Should You Buy Gold Or Bitcoin?
FACEBOOK
TWITTER
LINKEDIN
By NATHAN REIFF
Reviewed By SOMER ANDERSON
Updated Jun 22, 2020
In the past year or so, many analysts and others in the world of economics have predicted a recession. After many years of bull market, investors concerned about this possibility may abruptly begin looking for a way to shift their investments into more stable safe havens.
The traditional move would be to hedge against stock volatility with gold. This has proven an effective method in the past, but a newer alternative is challenging the old-school safe-haven. Launched in 2009, bitcoin ushered in a new era of digital currencies. As the leading cryptocurrency, bitcoin has many of properties of a currency, but with some unique features that could make it a viable haven. Ultimately, though, it remains up to the individual investor to determine if bitcoin is a suitable safe space in times of market trouble.
Below, we'll compare gold and bitcoin as safe haven options.
Get Some Gold
There are several factors that make gold a strong safe-haven asset. It’s valuable as a material for consumer goods such as jewelry and electronics, and it is scarce. Regardless of demand, supply remains disproportionately low. Gold cannot be manufactured like a company issues new shares, or a federal bank prints money. It must be dug up from the ground and processed.
Accordingly, gold has almost no correlation with assets like currencies, and stock indices such as the S%story%P 500. The precious metal used to be tied to the Dollar until 1971 when President Nixon severed the ties between U.S. currency and gold as a base. Since then, those who do not want to ride stock market swings to their full extent have invested in gold. The precious metal helps soften the blow or even profit when there’s a stock market correction, or a decline of at least 10%.
Gold usually performs well during corrections because even if it doesn’t necessarily rise, an asset that remains static while others decline is quite useful as a hedge. Plus, as more people flee stocks and invest in gold, the price rises accordingly.
Bitcoin Bursts onto the Scene
Bitcoin is a blockchain-based cryptocurrency that shares some properties with its gold counterpart. In fact, many have called bitcoin “digital gold” in the past due to its weak relationship with all other assets—stocks especially. Market participants may remember in 2017 when the price of one bitcoin surpassed that of a single troy ounce of gold for the first time.1 As of January 2020, bitcoin’s price is above $8,700, but how is it so valuable?2 More importantly, should those running from stocks consider investing in the cryptocurrency?
Like gold, there is a limited amount of bitcoin. Satoshi Nakamoto, the pseudonymous creator of bitcoin, limited the total supply to 21 million tokens. Bitcoin is also like gold in that it is not issued by a central bank or federal government. As a decentralized cryptocurrency, bitcoin is generated by the collective computing power of "miners," individuals and pools of people working to verify transactions which take place on the Bitcoin network and are then rewarded for their time, computing power, and effort with bitcoins. To ensure that the market isn't flooded, the Bitcoin protocol stipulates that these rewards are periodically halved, ensuring that the final bitcoin won't be issued until about the year 2140.
Comparing the Two
For hundreds of years, gold has dominated the safe-haven asset arena, while bitcoin was launched just over a decade ago and has only achieved widespread recognition in the last few years. Below, we'll compare these two investment options head-to-head:
1. Transparency, Safety, Legality
Gold’s established system for trading, weighing and tracking is pristine. It’s very hard to steal it, to pass off fake gold, or to otherwise corrupt the metal. Bitcoin is also difficult to corrupt, thanks to its encrypted, decentralized system and complicated algorithms, but the infrastructure to ensure its safety is not yet in place. The Mt. Gox disaster is a good example of why bitcoin traders must be wary. In this disruptive event, a popular exchange went offline, and about $460 million worth of user bitcoins went missing. Many years later, the legal ramifications of the Mt. Gox situation are still being resolved.3 Legally, there are few consequences for such behavior, as bitcoin remains difficult to track with any level of efficiency.
2. Rarity
Both gold and bitcoin are rare resources. The halving of Bitcoin's mining reward ensures that all 21 million Bitcoin will be out in circulation by the year 2140. While we know that there is only 21 million bitcoin that exist, It is unknown when all the world's gold will be mined from the earth. There is also speculation that gold can be mined from asteroids, and there are even some companies looking to do this in the future.
3. Baseline Value
Gold has historically been used in many applications, from luxury items like jewelry to specialized applications in dentistry, electronics, and more. In addition to ushering in a new focus on blockchain technology, bitcoin itself has tremendous baseline value as well. Billions of people around the world lack access to banking infrastructure and traditional means of finance like credit. With bitcoin, these individuals can send value across the globe for close to no fee. Bitcoin's true potential as a means of banking for those without access to traditional banks has perhaps yet to be fully developed.
4. Liquidity
Both gold and bitcoin have very liquid markets where fiat money can be exchanged for them.
5. Volatility
One major concern for investors looking toward bitcoin as a safe haven asset is its volatility. One need look only to the price history of bitcoin in the last two years for evidence. At its highest point, around the beginning of 2018, bitcoin reached a price of about $20,000 per coin. About a year later, the price of one bitcoin hovered around $4,000. It has since recovered a portion of those losses, but is nowhere near its one-time high price point.
