Grayscale had aired an advertisement in 2019 urging investors to step away from gold and invest in digital currency. Cryptos like bitcoin were also touted in this ad as the currency of the future.
Due to this advertisement, a new debate had also started among the bigwigs associated with the finance world. There was a discussion about who should be considered new and what is old.
It was a funny ad though. But it gave rise to a new debate. Those who advocate gold as an investment option believe that gold is not just a collectible, but has a much greater significance. It is considered to be the safest investment option. Human civilization has been considering gold as a safe investment option for thousands of years.
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Since ancient times, after the beginning of the Industrial Revolution and even in the modern era, gold has been considered as the basis of economic stability of the entire country. Due to this, countries around the world recognize the gold standard. However, over the past few decades, gold as a benchmark has lost its sheen a bit. In 1931, England abandoned the gold standard. Similarly, the US abandoned the gold standard in the early 1970s. This does not mean that now no one invests money in gold.
Gold often acts as a hedge against inflation. Gold is still considered the safest investment today. When there is more uncertainty and volatility in the market, investors tend to move towards gold. Gold enthusiasts are often heard saying that cryptocurrencies are a weaker investment option than gold. The price of bitcoin fluctuates a lot. From a long-term investment perspective, bitcoin is not as reliable as gold.
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bitcoin vs gold
From the perspective of price stability, gold is more stable than bitcoin. Bitcoin prices are sometimes seen on the floor and sometimes on the floor. Whereas this is not the case in gold. If we look at the prices of the last 10 years of gold, then in 2012 its price was $ 58,000 per kg. In the year 2010, there was some decline in its prices. But since then there has been an increase in its prices till 2021. On the other hand, if we look at bitcoin, we often get to see unexpected fluctuations in its price. Hence, it is not a good hedge instrument against inflation. However, money can be made from bitcoin in the short term. However, from a return perspective, flagship cryptocurrencies like bitcoin have given much higher returns than gold.
Bitcoin lovers argue that it is a de-centralized currency and provides freedom from unnecessary government interference. On the other hand, we have to face government interference in sleeping. Apart from this, it is easier to transfer bitcoin from one country to another than gold.
In a broader perspective, gold and bitcoin serve different types of investors. While the older generation seeks long-term stability in their investments, the new generation of investors are more enthusiastic about the novelty of bitcoin and the possibilities associated with blockchain technology. Gold and cryptocurrencies have their own strengths and weaknesses. These two can become complementary rather than rival to each other. Most financial advisors advise their clients to diversify investing in cryptocurrencies such as gold and bitcoin.
Let us also tell you that there are also some cryptocurrencies which are backed by gold. These give the convenience to investors that they can buy gold or crypto in any way they want.
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