From time memorial, saving has been an integral part of life that everyone knows the importance of, although many people are pretty poor at this act.

However, more than ever before, people deeply understood the relevance of saving and investing during the Covid 19 pandemic period, which ushered in an era where people rushed into investments and put aside exorbitant spending.

This development is because the Covid 19 lockdown period particularly favoured those with savings in their reservoir while those without savings had their compromised lifestyle to pay for it.

Assets became a haven to keep people safe from the harshness of the economy, just like they have always been.

For centuries, you would agree that the asset everyone worldwide considered a haven that could protect their finance and even assure them of a future increase was GOLD.

However, the pandemic ushered in a solid and dominating era of Cryptocurrency, which Bitcoin pioneered about a decade ago. This new currency brought a slight twitch in the age-long status quo of Gold being the number one asset worldwide.

Being more profitable than Gold and yielding more returns and faster too, Cryptocurrency, specifically Bitcoin, became a strong contender for Gold, and eventually, a substitute for it. As a result, Crypto investment became a hot cake that everyone rushed after to get a bite of.

Long before the reign of Bitcoin and other Cryptocurrencies, people used gold as a hedge against the volatility of a stock. Volatility means the continuous, sharp and sudden increase and decrease in the value of something.

But, as highly effective as Gold was, people swiftly embraced Cryptocurrency, particularly Bitcoin, as an alternative to replace it and play its traditional role of being an investment refuge.

Now, looking at the investment chart today, Bitcoin tops the list while successfully moving Gold sideways. So we can say that there is intense competition between this new system and the old investment system.

In this article, we will examine what differentiates these two assets from one another, look into their similarities and then, maybe, hitch these to a conclusion on which is more profitable to invest in.

ADVANTAGES OF INVESTING IN GOLD

Gold is valuable enough not just as an asset but also as a consumer commodity in that they could transform it into pieces of jewellery for the owner. And this doesn’t depreciate its worth.

Gold is not gotten in abundance and can’t be gotten everywhere. And as such, it is a scarce commodity which makes it even more profitable.

The demand for Gold may be high, but the supply is always low due to its scarcity, also contributing to its profitability.

Gold is not an asset that they manufacture and so is not under any company’s name and authority whereby new ones could be re-issued to the public as Companies do for new shares. The CBN also does this for new fiat currencies. They only find it when they dig it out from the ground.

Gold is a haven that will always serve as a hedge for investors against stock volatility and even cryptocurrencies.

The prices of Gold either go up or stay stagnant when the economy isn’t so friendly. This fixed price is better than the price reduction. The other investment assets, Cryptocurrency and stock, cannot boast of the same advantage.
 
SOME ADVANTAGES OF BITCOIN

Bitcoin is a digital currency gotten from blockchain but shares specific properties with Gold. Thus, people mistook it for a type of Gold (digital Gold) before it gained more popularity and comprehended it better.

Similarly with Gold, Bitcoin is also minimal, and no more will be manufactured to circulate the world.

In just a decade, its market Cap has completely grown so much that by February 2021, Bitcoin’s market Cap has been recorded to be worth trillions of dollars. Bitcoin investment is worthwhile because it offers a level of security against hacking and fraud. In addition, the chance of losing your Bitcoin investment is meagre, especially since it is not physical and cannot be stolen. Bitcoin investment offers vital transparency in that the owner alone gets to operate on his wallet except if he discloses his sensitive details to another. Every transaction that occurs with your investment, either buying or purchasing, will be done by the owner alone, with no third party involved. 

SOME MAJOR SIMILARITIES BETWEEN GOLD AND BITCOIN

Both Gold and Cryptocurrency are scarce assets that are only in limited quantities all over the world.

These two assets have excellent liquidity markets as they can both be exchanged for fiat money.

As people initially took Gold, they have also embraced Bitcoin as a store in value asset. This embrace is because it could hedge against the volatility and the devaluation of the currency.

SOME MAJOR DIFFERENCES BETWEEN GOLD AND BITCOIN

Gold grants more assurance than Bitcoin, looking at how legal, safe, and transparent these two assets are. People have also not been able to change or tamper with its customary and established system, making it more secure than Bitcoin, which isn’t entirely secure.

The volatility of Bitcoin completely exceeds the volatility of Gold. Gold has always been a less volatile asset, which is why people opted for it as a significant asset in the past.

