Gold and Bitcoin have many similarities, but they are ultimately different investments and do not serve the same purpose in your portfolio. You do not need to choose Bitcoin or Gold, you should invest in both.
Gold has been around for a long time and performing its function well for more than 5,000 years. It is a store of value and purchasing power, in a highly liquid form, for a potential financial crisis you hope you never have. Gold has credibility and is accepted everywhere in the world.
Bitcoin wants to be that too. But Bitcoin is only just 12 years old. Bitcoin has not matured enough as an asset to make such a claim.
So, why not own both, gold and Bitcoin. With the volatility at hand Bitcoin is not a stable store of purchasing power. It is rather a potentially very lucrative speculation that may be one day it will become the “new gold”. Speculation suggests a small allocation (max. 5%) with money you can afford to lose. Consider investing your Bitcoin profits into gold. Swap from speculating profits into a safe storage of stable purchasing power.
Bitcoin and gold benefit from a lack of confidence in fiat currencies. Governments and central banks worldwide have been mismanaging fiat currencies throughout history. No fiat currency to date has survived for 5,000 years as gold has. Since the creation of the Federal Reserve in 1913, the U.S. dollar has lost 97% of its purchasing power. And, after wholesale shutdowns of global economies, they have taken currency mismanagement to a new level. They have drastically increased the money supply. For the U.S. dollar, the increase was 25% last year alone! This monetary expansion is simply a dilution of the purchasing power of each and every dollar, euro, yen, etc., in circulation. When confidence erodes, alternatives are sought. Precious metals and cryptocurrencies are the beneficiaries of this eroded confidence. Gold and Bitcoin should benefit from continued currency mismanagement.
Do not choose between Bitcoin and Gold. Own them both. Just understand the roles Bitcoin and gold play. Allocate accordingly. Then you are able to sleep peacefully at night.
Sven Franssen