This is a question that we get all the time…
Bitcoin is often compared to gold. It’s a debate as old as Bitcoin itself, and it will endure as long as both remain adequate stores of value.
Gold, which has been considered the safe haven of investments, and has been one of the best performing assets this year despite the latest economic, political, and social events, combined with the pandemic effects. However, people still beg the question. Can Bitcoin replace gold?
In the last six months, since the first signs of the upcoming COVID-19 crisis, gold was steadily growing in price while Bitcoin experienced a few shakeouts. Over this period, the gold price surged by 25%, while BTC price grew just under 14%. Keep in mind, both gold and Bitcoin require low time preference, and both have a strong historic record of growth.
Bitcoin vs. Gold comparison
This table outlines the main similarities and differences between Bitcoin and Gold.
Although both Bitcoin and gold have a scarce supply which can make the asset increase in price rapidly, the maximum supply of bitcoin is fixed and transparent, it will always be 21 million that will be mined in the year 2140. We can’t precisely quantify how much gold is there left to mine.
Without the right tools it is quite hard to identify the purity and quality of Gold, so it’s prone to counterfeiting, Bitcoin is fully counterfeit-resistant. This is possible thanks to the blockchain network, which verifies and records every mined coin and transaction.
Whether you own physical gold or I owe you (IOU), gold is a bit hard to transfer. It takes days, if not weeks, to transfer physical gold to a different location or to make a transaction. Physical gold requires expensive transport and security measures, while Bitcoin is more portable and can be transferred anywhere in the world in less than 20 minutes using your smartphone.
Gold has a few mining corporations that control the mining process making it very centralized. In the case of Bitcoin issuance and governance are both completely decentralized, as there’s no central entity that issues (mines) new bitcoins, regulates its supply, or governs the network.
Divisibility means that the asset can be divided into smaller components. A single bitcoin can be divided into 100,000,000 Satoshi. You can divide gold, but most times you cannot do it yourself, oftentimes when buying a low quantity of gold, mark-up premiums can be quite high.
Fiat currencies are not durable and often decay when stored for a long time, this is not the case with either Bitcoin or Gold because they are both very durable, the only difference is that Bitcoin can be stored digitally, and therefore it cannot deteriorate. It’s also impossible to destroy Bitcoin. Gold is also very durable and retains its physical characteristic well, but it can be destroyed or devalued.
Fungibility is high for both Bitcoin and Gold, because both are easy to exchange for different assets or goods.
Conclusion
In the case of choosing your investment it’s always best to get informed what best works for your personal strategy and your investing goals. Both Bitcoin and Gold are considered good investments and great stores of value, and their differences make them unique.
However, Is there a 3rd option?
Actually there is! If you want to have physical Gold exposure in your portfolio and at the same time having the benefits of using a Blockchain network, Aurus.io launched this year a gold-backed token and it’s now listed on CBX!
AurusGOLD (AWG) is a gold-backed token. Each AWG is collateralized by, and redeemable for 1 gram of 99.99% gold from LBMA certified refineries. It’s a sustainable, global currency that can be used as an alternative to unstable fiat currencies or as the easiest way to invest in gold.
With the price of an ounce of Gold breaking above $2,000. Hedge some of your Bitcoin profits by buying AWG. It’s up over 22% since listing!
