Has the gold lost its luster? The last years would certainly show gold as a good that only grew with time, but 2009 it’s a different story. . Gold fell 9% while other classes, including real estate and the dollar, rose. What is surprising is that the value of the dollar usually moves in tandem with precious metals, but even the US dollar has grown by 3% this year.
During a recession, the typical course of action would be use gold as a hedge against stock market volatility. However, a newer approach is challenging this tried and true safe haven strategy, which has already proven effective in previous cases. Bitcoin, which was introduced in 24, marked the beginning of a new era in the history of digital currencies.
As the dominant cryptographic currency, bitcoin has many of the characteristics of a general currency, as well as some distinct characteristics that can make it a viable haven. However, it is up to the individual investor to decide whether bitcoin is an appropriate safe haven during times of market turmoil.
With gold moving sideways and cryptocurrencies seeing a massive resurgence in the past two years , we are designing a case to understand which is the best investment — gold or bitcoin?
Gold: The safest good of all time?
Gold has been present for thousands of years as a safe and reliable asset. One of the main reasons people respect gold is that it is a reliable source of protection that has withstood the passage of time, whereas Bitcoin has not been present during a major financial crisis like the Great Depression (even though it was specifically created to avoid such a crisis).
Central banks, government organizations, pension funds and astute wealth management offices have always had a portion of their assets invested in gold.
The value of gold is decreasing
Although gold prices have fluctuated in the short term, much like the stock market, the value of the precious metal has been kept relatively stable over time. Given that we are experiencing a period of high market volatility, it may be prudent to invest a portion of your portfolio in gold.
Gold prices may rise as a result of inflation, making it a good inflation hedge investment. When prices go up, the value of fiat coins goes down, but the value of gold usually goes up as well. That said, however, Bitcoin is slowly growing as an asset with incredible potential for short and long term investments.
India, which is one of the largest gold investors in the world, it has also seen a huge boost in its bitcoin industry. Thanks to cryptographic exchanges, more people are digitally investing in cryptographic currencies like Bitcoin, right from the comfort of their homes. This begs the question – Is cryptocurrency really the future of investment?
Bitcoin: Digital gold
Bitcoin is the most valuable cryptocurrency of the world, measured by market capitalization.
Unlike the stock exchange, which is only open for trading during the week at a certain time, cryptographic currency exchanges are open 24 hours a day, seven days a week, allowing traders to exchange Bitcoin and other products or digital assets 24 hours a day.
Another important feature of Bitcoin is that it has a finite supply, which means that there will only be a total of million Bitcoins in circulation in one given time. This means that if your Bitcoin bet turns out to be positive, it will only increase in value over time.
Read more about why you should invest in Bitcoin.
Bitcoin is similar to gold in that it is not issued by a central banking system or a federal government. Bitcoin is a decentralized cryptographic currency that is produced by the collective computing power of “miners”, individuals and groups of people who work to verify transactions that take place on the Bitcoin network, and are then offset with bitcoins in exchange for their time, computing power and effort.
In order to prevent the market from being oversaturated, the Bitcoin protocol specifies that these premiums be halved on a regular basis, ensuring that the final bitcoin will not be awarded until approximately the year of 2140.