There has been a lot of speculation about investing in bitcoin due to a variety of reasons. The continually rising value of the currency has led some to described bitcoin as digital gold, and for good reason. The value of bitcoin has remained seemingly unaffected by market fluctuations. This is held true for gold, a precious metal that has remained valuable for centuries. The two investment options seem to rise above the woes of the markets, and this is a good thing for many. However, it does bring up the question: is crypto gold trading as viable an option as gold trading?
Things To Note If You’re Considering Gold
Gold has been around for a long time, and many trust it. It is a safe bet, and has a proven track record. The price of gold has remained fairly stable, weathering the worst market fluctuations. The world is currently enjoying the bull market, but some are predicting that a recession is on the way. Gold is always a valuable asset in the recession. Additionally, the value of gold is easily determined. This is because the systems set up for measuring, tracking, and trading gold are impeccable. The presence and discovery of gold mines makes gold mining a perpetual process, allowing supply indefinitely. This is an assurance that supply is guaranteed, even in low quantities. Perhaps the greatest reason to invest in gold is this; it is legally recognized. If your gold is stolen, there are systems in place that will see the perpetrators prosecuted.
However, gold is not without its flaws. It is not a currency, and cannot be easily liquidated. This can be a great hindrance in times of emergencies. The process of liquidating gold involves multiple parties, adding more complexity. Gold also requires physical storage, and this calls for additional expenses.
Things To Note If You’re Considering Bitcoin
Bitcoin, also known as digital gold, is a fairly recent form of currency. This makes it a bold choice of investment. Despite the short time of existence, crypto gold trading has become widely popular. The value of bitcoin has increased steadily, and it was once shared the same value price with gold. The supply of bitcoin, however, is fixed. This eliminates the risk of oversupply, which can threaten the currency’s value. The bitcoin algorithm allows for the mining of a set number of bitcoins, creating a transparent and fixed system. As a currency, bitcoin can be easily liquidated. This comes in handy in case of emergencies. All that is needed to make a transfer is a QR code. The process can be undertaken personally, or through a third-party.
However, there are a few concerns regarding bitcoins. The first is the possibility of theft. Bitcoin boasts of a great encryption system and a complex algorithm. However, the safety measures in place have been manipulated a few times. This has led to massive bitcoin theft, including a $460 million bitcoin heist known as the Mt. Gox disaster. Tracking bitcoin is virtually impossible, and this creates a legal nightmare. The number of transactions as well as the amount of transaction that can be carried out per day is limited. This limits the liquidity of bitcoin. Additionally, crypto gold trading is not legally recognized by many governments. This means that there are no regulations governing the practice, making it a risky investment. With the recent political climate in some countries, concerns have been raised about the future of bitcoin. Its status as digital gold means it’s purely online, and thus internet shutdowns are particularly detrimental to the trade.
Is There Room For Both Investments?
Choosing between gold and bitcoin boils is a matter of personal preference. Gold is a traditional option, and is likely to earn only a little more than the original value. Bitcoin, however, is predicted to explode in value once the maximum amounts of bitcoins have been mined. The value of bitcoin is based on trust and faith, unlike gold’s universally recognized value.
Fortunately, bitcoin is not a substitute for gold or vice versa. Gold is a physical asset, while bitcoin is a digital currency. Their values are independent from each other, as well as the money markets. This creates the chance to invest in both options for those who cannot make a choice. Investing in both options provides the opportunity to practically evaluate the benefits of the two. This in turn, helps to determine which investment fits with the present financial goals.