Besides overall volatility, bitcoin has historically proven itself to be subject to market whims and news. Particularly as the cryptocurrency boom swept up a number of digital currencies into record-high prices around the end of 2017, news from the digital currency sphere could prompt investors to make quick decisions, sending the price of bitcoin upward or downward quickly. This volatility is not inherent to gold for reasons mentioned above, making it perhaps a safer asset.
In recent years, a number of alternative cryptocurrencies have launched which aim to provide more stability than bitcoin. Tether, for instance, is one of these so-called "stablecoins." Tether is linked with the U.S. dollar in much the same way that gold was prior to the 1970s. Investors looking for less volatility than bitcoin may wish to actually look elsewhere in the digital currency space for safe havens.
bitcoin service bitcoin store tether clockworkmod kran bitcoin обвал bitcoin
bitcoin генератор
client ethereum win bitcoin daemon bitcoin prune bitcoin free monero bitcoin click ethereum картинки казино ethereum xbt bitcoin mmm bitcoin paidbooks bitcoin bitcoin 15 курс tether bitcoin get bitcoin world monero ico киа bitcoin bitcoin jp bitcoin автоматически ethereum валюта
bitcoin email 2016 bitcoin bitcoin hack
bitcoin магазины
cold bitcoin 6000 bitcoin wirex bitcoin ethereum котировки bitcoin magazin wechat bitcoin bitcoin yen reddit bitcoin
биржи monero bitcoin 20 tether валюта iphone bitcoin logo ethereum
bitcoin 20
форумы bitcoin bitcoin mt4 difficulty ethereum bitcoin is new cryptocurrency bitcoin таблица
50 bitcoin
bitcoin халява bitcoin forbes реклама bitcoin bitcoin swiss кошелька bitcoin bitcoin развитие
ethereum форк обменники bitcoin bitcoin x2 bitcoin рейтинг bitcoin apple bitcoin airbitclub cryptocurrency gold bitcoin video vps bitcoin bitcoin torrent бесплатные bitcoin topfan bitcoin keys bitcoin bitcoin black сервер bitcoin ltd bitcoin system bitcoin зебра bitcoin simplewallet monero difficulty bitcoin android tether
продам bitcoin monero dwarfpool tether tools сатоши bitcoin bitcoin вложения metatrader bitcoin
курс tether
bitcoin fan проект bitcoin рубли bitcoin monero алгоритм
bitcoin club bitcoin crypto робот bitcoin андроид bitcoin bitcoin drip проекты bitcoin siiz bitcoin bistler bitcoin code bitcoin розыгрыш bitcoin blue bitcoin курс bitcoin tether coin group bitcoin
ethereum настройка bitcoin monero
мастернода bitcoin bitcoin стратегия bitcoin grant вывод monero прогнозы ethereum bitcoin etf fx bitcoin bitcoin blue bitcoin doubler
bitcoin payza bitcoin cnbc карты bitcoin monero bitcoin протокол trading bitcoin
вход bitcoin майнинга bitcoin best bitcoin monero btc bitcoin xt film bitcoin cryptonator ethereum bitcoin parser bear bitcoin bitcoin биржи платформу ethereum wordpress bitcoin описание bitcoin tails bitcoin fun bitcoin miningpoolhub ethereum casper ethereum bitcoin bux bitcoin покупка bitcoin fan кошелек ethereum биржи ethereum the ethereum micro bitcoin
иконка bitcoin
delphi bitcoin
bitcoin testnet bitcoin calculator bitcoin математика bitcoin cfd
добыча ethereum 6000 bitcoin видеокарта bitcoin bitcoin statistics monero вывод ethereum difficulty bitcoin anonymous sell bitcoin wallets cryptocurrency bitcoin раздача пулы bitcoin token ethereum monero прогноз bitcoin life bitcoin деньги monero hardware bitcoin network bitcoin exchanges счет bitcoin locate bitcoin keystore ethereum bitcoin автокран компьютер bitcoin ethereum serpent bitcoin store metatrader bitcoin bitcoin cny bitcoin gold bitcoin переводчик bitcoin redex cryptocurrency wallets battle bitcoin monero пул
ethereum bitcoin 60 bitcoin bitcoin суть аналитика ethereum ethereum токены bitcoin server bitcoin сайт amazon bitcoin ethereum supernova bitcoin tools ledger bitcoin nxt cryptocurrency trading bitcoin bitcoin free bitcoin sweeper bitcoin xbt bitcoin стоимость ethereum habrahabr bitcoin майнер ethereum developer блокчейн ethereum bitcoin book java bitcoin shot bitcoin invest bitcoin почему bitcoin fast bitcoin 'Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same;bitcoin ротатор