Both Gold and Bitcoin are rare; their scarcity differs. No one knows when they would mine all the Gold in the world completely, but we all know that Bitcoin is finite because it has a definite value, which is 21milion in total. This value is estimated to have been fully circulated in the world by 2140.
 
Bitcoin is a moonshot cryptocurrency that can multiply its value in multiple folds, unlike Gold which is never moonshot.

Analysing the baseline of these two assets, the value of Gold continually serves as a baseline for measuring the value of so many items. These items range from jewellery, electronics, dental items, etc., and this has been the case for many years now.

It is, however, impossible to use the value of Bitcoin, which is subject to ongoing volatility, as the baseline for anything. Instead, we can use the value of transactions in local banks as a baseline to measure Bitcoin’s progress.

We all know that, unlike local banks, bitcoin allows transactions to go as far as anywhere in the world with no charges at all.

Gold does not require any level of technological literacy or economic position and status before anyone could own it. However, this is not the same for Bitcoin as it requires one to be internet savvy and computer literate to understand how it works well enough.

Regardless of how far Cryptocurrency has gone in society, Gold remains the ultimate and apex currency of every central bank in the world.

The prices of cryptocurrencies depend on mere speculations, which allows for the prices of the currencies to change anytime and subjects them to sharp volatility. For Gold, on the other hand, an increase in Gold’s production cost is usually due to how deep the mines get, and this is not a frequent thing, which makes the prices of Gold less volatile.   

With the sharp volatility that Bitcoin experiences, its prices could enormously rise one minute, making the investor yield multiple returns, after which it could ultimately fall the next minute, causing the investor to lose almost everything he had invested.

These fluctuations have made crypto-investment somewhat like a risky act, which is far from what Gold is. Being less volatile, Gold does not experience a sharp rise and fall in its prices.

People run after less volatile assets to save them from the high volatility of every stock and even currency values. This tells that Gold will undoubtedly play a better role at this than the highly volatile Bitcoin.

The news around the Crypto market affects the prices of bitcoins. More explicitly, this means that the news spread in the market determines how much people will rush after bitcoin, an action that will determine whether the price of bitcoin will skyrocket or diminish.

Whether or not people spread rumours about Gold, the prices will still be what they should be regardless of how many investors rush after it. Its value is not subject to the market’s speculations.

While Gold and Bitcoin could be liquidated, Bitcoin assures more ease for this than Gold. This is because the exchange platform where you keep your Bitcoin is still the same place where you buy and liquidate it. What other level of ease could we possibly ask for?

THE OUTLOOK FOR THE FUTURE OF BOTH ASSETS

Realising how Bitcoin has accounted to be a store in value that is a hundred times more improved than Gold, people are going back to digital currencies as the best asset to invest in for now. Unfortunately, this has contributed to the price volatility of the Crypto market, which will continue, and probably even get worse.

Regardless of how much progress Bitcoin has made for itself in less than two years, its value may return to appreciating with the value of dollars in subsequent years. If this happens, then it will no longer remain as it is now.

There is a high possibility that following this same course, the market cap of Bitcoin will supersede that of Gold in years to come, which will not be surprising because it has started now.

Some experts doubt that bitcoin might compete with Gold in the aspect of longevity because looking at how Bitcoin works presently, it will not hurt to assume the eventual possibility of different hostile legislation coming up against bitcoin and cutting off its existence.

FINAL THOUGHT

Truthfully, examining both Gold and Bitcoin will most likely place you at a crossroad or in the face of indecisiveness. However, they both have beautiful features, advantages and downsides, as we have all examined above.

But what is most important is your choice as an investor. Choosing which to invest in solely depends on where your trust and confidence lies. They are both profitable, maybe in different volumes, and they both give fantastic returns. 

However, the significant difference lies in the risks involved in their investment and the rate at which they accrue interests. 

This article should guide you through your decision making. However, regardless of where you invest, what is most important is that you imbibe the art of investing.

If you enjoyed this article, please click the like button or let us have your view in the comment section below. Also, you could check out our blog for more interesting and educating articles like this one.  

Source: https://blog.ijamexchange.ng/post.php?id=60&t=BITCOIN%20VS%20GOLD:%20WHICH%20IS%20THE%20BEST%20ASSET%20TO%20INVEST%20IN?

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