In this post, I’m going to put an end to your search on Cryptocurrency vs Gold.
Cryptocurrency is the most talked about topic in the finance world today.
It has grown exponentially in value over just a few years, and it’s not showing any signs of slowing down.
Gold, on the other hand, has been around for thousands of years but many people still question whether or not cryptocurrency can overtake it as an investment opportunity.
In this blog post, we will compare cryptocurrency vs gold.
With their pros and cons to help you decide which one is best for your investment portfolio.
First here what you should know…
A Quick Summary Comparison of Gold vs Cryptocurrency:
Gold has a history that spans centuries, while cryptocurrency only began trading at the beginning of 2009. This means that there’s still plenty of time for cryptocurrency to grow before it can catch up with gold.
Investors who want to get involved in cryptocurrency need to buy coins from exchanges like Coinbase first – unlike investing in gold which can be bought through physical stores such as Walmart and Amazon.
Investing in cryptocurrencies is risky because they’re not backed by any physical assets; however, this also means that cryptocurrency is more like the stock market and can grow much faster.
Cryptocurrencies are decentralized which allows for a lot of innovation; gold, on the other hand, has been centralized since ancient times with no room to innovate.
Let’s take a brief overview of both:
Cryptocurrency vs Gold Overview
What is Cryptocurrency?
Cryptocurrency is a digital currency that was created to be used as an alternative to standard currencies, such as dollars or euros.
Like I mentioned earlier, cryptocurrency is decentralized, which means that it is not controlled by one government, bank, or entity.
Cryptocurrency can be used to purchase items anonymously without high transaction costs. The cryptocurrency market has a lot of potential for growth and many see cryptocurrency as the future of money.
The first coin being bitcoin – and also the most expensive crypto – was created by an individual or individuals under the alias Satoshi Nakamoto.
Over the years, bitcoin has experienced an increase in cryptocurrency market share, currently comprising nearly 40% of the cryptocurrency market.
However, bitcoin is not without challenges as it faces competition from other coins like ethereum and litecoin which have also seen increased usage in recent years.
The power behind cryptocurrency comes from blockchain technology – a digital ledger that can be programmed to record cryptocurrency transactions.
The cryptocurrency market is volatile and unpredictable, making it difficult to know when cryptocurrency will be the future of money or just a passing fad.
One thing can be certain though – cryptocurrency has gained popularity over the years because there are no banks involved in cryptocurrency trades, allowing for faster funds exchanges without any associated fees.
Cryptocurrency offers many benefits; one being anonymity because transactions cannot be linked to any identity.
What is Gold?
On the other hand, we have Gold.
Gold is a metal, which means it is malleable and can be hammered into different shapes.
Gold fluctuates in value based on supply and demand for the cryptocurrency but has been historically limited to humans as people traded goods with each other.
Gold also possesses some non-monetary uses such as jewelry or decoration.
Moreover, gold does not corrode like coins made of copper and silver do over time. It’s widely believed that no one knows how much gold exists at this point.
Gold is basically a commodity and countries around the world often hold gold reserves to back up their currencies and as an economic safety net.
The most common form of gold that investors can purchase, trade, or sell are coins stored in banks or investments held with financial institutions.
Of all the precious metals, gold is the most popular.
Gold is used as a hedge against inflation and financial turmoil, and for many other reasons.
The relative strength of gold means it’s more resistant to economic downturns than stocks or bonds are because its value doesn’t rely solely on monetary policy decisions.
In fact, since 1980 there have been seven recessions where stock prices fell by at least 27%.
During those periods when equities were falling sharply, gold prices rose an average of 60% per year in real terms over 13 years.
For these reasons and others, gold has served as both a safe haven asset during times of uncertainty but also a profit-making asset with historically high returns going back decades if not centuries.
Differences Between Cryptocurrency and Gold an Asset/Investment Vehicle.
Here are Differences Between Cryptocurrency and Gold:
1). Trade and Exchange mode
Cryptocurrency can be traded in cryptocurrency exchanges. Gold must be physically placed on a commodity exchange to trade gold for other commodities and currencies, which is more complicated than cryptocurrency.
Lets you want to sell your gold, cryptocurrency is more liquid than gold
Cryptocurrency can be converted to other cryptocurrency or fiat currencies. Gold cannot easily be exchanged for any other asset class except cash (i.e., USD).
The cryptocurrency market is 24 hours and settles trades quicker – sometimes in seconds and minutes.
Gold transactions are not as immediate because exchanges must take place at a physical location during business hours with the seller present.
Cryptocurrency exchanges allow you to buy/sell and trade anytime of day on your own schedule from anywhere in the world. By logging into an exchange’s website using a computer or mobile device.
There are no geographical restrictions to cryptocurrency markets; buyers may purchase cryptocurrency without being restricted by borders like they would trading through traditional financial institutions such as banks or brokers.
