The ongoing inflationary pressures and recessionary predictions have many investors worried that. their money’s value would diminish. Gold was always the go-to investment choice, but the emerging asset class in cryptocurrency offers a viable alternative. Most investors can’t resist the temptation to compare and appraise the two assets. Gold versus Bitcoin, which one should you invest in?
Bitcoin aims to deliver a deregulated digital currency with a few use cases while no one carries gold around to buy goods and services. Both assets are “mined,” and so far, they remain tools of speculation. Investors flock to either every time there’s a bubble in any direction. The prices of gold and Bitcoin skyrocketed recently when central banks pumped money around to cushion people and institutions from the ravages of Covid-19. Here’s what you need to know if you’re not sure what to place in your portfolio.
Gold has been around since time immemorial and is considered a low-risk investment as it is stable and widely accepted. Higher risks sometimes come with higher returns, as is the case with cryptocurrencies. Crypto is volatile, meaning you risk meaning can easily make a loss. Consult an expert and do your due diligence before choosing one over the other.
Return on Investment
The value of gold has increased over the years and has a less sloppy return curve when compared to cryptocurrencies. When you choose gold, you’ll have to keep it for several years before you can make a significant return on investment. Cryptocurrencies seem to show a faster upward trend that has seen some of them outdo the peak price of gold. The earlier investors made more profits than those that invested in gold, but the trend isn’t similar across all digital assets.
Liquidity and Borrowing Capacity
Cryptocurrencies can easily be interchanged between one another and the leading local fiat currencies. Cryptocurrencies are more liquid than physical gold since they’re available 24/7 without the restrictions of local bank timings. However, gold becomes more convenient when it comes to borrowing since most banks are willing to accept it as collateral.
In terms of volatility, many consider gold a better option for long-term investment. This is a result of past trends compared to cryptocurrency. However, the higher volatility of cryptocurrencies becomes advantageous to day traders. You can make minute decisions and make a considerable profit when a price fluctuation happens at any given moment.
Investment in physical gold offers security from theft and different forms of attack. Digital assets are based on blockchain technology by adding data to a chain of blocks that can’t be deleted or altered. Every once in a while, fraudsters discover a loophole and exploit them through hacking incidents. However, you can make your crypto assets secure by indulging security experts against possible attacks. You can also secure your gold investment through an insurance policy, making gold a secure investment option.
Gold and cryptocurrencies are both suitable investments when you’ve done your research well. Take the time to understand the risk and potential returns of both. Know how volatile and secure each one is and how that will affect your investment. Perhaps it’s best to consider the different ways you can invest each one of them for maximum returns.
Tom is a long-serving freelance writer who specializes in the blockchain and cryptocurrency niche. You may even call him a crypto-enthusiast with over 10-years’ experience in content creation, blog writing, and SEO. He is a philosophical figurehead who believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.