Bitcoin vs Gold: Which One Is a Better Investment?
Last Updated on January 9, 2023 by Kevin Groves
The bitcoin vs gold debate has been going on for a long time.
Cryptocurrency is gaining popularity, and Bitcoin is often referred to as digital gold, mostly because of its value on exchange sites.
Gold enthusiasts, on the other hand, still maintain that this precious metal hasn’t lost its shine.
Bitcoin is a relatively new instrument, but its disruptive technology could revolutionize the financial industry. Gold has a long history and is more stable.
Which of the two assets should you invest in? Here’s a comprehensive bitcoin vs gold guide.
A Quick Comparison of Bitcoin vs Gold
Gold has always been valuable; it has a high demand, but its supply is very low. Unlike digital assets, this metal can’t be manufactured or issued and must instead be mined and processed. It also has no correlation with digital financial instruments, which makes it a relatively safe investment.
Bitcoin, on the other hand, was only launched in 2009, but it’s beginning to gain wide acceptance. It also has a low correlation with the stock market, and in 2017, the value of 1BTC surpassed the value of an ounce of gold. Bitcoin also has a limited supply, making it highly valuable.
Here’s how bitcoin vs gold compare;
1. Scarcity
Bitcoin and gold are both extremely rare commodities. Since gold is a natural metal that has to be dug up from the earth, it’s unclear how much of it there is. Currently, only 244,000 tons of gold have been mined, most of which originate from South Africa, China, and Australia.
When Satoshi Nakamoto launched bitcoin, he made it so that only 21 million BTC could be mined. New coins are rewarded to miners when they verify transactions on the bitcoin blockchain, and currently, about 18.5 million BTC have been mined. It’s estimated that by 2140, all BTC will be in circulation.
2. Liquidity
Both commodities have high liquidity and can be exchanged for fiat money. Gold is mainly traded in trading centres, and 3 of them are responsible for more than 90% of the global gold trading volume. They are; the Shanghai Gold Exchange (SGE), the US futures market, and the London OTC market.
Bitcoin, on the other hand, can be traded on popular Australian exchange sites like Swyftx, and you only need to create an account.
The sign-up process is easy and requires you to provide your preferred email address and a strong password.
You then have to verify your identity, a process that will only take you 5 minutes. Once youre the verification is complete, you can start trading bitcoin against fiat currency and other digital assets.
How to trade bitcoin on Swyftx: account registration > identity verification > fund your account > start trading BTC!
All new users that sign up on Swyftx with the link above are given a sign-up bonus of $10 BTC to get you started.
3. Legality, safety, and transparency
Gold has an established tracking, trading, and weighing system that’s very hard to interfere with. This makes it extremely difficult to pass off fake gold, corrupt the integrity of the metal or even steal it.
Bitcoin is highly encrypted, based on complex mathematical equations, and is a decentralized currency which also makes it hard to corrupt. Its safety is, however, not guaranteed as you can only store bitcoin on hardware wallets that can be stolen or lost and online wallets which are susceptible to hacks.
The cryptocurrency industry is yet to launch safety infrastructures that can solve this problem.
4. Volatility
Gold is highly stable and doesn’t experience extreme price fluctuations within short periods of time.
Bitcoin, on the other hand, is very volatile, and its price history shows. BTC reached an all-time high of $20,000 per coin in early 2018, and within a year, the price had dropped to about $4000 per coin.
These kinds of price fluctuations are a major concern for investors, especially because they’re sometimes influenced by mundane aspects like reckless comments from an influential person. This is also why investors view gold as a safer asset.
Recently, however, some alt cryptocurrencies like Tether have been launched and are very stable. These digital coins are linked with fiat currencies like the US dollar and are based on a 1:1 ratio (1 coin is equivalent to 1 USD).
5. Value
Gold has an actual baseline value and has various applications, including making luxury items like jewels and specialized applications in electronics. It was also used as a form of currency before fiat currency was established.
Bitcoin is the currency of the digital era and also has a baseline value. It’s based on blockchain technology and is suitable for people who have no access to traditional financial systems or are simply looking for an anonymous way to transact.
Bitcoin is also highly portable and can be sent to other users around the globe in minutes.
