Bitcoin was introduced no more than a decade ago, while gold has been in the investment field as far as human history goes. Despite being an ancient go-to commodity gold has been left behind by bitcoin in many aspects. Bitcoin took a boost once again, right with the start of 2021, by hitting a new all-time high of $34,000. Therefore, bitcoin is most likely to outperform gold in investment portfolios throughout the year 2021.
Bitcoin and gold are seen as sources of investment along with safety from economic and political turmoil. These commodities act as safe havens especially when it comes to unbridled expansion and devaluation of major currencies, for example, the US dollar.
There is no doubt that both Bitcoin and gold will continue to be used for preserving portions of wealth by the investors. But, Bitcoin tends to offer a few more benefits than Gold. These inherent advantages are the reason why Bitcoin succeeded in outperforming Gold.
The question arises, from whom does this investment demand comes? Traditionally the demand usually comes from investors who require a unique asset with the following qualities:
- Whose supply is limited.
- Which can be easily bought and sold.
- Which is accepted worldwide (universal).
- Which is a stable source of storing wealth, even when there are threats from economic and political turmoil.
It is a fact that both Bitcoin and Gold fulfill all the requirements mentioned above, and there is no doubt that investors will keep buying both the commodities in order to protect their portfolio and diversification. But once again, Bitcoin is most likely to keep staying a step ahead of Gold.
Reasons why Bitcoin will win this race
To understand these reasons, we will have to do a side-by-side study of both Bitcoin and Gold. To help you understand, here is a complete Bitcoin Vs Gold comparison.
- The limited supply of Bitcoin and Gold
The reasons behind the limitation in the supply of both Bitcoin and Gold are different. The production of Gold is a very difficult and labor-intensive task. Moreover, it takes a long time for it to be available for the investment, and it is also restricted to the geographical areas where there are resources of the Gold present. All these factors make up the limited supply of Gold. But, according to some futurists, the supply can and will be outpaced in the future, because humans will start mining Gold from other planets or asteroids.
Just like Gold, Bitcoin also comes through mining. But this mining is quite different than Gold mining. Bitcoin mining does not need too many human resources and capital to be mined. So how is the supply of Bitcoins going to stay limited? Here’s how. The Bitcoin supply is limited, and Bitcoins are only 21 million in number. 99% of which will be mined in the next two decades. After the 99% is mined, the rest 1% Bitcoins will take around 100 years to be mined. After this, it will be the end. Bitcoins will not be available anymore and that’s a win-win for the investors.
- Easy buying and selling
Anyone can buy Gold easily, in several different forms i.e. jewelry, bricks, or nuggets. Moreover, exposure to Gold’s price is also achievable through ETF or any investment fund. Sounds easy, obviously! But, it requires effort and time to buy gold and also an investment account in order to buy ETF or a Gold fund. Also, there is kind of an age restriction for buying Gold.
On the contrary, for buying Bitcoins all you need is a Bank account and an application (App). Every person, who has a mobile phone, regardless of his age can easily buy Bitcoin. Older people are not so savvy regarding technology, but as time is passing they are also learning.
- Widely accepted exchange medium
There is no lie in saying that Gold is accepted almost everywhere as an exchange medium. But would someone accept Gold instead of currency? Let’s be honest, can you buy something you like online or in a store by offering Gold? Of course, you cannot.
On the contrary, Bitcoin is accessed by all our electronic devices, and the use of Bitcoins as a currency is also starting. Don’t you think it will be easier to pay through Bitcoins instead of offering Gold?
- Stable source of storing wealth
People have been using Gold to keep their wealth stored because it has been a common belief that Gold will always serve them right at times of turmoil is happening. This might be true but, how is someone supposed to keep all that Gold, and how can someone carry Gold around? And most importantly how can Gold help in everyday transactions related to business?
While on the other hand, Bitcoin is free of such questions and charges. You can carry it around in your very own smartphone.
The bottom line
There is no doubt that Bitcoin trading we can offer investors a wider range of benefits, but the volatility of this cryptocurrency makes it harder to find reliable entry points. This property makes Bitcoin a very good asset for trading rather than investing in it. Even with this point cleared, one must trade Bitcoin, but not without all the tools for risk management.
Bitcoin trading might be the next Gold. As the CEO of ironfx.com, says,
“We’re seeing it emerge as a part of the recommended allocation strategy for institutional investors and investment banks. This underlines just how important this asset has become in the world of investing. Right now, we are seeing a dramatic increase of new retail customers entering the market on a daily basis… Bitcoin is about to become gold for the 21st century.”
We will only know the true winner with the passing time, but the predictions are mostly in favor of Bitcoin. Bitcoin is becoming a go-to commodity for the next generation, and its making progress with every passing day because of the new people who are joining the market daily.
If you want to earn some quick profit, Bitcoin might be a good investment to invest or trade on. On the other hand, if your goal is the diversification of your portfolio and you want to trade in a traditional asset, then Gold is the better choice for you.