, it is regarded as a stable option, and there are guaranteed returns in the long run. Bitcoin is perceived as a good option for short-term investment and potential gains. Considering the volatility, the user can expect possible loss anytime.
Conclusion
Both Gold and Bitcoin can neither be printed nor inflated, and neither is related. They are often compared with one another and share a few similarities. Bitcoin is referred to as Digital Gold but still has a long way to go. Moreover, people are still having doubts that bitcoin might replace gold. Yet, Bitcoin’s blockchain technology has a good potential for Bitcoin to be accepted as a global currency in the future.
