Investing in Gold vs Investing in Crypto: Which One is Better?
The use of gold to make transactions dates back to more than 6000 years ago where it was used for buying and trading purposes. It has come a long way as a precious metal! It goes without saying that no one really carries irregularly shaped gold coins in their pockets to buy merchandise from the market like the good old days but it remains a valuable asset whose worth is easy to translate into monetary value, regardless of which part of the world you find yourself in. Meanwhile, cryptocurrency is a relatively new digital currency that is based on a decentralized framework with zero third-party interference. You get to enjoy 100% anonymity and can make mobile payments to purchase goods and services!
However, like all assets, the decision to invest in either gold or cryptocurrency relies on their current and future value along with other investment characteristics.
Investing in gold
Gold was incredibly relevant to the financial structure of the United States (and therefore the rest of the world) up until the late 20th century when President Nixon abandoned the gold standard (the conversion of ’n’ dollars into x grams of gold at a fixed value). However, this naturally occurring element continues to enjoy high value as an investment asset because of how scarce it is which affects the global supply of gold (extracting gold is expensive and requires technical expertise). Needless to say, gold will always be associated with utility because of its versatility of use that ranges from crafting jewelry to constructing electronic devices.
If you’re looking for stability and a safe option to rely on, then gold might be ideal. However, it cannot be used as a currency, and storing it and selling it off during a recession can be tricky!
Investing in cryptocurrency
Cryptocurrencies such as bitcoin are similar to gold in that they are scarce and therefore precious. There is a fixed number of bitcoin in the cryptocurrency ecosystem and the way new bitcoin generated (or ‘mined’) is a process that takes place through a verification system that rewards those who expend the most time and effort in the cryptocurrency landscape. However, cryptocurrencies have gained the attention of the world by establishing themselves as a powerful, decentralized, and credible store of value. The relatively new emergency of cryptocurrency means that you can expect its value to exponentially increase in the future as more individuals and businesses begin using it as a viable currency.
However, cryptocurrency can be incredibly volatile in value (which can be a good or bad thing depending on the fluctuation itself). For example, at the start of 2018, a single bitcoin was worth $20000, whereas a year later the value dropped to $4000 before it rose again. Cryptocurrency investors need to be familiar with such price shocks and indulge in predictive analysis to make the most out of their cryptocurrency investment.
Conclusion
If you are looking for a stable store of value with little focus on return on investments, the gold might be your best shot. However, it isn’t exactly useful (cannot directly be used to make purchases) so its utility is limited. Meanwhile, cryptocurrencies are a promising option because of how they can be used to avail goods and services. But the volatility of cryptocurrency means that you can either win big or lose terribly. The choice is yours!
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