In the last two years, the COVID-19 outbreak has had a drastic impact across all aspects of our lives, including the economy. The extended lockdowns, declining oil prices and the financial instability pushed people towards finding assets that could be their “safe haven” in a time of need.
Many believe that cryptocurrencies like Bitcoin can work in the same lines as gold. As a trader or investor, you should explore the difference between gold and Bitcoin in order to make informed decisions and find the best return for your money.
Keep reading this article to take a closer look at some of the key differences between the two. But first, let’s give you an overview of how Bitcoin and gold work.
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Gold and Bitcoin: An Overlook
While gold is almost as old as time, Bitcoin is a new phenomenon believed by many to be the future. People used gold and gold-backed assets for a long time to pay for goods and services. As we move forward, Bitcoin seems to be moving in the same direction.
Gold vs. Bitcoin
You surely have seen Bitcoin shown as a shiny coin on the web. But, it’s purely digital, unlike gold which is a physical asset. Beyond physical form, there are a number of differences between gold and bitcoin. Here are some of them:
There’s some level of volatility and fluctuations in any type of market. However, the cryptocurrency market is known for having sudden upward or downward spikes in price. In fact, this is one of the main factors that is consistently mentioned among the benefits and drawbacks of Bitcoin.
Bitcoin price is very much affected by news, events, or even endorsements by famous figures around the world. For instance, in February 2018, the price of Bitcoin went from $5,000 to beyond $11,000 in just several days, and it has seen many more fluctuations ever since.
Compared to Bitcoin, the price of gold is significantly less volatile. For instance, the biggest daily change for the gold price was 2.5% back in 2017. That had not happened since the ’90s.
Investment, in general, is never free of risk, and many investors use this factor to make significant profits.
Bitcoin pays off nicely but carries a higher risk compared to investing in gold; the higher the risk, the higher the return. That’s the main difference between Bitcoin and shares as well.
One of the biggest and most obvious differences between gold and Bitcoin is how people store them. Like most precious physical assets, people keep gold in safety deposit boxes, safes, and even in vaults.
That can not happen with Bitcoin since it’s a digital asset stored in software or hardware wallet protected by private keys.
Security-wise, in recent years, a wide range of crypto exchanges have been under cyber-attacks, and some even have been exposed as scams. That’s why many have moved towards a Bitcoin OTC desk.
Medium of Exchange
Today, there’s some dispute over whether Bitcoin qualifies as real money or not. By real money, people mean something that can be used to purchase goods and services. While no crypto was considered a payment medium several years ago, Bitcoin has recently become accepted by many service providers in the US.
Despite what some may think, gold is not a medium of exchange, and people can not directly use it to buy services or goods. Fiat money is backed up to some degree by gold, but that is a separate matter.
You can Make Money with Bitcoin
There’s no doubt that the secret to making sound investments is to research, carefully analyze, and compare the opportunities. That’s why we tried to outline the differences between gold and Bitcoin to help you make an informed decision that suits your financial position.
Like any other asset in the world, Bitcoin is not without drawbacks. However, the growing popularity and acceptance of Bitcoin among famous figures and well-established enterprises suggest that Bitcoin may very well be the future.Not sure where to start? Secure Digital Markets provides the tools and expertise to help individuals and businesses make profits by investing in Bitcoin. Don’t hesitate to contact us, and our experts will be more than happy to guide you!