Bitcoin and gold compete with each other to be the best financial investment, both seen as a great store of value. Bitcoin has had the nickname "Virtual Gold" since its launch. (Litecoin: Virtual Silver, Ethereum: Virtual Oil)
For centuries, gold has and continues to dominate the financial market strongly. Investors see it as a safe haven. Bitcoin was launched a little over a decade ago and only gained widespread recognition in the last few years. In this new era, Bitcoin and gold are struggling to be the best investment among themselves. Basically, both Bitcoin and gold have a huge store of value.
The market value of gold is about 115 trillion dollars. On the other hand, Bitcoin has a market cap of $780 billion. It reached $1 trillion, but was only there for a short time. Apart from the market value table, there are other issues to consider before investing.
Let's take a look at Bitcoin and Gold
- Transparency, Security, Legality
It is true that gold established a system for trading, weighing and tracking. It is very difficult to steal, dispose of, or otherwise corrupt counterfeit gold. But now iridium can fool even experts, as it contains many gold-like properties.
Thanks to its cryptographic encryption, decentralized system, and complex algorithms, Bitcoin's algorithm is nearly impossible to break. If someone wanted to transact with fake Bitcoin, it would require them to take over 51% of the network. This is an almost impossible task to accomplish.
- Rarity
Gold is one of the rarest resources in the world. It is not known when all the gold in the world will be mined from the ground. There is speculation that gold could be mined from asteroids or created in a lab. There are even some companies that want to do this in the future.
We know that there are only 21 million Bitcoins in existence. Bitcoin's mining reward halving makes it take until 2140 to mine all 21 million Bitcoins.
- Core Value
Gold has historically been used in many applications, from luxury items such as jewelry to specialty applications in dentistry, electronics and more. Initially, gold supported the value of fiat currencies. Now, fiat coins are just pieces of paper with no real value.
Bitcoin itself also has tremendous fundamental value. The first is the blockchain technology it brought to the world. Billions of people worldwide lack access to banking infrastructure and traditional financial instruments such as loans. With Bitcoin, these people can send value worldwide at virtually no cost. Bitcoin's true potential as a banking tool for those who do not have access to traditional banks is perhaps yet to be fully realized.
Liquidity
Both Bitcoin and Gold have very liquid markets. They can be easily exchanged for fiat currency.Volatility
A major concern for investors seeking Bitcoin as a safe-haven asset is its volatility. For proof, one only needs to look at the Bitcoin price history over the past two years. At its highest point, in mid-April 2021, it reached a price of about $65,000 per Bitcoin. About a year ago, the price of one Bitcoin was around $11,000.
Besides general volatility, Bitcoin has historically proven to be subject to market manipulations and news. A number of cryptocurrencies reached record prices around the first quarter of 2021, especially when cryptocurrencies were hyped. News from the cryptocurrency space can prompt investors to make quick decisions and quickly go up or down in the Bitcoin price.
This volatility is not inherent in gold, but it also makes it a really slow-moving investment. Despite being a rare metal, the large supply of gold already available in the market is preventing its value from increasing.
A year ago, the price of gold was around $1700, while the price of Bitcoin was $11,000. The current market value of gold is $1750 and for Bitcoin $41,500. Thus, on a $100 investment, gold yields roughly 3%, while Bitcoin provides more than 280%.
It is not investment advice.
Hello, @bonarousx! This is @anggreklestari from @OCD team. We saw that you already posted your first post here in Hive! Congratulations and welcome! However, it would be awesome if you do an introduction post. As a sample of what an intro post is, you can refer to this intro post for reference:
Keeping Up With the Buzz - My Introduction to the Hive Community
There's no specific format on how you do your intro post, but there is some suggested content that we would love to see in your post. Information like who are you and where you're from, how did you discover Hive or who invited you, what types of content you want to see here and the types that you want to produce, and what are your expectations in this platform. There's no pressure on this. You can choose whatever information you would like to share.
You can tag me @anggreklestari on your intro post then if you have done with it.
Well, you can explore the communities that are suitable for your content. You can read some of the communities in this post: OCD Communities Incubation Program
If you are looking for tips and information as a Hive newbie, click here: newbie guide.
If you have questions, you can hop into OCD's Discord server and we'll gladly answer your questions. For now, @lovesniper will follow you and we are looking forward to your intro post!