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Gold vs Bitcoin: Which is a better investment in 2021?

by JQ Jewels on July 25, 2021

Gold vs Bitcoin

Money has revolutionized from one form to another over the last 4000 years. From the use of bartering system to gold, then to coins and finally to paper currency, which is being used worldwide these days in various forms, i.e. cash, debit/ credit cards, digital wallets etc. 

But this progress has not stopped yet. Now, there is a new version of money called cryptocurrency. It's an entirely digital form of money that works on blockchain technology. Bitcoin is most popular as it is the first decentralized cryptocurrency. 

 

Gold & Bitcoin History

Gold is a precious metal that has limited supply; it's rare and is chemically inert. It was officially declared as money in 550 BC. Even paper currency was backed by gold till 1971.

Nowadays, gold is used in processors, graphic cards and most electronic equipment due to its unique material properties. Additionally, it is used in jewellery and watches.

Bitcoin was founded in 2009 by an unknown person named Satoshi Nakamoto. It's a peer-to-peer decentralized electronic cash system. 

Since its invention, bitcoin's acceptance is increasing gradually. It was first used commercially in 2010 to buy two pizzas from Papa John's for 10,000 BTC.

 

Physical Vs. Virtual Existence – Hacks, Scams & Frauds

Gold exists physically, whereas Bitcoin is a virtual currency. You can touch gold, you can feel it, you can use it to make jewellery, and you can even eat it. Gold is a highly liquid asset; it means that you can convert it to cash quickly anytime without the need of a middle man. As gold buying and selling are done physically, there is no chance of hacking. However, you need to be vigilant about purity while purchasing gold as it is priced according to purity levels, i.e. 9ct, 14ct, 22ct etc. There is a chance of theft, but lockers, security systems and insurance can help you protect your gold.

Whereas, there are risks of hacking, scams and frauds in bitcoin due to its virtual nature. If someone steals your digital wallet private key, then you can lose all your invested money. That is why it is highly recommended to use hardware wallets to store your bitcoins if you have a considerable investment. But you are still not fully protected. For example, your pc/ laptop may be infected by a virus, or your hardware wallet may have been tampered giving backdoor access to your bitcoins. Or you may forget or lose private keys, or your hardware wallet may get misplaced; in these cases, you can't recover your money by any means. Moreover, cryptocurrency trading exchanges are prone to get hacked; even some exchanges are involved in scams and fraud. Hence, you need to be careful all the time.

 

Volatility

Gold prices have been volatile like stocks, real estate and every other asset. But over the long term, gold has maintained its value and investment in it acts as a hedge against inflation. 

Whereas bitcoin is a highly volatile asset. Its volatility is measured to be 117.04%, which is extreme. Though its price has increased exponentially over the last few years, its volatile nature can cause you to lose a lot too.

 

Laws, Rules & Regulations

Gold is a legal and regulated asset; one can freely trade in gold. Even governments and banks have gold reserves.

But bitcoin is not a regulated currency. It is used for money laundering, cybercrimes, gambling and various other criminal activities. Due to this, several countries like China, Russia and Vietnam have declared Bitcoin for payments as illegal. Recently, there has been a crackdown against cryptocurrency exchanges too.

 

Gold and Bitcoin both are good choices of investment. Gold is relatively less volatile and stable than Bitcoin, but the later investment may give you more return. It all depends on how much risk you are willing to take.

No doubt that Bitcoin and other cryptocurrencies are the future as many countries are looking to regulate them. Hence, a better strategy is to invest in both; as Miguel Cervantes said, "Don't put all your eggs in one basket".

If you are looking to get some gold as an investment or wear it, buy gold jewellery here. You can also sell your gold jewellery to us.

 

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