Bitcoin is currently trading at $3,577 as at 11 August 2017. At the same time, the price of 1 ounce of gold is $1,286. This means that the value of Bitcoin is nearly 3 times the price of gold. That begs the question, is Bitcoin the new Gold? In this article, I shall highlight how  Bitcoin compares with Gold as an investment.
In order to perform the comparison, we need to understand Bitcoin and Gold as commodities and both are subject to fluctuations.

Is Bitcoin the new Gold for Investors?

According to Tom Lee, a major Wall Street strategist, Bitcoin is expected to outperform stocks and bonds for the rest of the year. There is a potential for a huge sponsorship which will drive the price higher according to Tom. He expects the price to reach $20,000 and touch $55,000 by 2022.
Bitcoin the new Gold - Image 1
Bitcoin 6 months Chart – bitcoin.com

The amazing rise of Bitcoin

Bitcoin has tripled in value this year. When I bought Bitcoin in March this year, the price was around $1,200. It reached heights of $3,500 despite splitting into Bitcoin Cash. Owners of Bitcoin could claim Bitcoin Cash, but that did not stop Bitcoin from scaling new heights.

Upcoming support from Institutions

The Chicago Board Options Exchange (CBOE) said it plans to offer Bitcoin futures by early 2018, while the U.S. Commodity Futures Trading Commission (CFTC) provided approval to LedgerX to clear derivatives.

With the monetary policy in the U.S. getting tighter, there are few attractive investment opportunities. Stocks are at all-time highs and bonds are steady. This has driven many to Bitcoin and other cryptocurrencies.

No regulations

Bitcoins are not regulated by any bank or government. The cryptocurrency is decentralised and can be accepted anywhere in the world. Without regulations, there have been misuses. However, that has not stopped many offline shops accepting Bitcoins.

Bitcoin is rare

Bitcoin beats Gold at being rare. Gold was considered to be a rare precious metal. However it cannot beat Bitcoin when it comes to rarity.

Why Bitcoin is not the new Gold

Bitcoin remains the cryptocurrency with the largest market cap. However, it could be taken over by any other cryptocurrency. The prime candidate for that being Ethereum. Gold rose more than 1% on 9 August 2017 due to threats delivered by the U.S. and North Korea. This proves that Gold is one of the safest trades during a crisis. While Gold rose, Bitcoin dropped slightly on the same day.
Bitcoin the new Gold - Image 2
Gold 6 months chart – Goldprice.org

Gold has a baseline value

The precious yellow metal derives its baseline value from being used in jewellery. Its price cannot drop below a certain value as it would hit its demand. Gold has always been seen as a store of value during times of crisis. On the other hand, the price of Bitcoin is speculative.

Gold has trusted Exchanges

The exchanges in which Gold can be purchased have been running for many years now. The same cannot be said for Bitcoin. There has been a major failure in MT.GOX. However, the number of exchanges for Bitcoins and other cryptocurrencies have been growing.

Conclusion – Bitcoin the new Gold

For me, Bitcoin is the new Gold. I never invested in Gold, but being actively online and interested in technology drove me towards Bitcoins. If you are like me, you will find Bitcoin easy to buy and trade online. Also its easier carrying a Ledger Nano-S then a Gold bar.

Let me know your thoughts in the comments section below. Also feel free to share this post so that your friends can also learn how Bitcoin is the new Gold.

LEAVE A REPLY