Bitcoin’s price has experienced an outstanding performance, as since the beginning of 2023, the leading crypto asset has increased by 311%, and this is mainly due to the appeal and introduction of spot ETFs. Interestingly, gold has also been experiencing bullish sentiment, with its price achieving massive milestones. However, when comparing gold with Bitcoin, it’s becoming increasingly evident which asset outshines the other. While there’s been an ongoing debate around whether Bitcoin is better than gold, we have valuable data that shows the former has a substantial edge over the latter, attracting many people who want to understand how to buy bitcoin. If you want to learn more about Bitcoin’s potential over the precious metal, keep reading!
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Bitcoin and gold are akin in many ways, which is why investors often compare the two assets. First of all, they are both scarce to a certain extent – at some point in the future, Bitcoin will reach its 21 million tokens limit, while the Earth’s crust only has a specific amount of gold. According to basic economic principles, if the supply of an asset is fixed and its demand increases, prices could go up. It’s a simple rule explaining why gold has long been regarded as a safe asset to hold over a long period of time.
But apart from being utilized as a store of value, both Bitcoin and gold have utility. For example, gold is mainly used in jewelry due to its rarity and luster; however, its value is tiny as an input when it comes to industrial use cases. On the other hand, Bitcoin is helpful to anyone who wants to send a lot of money to someone else directly, and it also appeals to users due to its decentralized nature and the fact that no intermediary controls it.
While Bitcoin and gold look similar at the surface level, their differences become more evident when digging deeper. Bitcoin is superior to gold due to its properties, and the most notable one is scarcity. Although the supply of gold seems to be fixed, it’s not really that way. About 77% of the gold known to exist in the crust of the Earth has already been mined, and there’s still a substantial amount of it underground. Suppose the price of gold skyrocketed; then mining companies would invest aggressively in it to extract more deposits of the precious metal. What does this mean? Well, simply put, it means that gold’s supply can be adjusted based on how strong the demand is. Furthermore, gold deposits could also be found in outer space. On the flip side, Bitcoin shines when it comes to the topic of scarcity, as it has a finite nature.
There will only be 21 million coins in circulation, and this is unlikely to change unless all the nodes agree to boost the supply. It’s essentially impossible to adjust Bitcoin’s supply to match demand trends, which is why the asset has been incredibly volatile throughout history.
Another difference between Bitcoin and gold lies in the fact that the former is more transportable than the latter. Furthermore, Bitcoin can be divided into eight decimal places, and utilized for transaction purposes, while gold can only be used in daily purchases – which is not as practical and translates into less utility. Finally, regarding the store-of-value debate, Bitcoin is undoubtedly a winner because, at the end of the day, investing comes down to enhancing one’s purchasing power over time, and Bitcoin clearly is better from this perspective.
Over the last five years, Bitcoin’s price increased by 1,630% (that’s a staggering percentage), while an ounce of gold’s price rose by only 58%. This clearly reflects that those who bought Bitcoin over gold saw higher profitability, and it’s worth noting that this happened during a time of increased macro-uncertainty due to factors like inflationary pressures, the pandemic, and heightened interest rates.
Bitcoin is an outstanding asset and, in some ways, it’s better than gold. However, that doesn’t make it ideal for every type of investor, and that’s because its value tends to fluctuate a lot, which isn’t the case for gold. So, on a psychological level, it can be easier to own gold than Bitcoin because you aren’t exposing yourself to great risks. However, suppose you are an investor with a high appetite for risk. In that case, it makes sense to add Bitcoin to your investment portfolio and take advantage of everything this asset offers, from its finite supply and decentralized nature to enabling transactions globally. In an increasingly digital world where fiat money is debased, the investment proposition of Bitcoin becomes more and more evident. The leading crypto asset offers its holders financial sovereignty and has proven to be superior to gold as a store of value while also becoming a reliable asset when it comes to building wealth in today’s world.
However, it’s imperative to remember that investing is a personal journey, and even if an asset is lucrative, it doesn’t necessarily make it suitable for you. This is also applicable to gold and Bitcoin – while the former is best suited for investors seeking stability and who are more focused on long-term goals, the latter is ideal for investors willing to take on a substantial risk to earn high returns. Be honest with yourself when making an investment decision and remember that it’s not the trends that should dictate your investment path, but your goals and preferences.
Gold and Bitcoin have advantages and drawbacks, so it’s paramount to understand how they both work before deciding which to invest. Keep in mind that no matter the option you choose, it’s imperative to conduct detailed research and always come back to your strategy as you navigate the dynamic world of cryptocurrencies. And of course, whenever you feel confused and aren’t sure what’s the best next step, you can always seek the help of a financial advisor – after all, it’s your money at stake, so why take unnecessary risk when you can have someone guide you on this journey?
