5 Reasons Bitcoin Could Be a Better Long-Term Investment Than Gold
5 Reasons Bitcoin Could Be a Better Long-Term Investment Than Gold
The emergence of high inflation figures for forty years and the increasingly bleak global economy have prompted many financial analysts to recommend investing in gold to protect against volatility and a possible decline in value. of the US dollar. For years, crypto traders have referred to Bitcoin (BTC) as “digital gold,” but is it actually a better investment than gold? Let’s take a look at some of the conventional arguments investors cite when praising gold as an investment and why Bitcoin might be an even better option in the long run. Value retention One of the most common reasons to buy both gold and Bitcoin is that they have a habit of holding their value during times of economic uncertainty. This fact has been well documented, and it’s undeniable that gold has historically offered some of the best wealth protection, but it doesn’t always hold its value. The chart below shows that gold traders have also been subject to long periods of falling prices. For example, someone who bought gold in September 2011 would have had to wait until July 2020 to get back into the green, and if they continued to hold, they would be close to level or under water again. In Bitcoin’s history, it has never taken more than three to four years for its price to regain and surpass its all-time high, suggesting that over the long term, BTC may be a better store of value. Could Bitcoin be a better inflation hedge? Gold has always been considered a good hedge against inflation because its price tended to rise as the cost of living rose. But, a closer look at the Gold vs. Bitcoin chart shows that while Gold has seen a modest gain of 21.84% over the past two years, the price of Bitcoin has increased by 311%. In a world where the overall cost of living is rising faster than most people can afford, holding an asset that can outrun rising inflation actually helps build wealth rather than maintain it. Although the volatility and price decline in 2022 was painful, Bitcoin still provided much more benefit to investors with a multi-year time horizon. Bitcoin Could Mirror Gold Amid Geopolitical Uncertainty Often referred to as the “crisis commodity”, gold is well known for holding its value during times of geopolitical uncertainty, as people have been known to invest in gold when global tensions rise. Gold is called the crisis metal so I guess if we go into a recession again gold will rise as a commodity — Scott Hempstead (@scottytrip1) [April 22, 2022] Unfortunately for people located in conflict zones or other areas prone to instability, transporting valuables is a risky proposition, with people prone to asset seizures and theft. Bitcoin offers a more secure option for people in this situation as they can memorize a seed phrase and travel without fear of losing their funds. Once they arrive at their destination, they can replenish their wallets and access their wealth. The digital nature of Bitcoin and the availability of several decentralized marketplaces and peer-to-peer exchanges like LocalBitcoins provide a greater opportunity to acquire Bitcoin. The dollar continues to lose value The US dollar has been strong in recent months, but that is not always the case. During times when the value of the dollar drops against other currencies, investors have been known to flock to gold and Bitcoin. If various countries continue to move away from their focus on the US dollar in favor of a more multipolar approach, there could be a significant drain on the dollar, but these funds will not flow into weaker currencies. Although gold has been the asset of choice for millennia, it is not widely used or accepted in our modern digital society and most younger generations have never even seen a gold coin in person. For these cohorts, Bitcoin represents a more familiar option that can fit into people’s digital lifestyles, and it doesn’t require additional security or physical storage. Related: Argentines Turn to Bitcoin Amid Inflation Worries: Report Bitcoin is scary and deflationary Many investors and financial experts point to gold scarcity and supply constraints after years of declining production as the reason gold is a good investment. It can take five to 10 years for a new mine to reach production, meaning a rapid increase in supply is unlikely and central banks slowed their pace of gold sales significantly in 2008. That being said, it is estimated that there are still over 50,000 metric tons of gold left in the ground, which miners would gladly focus on mining should the price rise significantly. Gold will never reach the promised land of “true scarcity”. The higher the price, the more it is mined, thus increasing the supply, which then lowers the price. [#bitcoin] [#gold] [#prixor] — DeepSeeer (@ErDeepsee) [March 7, 2022] On the other hand, Bitcoin has a fixed supply of 21 million BTC that will never be produced, and its issuance is occurring at a known rate. The public nature of the Bitcoin blockchain makes it possible to know and verify the location of each Bitcoin. There is no way to truly locate and validate all gold stores on this planet, which means its true supply will never truly be known. For this reason, Bitcoin wins the scarcity debate, hands down, and is the most difficult form of money created by mankind to date. Want more information on trading and investing in the crypto markets? The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of TSTIME.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
