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What is the difference between Bitcoin and Gold?

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What is the difference between Bitcoin and Gold?

If you are a retail or institutional investor who is unsure on whether Bitcoin or Gold would be a better hedge during economic uncertainty, it is important to remember that the one which you have the most MASTERY OF FUNDAMENTALS AND TECHNICALS will result in higher short terms AND LONG TERM portfolio again GAINS.

What is the difference between Bitcoin and Gold?

Bitcoin’s is an attractive option for  investors seeking exposure to the blockchain/web3 revolution.

Whereas, Gold has a timeless reputation as a hedge during economic uncertainty because it offers the familiarity of tangible store of value.

While Bitcoin is considered as Digital Gold, Gold actually can be used in manufacturing and jewelry.

Bitcoin’s price on the other hand is purely speculative, whereas Gold’s demand is based off industrial demand.

 

Is Gold or Bitcoin a Better Investment?

Despite Bitcoin’s potential for massive gains,  Crypto bear markets have historically been longer than bull runs.

The better long-term investment will always be the one which you master the fundamentals the most.

The better short-term investment will depend on your level of technical analysis.

Technical traders, more specifically derivative traders, will have an advantage at identifying tops and bottoms in either market since they make money in either direction.

Forex traders prefer Bitcoin over Gold for short term profit because of its volatility.

Institutions prefer Gold because it is regulated and deemed as less speculative.

 

Bitcoin vs Gold value

If you bought Bitcoin during December 2017 had to wait 4 years to see profit, and if they did not cash buy 2023, they would be at a 5% 

If you bought Bitcoin in November 2021 when it was all over the news, your investment would only be worth 36% of your original investment

gold compared to bitcoin
If you bought Bitcoin at $19, 000 in December 2017 you would have experienced more negative days than profit days.

 

Now let’s compare this to gold, if you bought during the highs. 

Gold Highs during Covid and the past two US president elections.
Gold Highs during Covid and the past two US president elections.

 

Is gold a better investment than Bitcoin?

 

So, if as an investor, your goals are based on time rather than numbers gold offers more security due to its “stability”

Because if you buy at the top of either one’s market cycle, the odds of seeing returns will be longer compared to buying at the bottom of the cycle.

But the lower you are in the market cycle the more protected your investment is.

Therefore, Bitcoin is a better investors for Investors with strong technical analysis skills who know when to get in and get out of a position.

Bitcoin is high risk for those using BTC seeking to grow equity but do not understand basic chart reading.

Bitcoin is high risk for investors who rely on the on the news for buy signals.

It  does not matter whether you’re a retail investor, an institutional investor, a beginner, or even a government official, if you buy Bitcoin or Gold at the top of the market cycle, YOUR INVESTMENT IS IN A HIGH RISK POSITION.

Is Gold or Bitcoin a better hedge against inflation

Only 21 million Bitcoins can be created and will ever exist and therefore it is anti-inflationary

We see the above statement all the time.

Because of its limited supply Bitcoin is said to be anti-inflationary and yet bitcoin kept crumbling as inflation skyrocketed around the world.

This is because when inflation gets out of control governments seek to control, so as  inflation was controlled,  Bitcoin’s prices plummeted.

 

The US Federal Reserves began increasing interest rates in March 2022, about 12 months after inflation started a dramatic climb to its highest level in some 41 years. 

Federal Funds Rate – 5 Year Historical Chart

Source: Macrotrends 

Gold prices in comparison, remained relatively stable.

 Liquidity

The Cryptocurrency market has been around since 2008 and therefore still young with

Bitcoin is a currency and therefore more liquid but this comes at a price.

 

The Good

 

Bitcoin is said to be the destroyer of banks since it eliminates the middle-man, reduces transfer speed and speed.

 

The bad

 

However, being your own bank might sound disruptive but in principle it is no different than keeping cash under a mattress.

Many investors know that a PC can crash, a mobile phone or pendrive can get lost. 

So, they leave their crypto investments on cryptocurrency exchanges.

 

No biggie until it gets ugly

 

The most underrated risk I’ve seen in crypto is how easy it is to get hacked.

If you have roll of $100 bills, your money is safe until someone finds out about it.

Cryptocurrencies are no different except your have expert hackers who exploit of any software update glitch.

Plus you don’t have the safety nets insurance that banks    

 

Regulators don’t want money to leave the country 

Especially during economic hardships..

It is important for you to understand that investing in Bitcoin means that you are leaving the monetary system of your country. 

While some countries like CAR and El Salvador have made Bitcoin their official currency.

China has released its own Central Bank Digital currency while banning bitcoin.

 

In many countries around the world , government will seek to regulate and even ban crypto to “protect investors”, but ultimately to prevent tax-evasion as well as money laundering.

Gold has all the legal frame-work which makes profit more taxable and more comfortable for governments.

However, many governments are catching up and requiring profits from crypto assets to be declared.

In terms of accessibility,Bitcoin has a lower barrier to entry, as Bitcoin can easily be purchased on a crypto currency exchange with a credit card for values as low as $10.

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