Is gold as attractive as Bitcoin?

Highlights 

  • Gold prices have appreciated significantly in the past 20 years and increased the wealth of investors.
  • Bitcoin is relatively a nascent asset that is touted to draw investments from traditional assets such as gold.
  • Investment in Bitcoin could be a risky option relative to gold because of its volatile nature.

Gold, Bitcoin, Investment

Source: Copyright © 2021 Kalkine Media

The euphoria of cryptocurrencies has dimmed the appeal of gold which is traditionally considered as an important asset class for investment. The gold price has grown significantly in the past 20 years and increased the wealth of investors, especially during economic turmoil.

Is Gold as attractive as Bitcoin?

The recent COVID-19 pandemic has taught investors a lot of lessons about savings and investments. The ones who made proper planning and took wise decisions about their investments were least affected by the economic crisis during the pandemic led lockdowns.

Must Watch: How Good is Gold as an Inflation Hedge Asset ?

People have directed their money towards the safe-haven investment during the pandemic when other asset classes were considered risky due to recession.

Why is gold everyone’s favorite

Gold has maintained its legacy of being one of the best safe-haven investments to date. The yellow metal is prominently used in jewelry and is not present in abundant quantity. The supply of gold is limited regardless of its demand since it can’t be created in laboratories or by any blockchain technology, like cryptocurrencies. To increase the supply of gold, extraction from the earth's subsurface is the only choice.

Gold, Bitcoin, Investment

Gold Investment | Source: © Rfischia | Megapixl.com

Similar to the gold, the makers of Bitcoin challenge that the digital currency can't be created. However, gold followers believe that it’s a machine-made thing and somehow it can be created.

Is Gold as attractive as Bitcoin?

Cryptocurrencies like Bitcoin have created a lot of buzz in the past few years and a major section of investors have jumped into the bandwagon. Interestingly, cryptocurrency has gained wide applicability as a store-of-value investment and a hedge against currency devaluation.

Related Article: A Guide to Gold Financial Investments

On the other hand, gold has a wider audience and has been a flag bearer of safe and reliable investment idea for thousands of years. Its unmatched accessibility to the people of all economic classes has made gold one of the most prominent investment options.

Gold vs Bitcoin

Though Bitcoin has delivered a terrific performance and recorded more than 100x gains relative to the performance of gold. However, as a store of value based on trust, transparency, and volatility gold ranks above Bitcoin.

Gold, Bitcoin, Investment

Source: Copyright © 2021 Kalkine Media

Investment in Bitcoin could be a risky option because of its volatile nature while gold has an extensive history of being less volatile.

However, Bitcoin rewarded its investors tremendously with its market cap hitting more than US$1 trillion in early 2021. However, the crypto market crashed in mid-2021, offsetting most of the gains. Later the market stabilized and managed to claw back some of the losses. Gold is currently trading at around US$ 11 trillion market cap, so there is a major gap between the two asset classes. However, the news around cryptocurrencies has been encouraging, for example a sovereign country- El Salvador has recognized  BTC as a legal tender. This move has come as a big shot in the arm for the BTC buffs.

Related Article: When will Bitcoin crash again? Here what experts claim

Considering the above significant points investors could make a wise decision related to their investments in gold or Bitcoins. It is no secret that the younger generation has being fascinated by the choices that cryptocurrencies’ offer, thus the lure of old school investment – gold seems to be decreasing.

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