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The Gold-BTC conversation has been common in the investment world recently. The two assets are high-value investments that many investors want in their portfolios. Bitcoin got the nickname ‘the digital gold,’ owing to its investment prospects.
However, one question somewhat still troubles the investment world. Which is better, Gold or bitcoin? When analyzing the two assets, there are different factors to consider. Here, we can see the comparison and distinction of Gold and bitcoin on different fronts, starting with their history.
Understanding Gold
History and Regulation
For over four millennia, Gold has been a measure of value and standard of payment. Every era, millions work hard, seeking Gold.
Gold’s rich history increases trust and reliability in the asset. Gold-related regulations are quite friendly, and the asset is globally accepted.
Accessibility
Gold is a highly accessible asset. The fact that millennials use it as a medium of exchange clearly shows the asset’s accessibility. Even today, getting Gold does not involve having deep technical knowledge. You can purchase it.
Rarity
Although Gold is highly accessible, the asset is also rare. Gold is not an everyday commodity that you will find easily and anywhere. You have to work very hard and pay lots of money to find it. Even though Gold’s demand is high, the supply does not increase fast to feed the demand.
Demand
As an investment asset, Gold is the most demanded. Every investor, large scale or small, wants to have a small share of Gold as part of their portfolio. It has more demand but less supply.
Understanding Bitcoin
History
Bitcoin is a decade-old asset. It launched in 2009 but began to gain real fame in 2011. Since then, Bitcoin has been creating a rich value to strengthen its history. The regulatory world is not at all friendly to bitcoin. Markets connected to bitcoin like Binance face bans in several countries, including the US.
Accessibility
Although the coin is fairly accessible, there is still more to make it more reachable. Generally, bitcoin is an asset for the millennial generation. Its base is the internet, and most of its transfers and uses are internet-based. Only people with internet and technological know-how can easily invest in the asset.
Related: Here’s Why Analysts Still Believe BTC Could Hit $100k
Rarity
It’s no doubt that bitcoin is among the rarest investments currently. Its maximum supply is 21 million coins. A process called mining helps in the release of the coins. The mining process is quite costly and complex. Thus very few people can have access to the coin, making it very rare.
Demand
Bitcoin has a very high demand, especially in the crypto world. The trading volume of the coin is a clear show of how high the coin’s demand is. Even fiat investors have been showing interest in the coin. You may also like to read El Salvador Buys More BTC.
Bitcoin Vs. Gold: Investment Prospects
Generally, considering the factors above, it’s easy to conclude that Gold is a better asset. It has a richer history, friendly regulations, highly accessible but rare. However, the most important front to look into as an investor is the investment prospects. Both assets are rare and have high demand, thus are deflationary. So, which is a better investment asset? Bitcoin!
Related: Does The US Government Own More Bitcoins Than Any Other BTC Holder?
Gold Investment Check
For some investors, Gold is a better asset. It not only enhances return but also helps in reducing risks. According to Statista, Gold has an average annual return of slightly over 10%. However, its risk reduction advantage is the main feature that makes investors prefer it over bitcoin.
For instance, because of Gold’s ability to hedge against risks, many Central banks have huge gold reserves. Statistics report that Central banks hold around 35k metric tonnes of Gold. Mostly, they hold it for risk reduction and hedging inflation. Therefore, Gold offers risk reduction in the portfolio while increasing value.
Bitcoin Investment Check
Bitcoin as an investment asset also brings in very high returns. Looking at the annual return rates for Bitcoin, the asset makes four figures rates in some years. In 2017, 2019, and 2020, Bitcoin made returns of 1318%, 87.2%, and 302.2%, respectively. The figures are extremely higher than Gold returns. However, high returns bring in high risks.
Related: Bitcoin in 2030: Predictions and Patterns you should watch out for
Bitcoin, being a highly volatile asset, can easily end the year with negative returns. In 2018, Bitcoin closed the year with a 72% loss. The asset also faces immense risks connected to its technology. On multiple occasions, users lost millions, billions connected to scams and hacking on crypto. Therefore, even though bitcoin has higher return rates than bitcoin, it’s a very risky investment option.
Final Verdict
This guide has helped you compare the worth of Bitcoin and Gold. Gold has a rich history, is more accessible, and is less risky.
Contrarily, bitcoin is a better investment asset. It has higher returns but comes with very high risks. However, both assets have huge benefits to the portfolio.
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