This post compares gold vs bitcoin and discusses the differences between each and more. We cover which of these investment options are safer and likely better long term. There are many people debating this today. Check out what I believe to be the best comparison of gold versus bitcoin today.
With the rising popularity of cryptocurrency, it can be tempting to “jump ship” from traditional and other alternative methods of investing. Or, as with everything new, comes new things to learn and it can be overwhelming to investors who are used to traditional investment methods and they give up before they’ve even begun. And, many people pit gold and cryptocurrency against each other as opponents.
But, is that fair? Is there a clear winner in this debate?
Table of Contents
Between Gold and Bitcoin, Is One Better Than the Other?
Let’s start with Bitcoin…
Bitcoin
Bitcoin has been the buzzword lately, yet not many understand what it actually is. Let’s try to break it down simply.
Bitcoin was created in 2009 by Satoshi Nakamoto. This may be a single person, or it may be a group, but whoever it was, their name is a pseudonym. Of all the crypto out there Bitcoin was the first and continues to be the most recognized and valued.
Bitcoin is a digital currency that is circulated and managed using peer-to-peer technology called a blockchain, or distribution ledger, which is meant to increase financial transparency and security of the resulting transactions.
Any banks or governments do not manage Bitcoin; this is known as a decentralized currency. Instead, other crypto investors will manage all transactions and distribute them around the world.
Blockchain
A blockchain is a digital ledger of transactions that is shared between multiple locations of a computer network. Blockchains maintain a secure and decentralized record of the transactions that occur and each “block” of the chain is essentially unchangeable without the consent of the peers in the network.
When changes in the blockchain are required, a new block is created by peers in the network solving complex equations with computer power. Miners of Bitcoin are then rewarded for providing the computer power to the blockchain and they then earn cryptocurrency in a digital wallet.
Bitcoin is not the only cryptocurrency to use blockchain technology for its operating structure. In fact, blockchain has been adapted to create other cryptocurrencies such as Litecoin, Ethereum, and Dogecoin, for example.
As of this writing, over 10,000 different cryptocurrencies are now in existence and many celebrities have begun to push cryptocurrency, including Tom Brady, Kim Kardashian, and Elon Musk.
NFTs
Non-Fungible Tokens, or NFTs, are a one-of-a-kind digital asset that is stored on a blockchain. NFTs are used to represent actual physical objects such as art, as well as digital items that may include images, videos, and songs, to name a few.
An NFT represents the owned object and links the ownership of this object in a blockchain to an individual which allows the ownership of the said item to be sold and traded. Each transaction is then recorded in the blockchain. While any cryptocurrency can utilize NFTs, you’re more likely to see them in the cryptocurrency of Ethereum.
What About Gold?
Gold has been valued since ancient times as a standard for measuring wealth. While many countries have since disconnected their currency from gold towards paper money, gold continues to retain its value. Owning gold and other precious metals is a popular hedge against inflation and a volatile market.
Gold does not necessarily increase the value of assets or grow in the same manner as stocks can, but it can be more stable than traditional investment methods, which is why so many investors like it to diversify their retirement portfolios.
There are folks out there that are saying that Bitcoin will be the new gold. But, is this true? Is Bitcoin the new gold? Let’s take a look.
Comparing Gold and Bitcoin
It may seem strange to compare the two, especially with gold being a physical item and Bitcoin being completely digital, thus untouchable. And, if you got rid of the servers, wouldn’t that mean that the cryptocurrency would disappear, while gold would remain?
Sure, if you got rid of every single server, cryptocurrency would cease to exist, but what are the chances of that occurring? Pretty much slim to none.
Some investors see gold and Bitcoin as similar. For example, there is only so much gold on earth that can be mined, just as there is only so much cryptocurrency that is available. Also, gold cannot be created by the government just as the government has no hand in crypto.
Now, let’s look at the pros and cons of both gold and Bitcoin:
Gold
Pros
- Stores value
- A physical item you can hold in your hands
- Aesthetically pleasing
- Accessible
- Maintains stability through uncertain times
Cons
- Using gold daily as a currency is not feasible
- Has less potential for growth
Bitcoin
Pros
- Cryptocurrency is not a physical item
- High growth potential
- Highly liquid
Cons
- Still a very new type of currency
- Value is volatile
- Not as widely accepted
- Subject to price fluctuations
- A limited number of transactions per second
- Consumes a large amount of electricity–the equivalent of powering a typical home for six weeks
Gold and cryptocurrency are different, but it doesn’t mean you have to choose one over the other. They are not mutually exclusive, and both have their positives and negatives. You need to decide if one or the other works best for you and your investments, or maybe even both are an option.
Final Thoughts on Gold and Bitcoin
If you want to buy gold, that doesn’t mean that you can’t get in on the Bitcoin train. The debate between the two will likely remain lively, especially between newer and more experienced investors.
Regardless, every investor should research what type of investment will work best for their financial goals and portfolio.
When you decide to purchase either, make sure that you do your due diligence, including researching spot prices, the different types of investments you can make with the various products, and how each asset will fit into your financial strategy for the long term.
Whatever decision you make, our suggestion is to consider precious metals today over cryptocurrency. See the homepage of MFMetal.net to make more sound investment decisions today.
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