Should you be buying Bitcoin or gold? Traders who are always looking for the asset that will optimize their returns, it can be difficult to weigh the risks and rewards of so many different assets.
Some want a high-risk portfolio that offer huge returns if it pays off. Others want to balance high risk with more conservative, stable assets in case things go awry. A balanced approach is often a good way to mitigate risks. But with Bitcoin and gold increasingly competing in the same space, deciding on one or the other can be a challenge.
Before you can decide which one you wan to buy, you need to be able to make an informed decision and read price movements in order to capitalize. While there many similarities between gold and Bitcoin, even down to the vocabulary around “mining,” there are some important differences between the original digital currency and one of the oldest stores of value known to humankind. The biggest differences are: volatility, storage, and sources of demand.
There are plenty of similarities, too, which is why traders have to decide which one they want to buy. Both have limited supply, thanks to the hard cap of 21 million Bitcoin, compared to the 180,000 tons of gold currently believed to exist in the globe both above and underground. Differences like usefulness as a currency continue to be debated.
The Top Differences between Bitcoin and Gold
Volatility may be the biggest difference between Bitcoin and gold, and one of the most important to traders. Bitcoin’s volatility is part of what makes it exciting. When it rose from $1,151 to $19,783 ins a single year, everyone wanted a piece of Bitcoin. The plummet down to $5,951 was even more dramatic, not to mention its recovery back up.
Gold by comparison is much calmer and has a smaller range, especially since the end of the gold bust that followed a huge bull market in the 2000s. Throughout the year 2017, gold didn’t move more than 2.5% in a single day. However, that hadn’t happened since 1996, so gold can be more volatile.
The difference between gold and Bitcoin in terms of storage are like night and day. Small quantities of gold may be stored at home in a safe, but in larger quantities, investors will pay for global storage solutions including insurance. The storage costs can become expensive. By contrast, you will need to make a smaller investment for a Bitcoin storage solution like a USB device or app-based storage.
You can click here to learn more about Bitcoin storage and how to securely store your cryptocurrency.
If you use a cryptocurrency exchange, you can safely keep cryptocurrencies on the exchange, but most investors take additional steps, because you never know. Cryptocurrency exchanges like Bitbuy use best practices such as storing 80% of their cryptocurrency in cold storage. For long-term investors, cold storage devices work best for security, as they keep them offline.
Who’s buying Bitcoin vs. gold? Thirty percent of the gold mined every year is snapped up by investors. A further 54% goes into the making of jewelry, 10% is used by technology and industry, and 6% is purchased by central banks – generally to be minted and turned into investment products.
Who’s buying Bitcoin? That’s harder to say given the available data.
In the end, the gold vs. Bitcoin debate will come to your personal investment goals and your taste.