There are differences and similarities between Bitcoin and Gold. Here are 5 important things you should know about Bitcoin and Gold:
Safety/Legality
Gold’s system for trading, weighing and tracking is near perfect. Passing off fake gold or stealing it is no easy task. Bitcoin is also hard to corrupt, since it’s encrypted in a decentralized system with complicated algorithms. However, gold has the advantage that it can’t be hacked. Bitcoin’s digital infrastructure is vulnerable to cyber attacks.
Scarcity
Gold and Bitcoin are both rare resources. Bitcoin’s creators ensured that only 21 million Bitcoin would be in circulation by the year 2140. While it’s still unknown when all the world’s gold will be mined from the earth, we know there is about 244,000 metric tons of gold that has been discovered to date. But unlike the blockchain which records every transaction of Bitcoin, gold circulation is harder to estimate since many investors keep their gold stashes private.
Baseline Value
Billions of people around the world lack access to banking infrastructure. Bitcoin solves this problem by creating a platform where these people can send money across the globe at almost no cost. Bitcoin’s potential as a means of banking for those without access to traditional banks give it enormous baseline value. Gold also has tremendous value, proving useful in many applications like dentistry, jewelry, electronics and other luxury goods throughout history.
Liquidity
Liquidity is important for any tradable assets including cryptocurrencies. A higher liquidity in the market means fairer prices, more market stability, and faster transaction times. Both gold and bitcoin have very liquid markets where fiat money can be exchanged for them.
Volatility
One major concern for investors interested in Bitcoin as a safe haven investment is its volatility. Bitcoin is an emerging investment and therefore it is susceptible to large price swings in a short period of time. This kind of volatility is not seen in gold. One reason why gold is a safer long-term asset.
Sven Franssen