Pros and Cons of Buying Bitcoin
Pros
- It can be used as a currency:
Bitcoin is a form of digital currency, and even though you can’t use it everywhere like fiat currency, retailers are quickly embracing BTC transactions. You only need to have a mobile wallet that allows you to make payments, and you can quickly and easily transfer BTC to the merchant’s address. - Easy Transactions:
The digital nature of bitcoin makes it easy to buy and sell. There are 3 main ways of transacting BTC; buying and selling the coins to family, trading BTC on peer-to-peer sites, and trading it on exchange sites like Swyftx. All three options are easy, but crypto trading on exchange sites is safer and faster. - It’s an emerging investment:
Bitcoin has only been in the market for 11 years, which makes it relatively new. While some people could argue that this only makes it a riskier investment, it also means that its value could increase exponentially, resulting in big payoffs later on. For instance, investors that embraced BTC when it was first launched have made significant profits. - Great short-term investment:
Due to the price volatility of bitcoin, you can easily earn short-term gains, especially in day trading.
Cons
- It can be used as a currency:
Bitcoin is a form of digital currency, and even though you can’t use it everywhere like fiat currency, retailers are quickly embracing BTC transactions. You only need to have a mobile wallet that allows you to make payments, and you can easily transfer BTC to the merchant’s address. - Easy Transactions:
The digital nature of bitcoin makes it easy to buy and sell. There are 3 main ways of transacting BTC; buying and selling the coins to family, trading BTC on peer-to-peer sites, and trading it on exchange sites like Swyftx. All three options are easy, but crypto trading on exchange sites is safer and faster. - It’s an emerging investment:
Bitcoin has only been in the market for 11 years, which makes it relatively new. While some people could argue that this only makes it a riskier investment, it also means that its value could increase exponentially, resulting in big payoffs later on. For instance, investors that embraced BTC when it was first launched have made significant profits. - Great short-term investment:
Due to the price volatility of bitcoin, you can easily earn short-term gains, especially in day trading.
There are also thousands of other cryptocurrencies in circulation, which highly influence the value, demand, and supply of BTC. They’re, however, not a threat as bitcoin still remains the flagship of all digital currencies.
Hey! Moritz here. If you want to start trading Bitcoin then Swyftx is one of the most trusted platforms to buy, sell, and trade crypto in Australia. I highly recommend signing up and practicing with the free $10 worth of BTC, especially if you are new. (Grab it while you can!)
Pros and Cons of Buying Gold
Pros
- Ease of storage:
Since gold is a physical commodity, it’s pretty easy to store. Most precious metals are stored in vaults which are then overseen by custodians. They’re also usually insured up to a certain measure of their value, which means that your gold will be safe. It’s also hard to steal precious metals as you’ll have to break into the vaults, which are heavily secured. - Longevity:
Gold has been around for centuries. Its scarcity and utility are some of the reasons why it has stood the test of time while still retaining its value. This means that you can rest easy knowing that your gold investment will always remain valuable even after many years. - High stability:
Unlike digital currencies, the value of gold tends to increase when the economy is facing a recession. It also doesn’t experience wild price swings. - Wide popularity:
Gold was previously used as a form of currency and has been in the market for as long as civilization. This kind of popularity makes it a very safe investment.
Cons
- It can be usedIt must be stored:
Unlike digital currencies, gold isn’t portable, and you have to store it in a physical location for safety. - Has minimal transactional benefits:
If traditional currency ceases to be viable, there’s a very high chance that precious metals can be used in transactions. However, currently, you can’t use gold to buy commodities. You can only use it as a store of value.
Even though there are some fiat currencies made of gold, the value of the coin is way less than that of the gold that it’s made from.
Should You Invest in Bitcoin or Gold?
There are 2 main ways in which bitcoin is better than gold:
- Portability:
You can transfer ownership in a few clicks to anyone across the world, and the traction will be complete in minutes. For gold, you have to incur additional costs such as transportation and security. - Divisibility:
1 bitcoin is very expensive, and the good news is that you don’t have to buy a full coin. You can purchase small units of BTC at a fraction of the market value. Even though gold is divisible, bitcoin can be divided into 100million satoshis which are smaller.
The main way in which gold is better than bitcoin is that it’s highly stable and doesn’t experience price fluctuations. This is mainly because the value of crypto is highly speculative and often correlated to other digital assets.
If you are in Australia and want to get started buying Bitcoin or other cryptocurrencies, I highly recommend the Crypto Exchange Swyftx. We have been using it for months and it is the best and safest way to buy and trade crypto in Australia!
Warren is the co-founder of CoinCryption. He has a passion for cryptocurrency and has been involved in this space for more than 7 years. His other love is digital marketing and has over 15 years of experience.