Preserving your wealth is always a sensible decision. However, considering how many options are offered in preservation, it is sometimes hard. One such example is Bitcoin vs. Gold. Gold has a thousand years of being universally recognized, whereas Bitcoin offers a decentralized nature. Both assets provide benefits but have their drawbacks as well. You can use trading platforms like the Bitcoin Loophole website to purchase Bitcoin.
Bitcoin: Pros and Cons
Bitcoin was created as a digital currency in 2008 by Satoshi Nakamoto. The system was described as a way for two parties to make transactions directly without involving a centralized third party such as the bank. Bitcoin’s popularity has been growing tremendously since its release because of many factors. One of those factors is that it diversifies your portfolio. Another pro is that Bitcoin can turn into a long-term store of value since its supply is fixed and value is protected, unlike Fiat currencies issued by the government and not backed by a physical commodity.
The Cryptocurrency frenzy brought forth several supporters who believe that Bitcoin’s price surge is just the tip of the iceberg, and there is a lot more to come. Many figures in the financial market expect it to overtake Gold’s monopoly over the market, which sits at $11 trillion. Some even go as far as to call Bitcoin “Digital Gold.”
However, with all its pros, Bitcoin is also considered socially irresponsible as its mining consumes massive amounts of energy and is therefore not good for the environment. A consequence of this was when Tesla, an initial supporter of Bitcoin, dropped its acceptance citing the environmental cost of mining it as the reason for the suspension. There are also some concerns over the safety of trading digitally and security breach potentials.
Gold: Pros and Cons
Gold has been considered a dependable store of value for years, and it still is. It is also a tangible asset that can be passed down to generations. Gold is a mainstream asset accessible to everybody no matter their economic background, and it is also easy to understand. So, even if retail investors don’t understand Bitcoin, they can always buy Gold.
Apart from individuals, even Central Banks rely on Gold to help create economic stability and growth. Gold has always been considered a safe option, unlike the volatility of current currencies. Gold might also last and be reliable for longer than any Cryptocurrency.
But all of this doesn’t mean that Gold prices haven’t fluctuated over the years and that it can generate income like other investments. These are areas where Gold lacks over other options. Gold mining also has negative environmental impacts like water pollution, decrease in biodiversity, toxic emissions, etc.
Bitcoin vs. Gold
Both Bitcoin and Gold are limited assets, and the law of supply and demand can be argued for both. However, Gold has fewer risks when compared to Bitcoin as it is a system that has been in place for years and is hard to corrupt. But Bitcoin users are also offered decentralization and transparency. All-in-all, both Bitcoin and Gold are considered the most liquid assets.
There are a lot of pros and cons of both Bitcoin and Gold to tilt the argument on one side or the other, but the final argument is based on the investor. This choice solely depends on your risk tolerance, strategy, investing goals, and investment capital.