Crypto vs Gold as an asset
Hey Everyone,
Today I would like to discuss on the topic of Crypto (Bitcoin, to be more specific) Vs Gold as an Asset.
An Investor’s prime goal while making an investment is to beat the inflation. In Covid times, the inflation in many countries increased a lot than regular rates and also the stock market has gone through its recession phase, the value of stocks of most of the companies fall drastically due to which many investors faced a huge loss and started finding a better and safe alternative to invest their money.
The whole world knows that when the share prices of many companies were falling gold’s value was still almost fluctuating around a constant value and were not falling much, hence investing in such assets is much better option in recession times.
But a new digital asset which just came into existence around a decade ago, has become a topic of discussion in the recent years as it has outperformed gold in many factors. It is none other than Cryptos (bitcoin, to be more specific, for its huge market share) which recently reached its all-time high value of $70,000(approx.) providing a huge ROI (Return on Investment) to its investors even during a pandemic time.
So, Now the question arises, will cryptos replace Gold in terms of Safer investment Asset, let’s explore it together on the basis of multiple factors:
· Safety, Legality and Transparency:
Gold is accepted worldwide and is also centuries old as an Asset. It is also very hard to steal it and trade fake gold. On the other hand, Bitcoin which is just a decade old is also very difficult to be corrupted due to its encrypted system. But, the infrastructure to ensure its safety is not yet in place. The Mt. Gox disaster is a good example of why bitcoin traders must be wary.
· Scarcity:
Both Gold and Bitcoin are very rare, although we know that there are total 21 million bitcoins which would be out by 2140(calculated by halving the bitcoin mining reward), we still have no idea how much gold there is on Earth.
· Volatility:
In terms of Volatility, Gold surpasses Bitcoin as a safer investment Asset although there are many other cryptocurrencies which are comparatively less volatile like Dogecoin and TomoChain. On the other hand, with Bitcoin nobody can predict how much it will rise or fall in the next one hour or day. Hence, invest in Bitcoin only with the money that you can afford to lose is an advice that I would like to give.
Comparing the prices of starting and end of 2020 Bitcoin’s price has almost increased exponentially by giving the return of 200% with lots of ups and downs and on the other hand, gold has almost shown a steady increase in its value.
Rest, I would leave up to you what you think about a safer investment. Do comment your opinions in the comments below.
References: Investopedia, Businessinsider
Image Sources:- coinnewsspan, Pinterest
