The Question Is Should You Buy Gold Or Bitcoin? – Part 1

The media is doing rounds as to where the investors have to turn to. This is a short but detailed review of all the info on them. 

Why invest in gold or bitcoin?

Thereafter the debate is going on whether it is worth investing in the gold or the Bitcoin. The main reason is its safety and security while investing in them. This writeup throws light on what is considered to be the best option for investment. While Bitcoin comes with complexities like mining, buying gold suits those who are not crypto enthusiasts. Hence it is known that the tug of war between gold and bitcoin is nothing new. 

It was found that in the past year or so there were many analysts as well as others in the world of economics having predicted a recession. Henceforth after ay years of the bull market, the investors are then concerned about this possibility which many abruptly begin looking for a way to shift their investments into more stable safe havens. 

Hereby the traditional move could really hedge against stock volatility with gold which has proven an effective method in the past but with a newer alternative challenging the old school safe haven. While launched in 2009 bitcoin ushered in what is a new era of digital currencies as the leading cryptocurrency, bitcoin comes with many of the properties of currency but with some unique features that could certainly make it a viable haven. Thereby it was that ultimately it remains up to the individual investor to determine if the bitcoin is a suitable safe space in times of market trouble. 

Here we compare gold and the bitcoin as safe haven options.

Get Some Of The Gold

As of now, several factors are making gold a strong safe-haven asset as its value as material for consumer goods such as jewelry and electronics as its scarce. Therefore, regardless of demand, the supply remains disproportionality low as gold cannot be manufactured like a company issuing new shares or a federal bank printing money as it must be dug up from the ground and processed.

Thereafter accordingly gold comes with almost no correlation with assets like currencies as well as stock indices such as the S&P 500 whereas the precious metal used to be tied to the dollar until 1971 as President Nixon severed the ties between US currency and gold as a base. It was since then those who do not want to ride stock market wings to their full extent having invested in gold. Hence the precious metal is sure to help soften the blow or even profit when there’s a stock market correction or a decline of at least 10%

Subsequently gold usually perform well during corrections because even if it doesn’t necessarily rise, an asset that remains static while others decline is quite useful as a hedge, adding to it as more people flee stocks and invest in gold, the price rises accordingly

Here Bitcoin Bursts Onto The Scene

It is in this context that bitcoin as a blockchain-based cryptocurrency shares some properties with its gold counterpart whereas many have called bitcoin as the digital gold in the past due to its weak relationship with all other assets especially stocks. hence market participants may thereby remember that in 2017 when the price of one bitcoin surpassed that of a single troy ounce of gold for the first time, whereas as of January 2020, the price is above $ 8700 but how is it so valuable and more importantly should those running from stocks consider investing in the cryptocurrency? 

It was similar to gold that there is a limited amount of bitcoin where Satoshi Nakamoto as the pseudonymous creator of bitcoin is limited the total supply to 21 million tokens as the Bitcoin is also like gold in that it is not issued by a central bank or federal government whereas decentralized cryptocurrency has the bitcoin generated by the collective computing power of miners who are individuals and pools of people who are working to verify transactions which take place on the bitcoin network and are then rewarded for their time, computing power and effort with bitcoins. Thereafter to ensure that the market isn’t flooded the bitcoin protocol stipulates that these rewards are periodically halved ensuring that the final bitcoin won’t be issued until about the year 2140.

To Be Continued In The Next Post

The difference between bitcoin and gold is wide as it helps the investors decide which one suits you better. Hence the details have to be mentioned regarding the complexities of bitcoin mining and gold mining. Quite a few facts are helping the investors decide which, when, and where the issues stand. 

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