Bitcoin and other cryptocurrencies are very popular these days. Some are now declaring that these digital currencies are now more valuable than gold bullion. That assertion is more likely false because financial experts believe gold has the
advantage. Gold bullion possesses most of the important qualities of money according to pundits. Now let’s compare the two.
Gold lacks the yield that cryptocurrencies are currently enjoying right now. Still, almost all major financial institutions and countries continue to hold gold since it’s a relevant asset. This particular precious metal is known for its durability
and intrinsic value. New assets like cryptocurrencies are don’t possess such qualities.
During times of uncertainty and when stock market prices dive the price of gold rises. Investors like them since short to medium-term uncertainties drive the gold’s value up. They are also welcome in most stock markets, unlike cryptocurrencies.
Cryptocurrencies have certainly appreciated in value in a short time span. For example, Bitcoin increased its value by around 600% within a one year period. Other cryptocurrencies also achieved the same results. For the same period, gold
increased its value by a mere 12 percent. There is also the possibility that cryptocurrencies are enjoying a high value right now because it’s the fad right now.
Both will require storage in a secure location. Unfortunately, hackers can exploit online wallets, computers, and smartphone to steal cryptocurrencies. Regulatory bodies, network, and infrastructure failure can also prevent owners from transferring their digital currency. On the other hand, gold does not have these problems.
Cryptocurrencies such as Bitcoin are easier and cheaper to transfer since they are digital assets. Meanwhile transferring gold from one location to another is expensive. You will need to secure it during transport and countries will more likely charge import taxes.
- Intrinsic Value
Cryptocurrencies, despite its high current value, has no intrinsic value since it’s not naturally rare. For example, there are other alternatives for Bitcoins which means its value is highly dependent on the holder’s perception of its value. On the other hand, financial instructions and many people know that there is a limited supply of gold in the world. Cryptocurrencies simply don’t have the intrinsic value that gold enjoys and ultimately is a fiat.
- Stability in Value
Cryptocurrencies and other money have volatility rates. Gold has stable purchasing power and its daily volatility is relatively low. For the moment, the market price of gold is still higher than Bitcoin but that could change real soon. Cryptocurrencies are quickly rising in value at a rate that outpaces gold. Some believe that the digital currencies will soon eclipse all precious metals. On the other hand, most experts are not sure about that theory. Bitcoin and other digital currencies simply do not have the durability and intrinsic value that gold and other precious metals have. If you don’t agree simply sell bullion, gold or silver right now at the nearest local gold dealer.