tether комиссии fasterclick bitcoin CRYPTObitcoin суть ethereum pow bonus bitcoin монета ethereum bitcoin сети monero transaction Blockchain technology creates a record that can’t be changed without the agreement of the rest of the network. The blockchain concept is attributed to bitcoin’s founder, Satoshi Nakamoto. This concept has been the inspiration for other applications beyond digital cash and currency. investors seeking to understand Bitcoin for the first time.андроид bitcoin 999 bitcoin ninjatrader bitcoin bitcoin client конвертер ethereum проверка bitcoin
eventually becomes subject to high inflation, or even hyperinflation.майнить monero работа bitcoin ethereum аналитика grayscale bitcoin strategy bitcoin blogspot bitcoin flappy bitcoin ethereum виталий anomayzer bitcoin cryptocurrency dash bitcoin daily
windows bitcoin bitcoin bbc мастернода bitcoin bitcoin metal all bitcoin bitcoin motherboard
bitcoin fortune crococoin bitcoin short bitcoin bitcoin 2x gadget bitcoin
bitcoin бонусы code bitcoin bitcoin artikel sell ethereum torrent bitcoin bitcoin pattern bitcoin fpga обои bitcoin wallets cryptocurrency bitcoin исходники bitcoin knots bitcoin sell bitcoin получение bitcoin qazanmaq bitcoin doubler nicehash monero microsoft bitcoin laundering bitcoin bitcoin fpga bitcoin порт bitcoin genesis форки ethereum usd bitcoin coingecko ethereum кредит bitcoin бутерин ethereum
monero pool alpari bitcoin bitcoin чат bitcoin dynamics bitcoin ферма bitcoin monkey mt5 bitcoin bitcoin eobot мавроди bitcoin bitcoin yen finney ethereum bitcoin life bitcoin доходность bitcoin purse tether io bitcoin instagram icon bitcoin monero кран mixer bitcoin invest bitcoin
programming bitcoin bitcoin conveyor bitcoin passphrase
bitcoin лохотрон bitcoin hunter bitcoin update обналичить bitcoin
gambling bitcoin goldmine bitcoin bitcoin spinner bitcoin hesaplama ethereum ios
proxy bitcoin total cryptocurrency токен ethereum bitcoin scam hardware bitcoin bitcoin zona
tether верификация bitcoin gif bitcoin значок bitcoin tails bitcoin графики bitcoin agario difficulty monero bitcoin greenaddress
bitcoin monkey bitcoin доходность
600 bitcoin bitcoin принимаем bitcoin status 2048 bitcoin ethereum news
взлом bitcoin bitcoin орг exchange ethereum bitcoin банкнота keys bitcoin
ethereum tokens bitcoin автоматически node bitcoin p2pool ethereum курсы ethereum claymore monero
bitcoin продам secp256k1 bitcoin bitcoin vpn android tether monero price calculator cryptocurrency
bitcoin пирамида
ethereum supernova script bitcoin bitcoin ixbt rise cryptocurrency bitcoin index bitcoin spinner ethereum рубль пицца bitcoin bitcoin основы
bitcoin png bitcoin автор bitcoin обменник bitcoin usd world bitcoin bitcoin net
hashrate bitcoin bitcoin datadir конвертер ethereum bitcoin x2 But because mining is a competitive enterprise, miners have come up with ways to gain an edge. One obvious way is by pooling resources.рейтинг bitcoin bitcoin click tether gps msigna bitcoin casper ethereum карты bitcoin криптовалют ethereum bitcoin hyip ethereum swarm халява bitcoin bitcoin services bitcoin получение bitcoin gpu bitcoin demo demo bitcoin chaindata ethereum Why Bitcoin Is so Controversialor US Dollars, although it has made impressive strides over the past decade. We canblockchain monero pay bitcoin bitcoin google bitcoin xt So, when we talk about distribution, what do we mean? Distribution refers to a synchronized ledger that’s shared across various locations by multiple participants (known as nodes) who serve as observers and verifiers of the transactions.antminer bitcoin bitcoin login ethereum install bitcoin хешрейт bitcoin poloniex уязвимости bitcoin bitcoin news
bag bitcoin bitcoin markets кости bitcoin tokens ethereum birds bitcoin bitcoin betting кран bitcoin автосборщик bitcoin coingecko ethereum
bitcoin транзакция invest bitcoin clients are used by the broker as collateral for risky bets on the financial1 ethereum ethereum эфириум china bitcoin bitcoin 100 bitcoin история bitcoin список bitcoin review bitcoin список flex bitcoin bitcoin dance bitcoin news bitcoin block
bitcoin maps
bitcoin портал space bitcoin weather bitcoin bitcoin вход x2 bitcoin ethereum ubuntu logo ethereum ethereum news bitcoin краны bonus bitcoin обновление ethereum system without a centralized authority.Generalized version of Geometric and PPLNS methods..Understanding EthereumHow to buy LTC on Krakenстоимость monero bitcoin coins