2). Attacks and Government regulations
Cryptocurrency is not as liquid or secure of an investment (to some extent) because cryptocurrency exchanges are vulnerable to hacking attacks and government regulation, which may have a negative effect on the price.
While gold on the other hand, is not subject to any government regulation and is difficult to hack, unlike cryptocurrency exchanges.
Gold can also be bought in person at a gold exchange or mint from an individual seller.
So it’s almost impossible to hack gold and it’s not subject to government regulation. In fact, gold is widely acceptable worldwide while crypto appears like an enemy to the Government and killer of banks and fiat money.
The only vulnerability attached to gold is if the gold is in transit or being stored, but even then it’s difficult to hack.
3). Supply and Demand
The majority of the good cryptocurrencies have maximum supplies. They’re limited.
Gold has been used for thousands of years as currency and there are only so many in the world.
Cryptocurrency, on the other hand, isn’t really an asset that can be physically held by someone but rather it’s digital money that exists within certain computer systems around the globe.
This means cryptocurrency can easily be created or taken away depending on how society views cryptocurrency.
When bitcoin was first introduced back in 2009, people could mine (or generate) bitcoins themselves using their own computers at home to create new coins which would then increase supply.
And there are only 21 million bitcoins that can ever exist and the last bitcoin is set to be mined by the year 2040.
4). Legal Tender
Cryptocurrency is not yet legal tender anywhere in the world, whereas gold has been used as a currency standard for centuries and is accepted across borders.
Governments will never be able to control it or refuse to accept gold as a form of asset, but cryptocurrency is not yet considered a legal currency.
Another thing is – the price of gold fluctuates much less in times of economic uncertainty or geopolitical tensions because it relies on simple supply and demand rather than speculative forces.
Cryptocurrency can be more valuable when there are dramatic changes to the global economy that cause people to seek out alternative assets like Bitcoin (which you cannot find at your local bank).
Government regulators may take issue with cryptocurrency being traded anonymously without any form of identification which could lead to tax evasion issues if they ever do become an official currency.
With gold, tax invasion is not an issue because it does require identification.
Gold is also considered to be much more stable in terms of value than cryptocurrency, meaning that when things get really bad and the economy goes into a meltdown, gold can still retain its worth (assuming you have physical possession).
5). Investment Vehicle
Within a few weeks, or even days you can become rich by investing and trading crypto coins or tokens.
This is unlike gold. Because gold takes years to become rich from.
Gold is not a cryptocurrency and cryptocurrency isn’t gold but they are both valuable assets that can be traded for profit if the market conditions are right (that means you should buy low, sell high).
Investing in cryptocurrency has the highest risks and return. While the risk in gold is lower while the return isn’t that as rewardful as crypto.
Should You Invest in Cryptocurrency or Gold?
Whether you should invest in crypto or gold depends on your risk tolerance, cryptocurrency knowledge, and also the length of time and amount of money you are investing.
If you’re looking for a guaranteed return with low risks, then cryptocurrency is not what you should be considering.
The market volatility can go up and down in days or even hours.
So there will always be months where cryptocurrency has negative returns but it’s still possible to make money over a short period if done right.
On top of that, depending on how much risk someone wants to take they could speculate on cryptocurrencies which typically have more swings in their values than traditional currencies do against one another as well as different coins having positive correlation vs each other.
Gold is really a safer bet for someone who doesn’t want to take on too much risk.
Over the long term, cryptocurrency will likely outperform gold but it’s also possible that cryptocurrency could lose out if you’re looking at a time frame of fewer than five years or so.
Gold is a more conservative bet because as an asset class, it does not have such volatile swings in its values as cryptocurrency.
As cryptocurrency and gold are both considered to be a form of investment.
The cryptocurrency vs gold debate is ultimately about what an individual wants to invest in as there will not likely be many people who want or need to have investments in both cryptocurrency and gold at any given time.
In my own opinion, I think crypto is a much more affordable and flexible form of investment with higher returns compared to gold.
In fact, crypto is the future money.
While I don’t see cryptocurrency killing gold soonest, it has the potential to disrupt gold as a cryptocurrency is much more democratic and can be used without involving any authority.
Final Thoughts
Bitcoin’s volatility makes it much riskier than trading/investing in gold because when the cryptocurrency market crashes, those who have bitcoin might lose all of their funds as they cannot recover them back like you would with cash.
This could potentially lead people into bankruptcy if they are financially dependent on cryptocurrency investments for income.
Gold is far more stable with price fluctuations that do not result in major losses for investors:
This means individuals will generally get out unscathed even if there was a large drop in the market value of gold due to some event such as the U.S implementing tariffs cryptocurrency.
If you consider getting started with crypto – I’d recommend registering on the below exchanges and kickoff your crypto journey from there:
- Coinbase
- Binance
- Kraken
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