Bitcoin vs Gold: What to Invest In?

Bitcoin vs Gold What to Buy_

How to store your hard-earned money to avoid devaluation? Today, you have a myriad of options, but two of them are increasingly popular. Bitcoin vs gold are often compared by investors. With the advent of Bitcoin, people started arguing whether it will ever replace gold or not. This is still a burning issue. Our guide will help you figure out which one is best for you by comparing both assets from various standpoints.

Bitcoin and Gold Ratios

Why does it make sense at all to compare Bitcoin and gold? Today, both of them can serve as an equivalent of value – cryptocurrency is being integrated into many spheres of our life. Both are used for trading and as money storage. 

Let’s compare a few crucial aspects of both assets in our Bitcoin vs Gold chart:


GoldBitcoin
Reliability & keeping qualitiesGold is a precious metal. It is not affected by chemical reactions and is one of the most durable materials on the planet. Every ounce that has ever been mined still exists on Earth.Theoretically, Bitcoin can be destroyed under certain circumstances arising during mining. 
It can also be possible if the hard disk that stores private keys is destroyed. In this case, all the Bitcoin stored on it will be lost.
AccessibilityWant to purchase gold for long-term storage? When you buy it abroad, you have to pay fees for border crossing. Add to it the cost of currency conversion, since it is unlikely that there will be people ready to accept gold as a means of payment. This will add 10-15% to the initial cost.Bitcoin should not be taken anywhere. The currency is bought and sold on the Net. Bitcoin is placed in a public ledger called blockchain. The only thing you need to obtain BTC from your wallet is a secret key that can be copied, memorized or written down. No additional fees apply for purchase. 
ReservesThere’s a limited amount of gold on the planet. In addition, gold mining is becoming more and more complicated. Yet, if new large-volume gold reserves are found, it will lead to a drop in the value of this precious metal.The supply of Bitcoins is strictly limited. Satoshi Nakamoto projected the system in such a way that the last Bitcoin will be mined in 2140. 
Ability to make daily paymentsIt’s unlikely that you can easily pay for something with a few grams of gold in your pocket – there are very few places in the world where you can pay with gold.Bitcoin can be easily used to make daily payments. More and more companies accept Bitcoin as a means of payment. The number of places labeled “Bitcoin is accepted here” is growing exponentially.
InflationThe price of gold is relatively stable. However, its price can grow during a crisis. When the price of gold declines, the spending power increases – after that, the situation stabilizes.Bitcoin is not prone to inflation thanks to 1) limited amount of BTC; 2) halving of mining reward; 3) increased volatility.

Interesting to note, Bitcoin and gold correlation is almost absent: those assets do not affect one another.

Bitcoin vs gold correlation.jpg
Bitcoin vs gold correlation is zero

Gold Demand  

Gold price chart.png
Gold price chart 1960-2010

As you can see, the price of gold can hardly be called ‘stable’. It keeps changing and depends on a variety of factors, including financial market conditions, overall inflation, US dollar rates, etc.

As we know, scarcity drives the cost – a highly-demanded object becomes more expensive. But when it comes to gold, it’s easier to understand where the demand comes from.

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Gold demand by industries in 2017

Moreover, gold price fluctuations are seasonal, which makes it easier to predict the cost. For instance, gold price increases from Christmas to the end of February. In India, gold price increases before massive festivals where women use a lot of gold for decorations and jewelry – the peak prices are observed in July and August. To top it off, analysts can predict when the demand for gold should pick up throughout the year.  

On the contrary, demand for Bitcoin and thus Bitcoin prices are impossible to predict – the cryptocurrency price fluctuations are spontaneous, and there is not much historical information to conclude whether traditional financial chart patterns are applicable to cryptocurrency. 

Bitcoin Usage 

Until recently, Bitcoin was used to carry out speculative operations on exchanges. But today, many entrepreneurs realize that cryptocurrency can be successfully used to develop a business, and integration of Bitcoin payments will never hurt. Entrepreneurs started using this currency as a means of payment, with some even building their business around currency exchange, gambling, etc.

Some make money on long-term BTC storage and manage to multiply their investments exponentially. This is how many early Bitcoin investors became millionaires. 

Also, this currency allows you to make international payments. Specialists like freelancers and remote workers are often paid in BTC. This payment method is very convenient, reliable and simple. It can be used even by those who have no experience of using electronic money.

Bitcoin can be used to pay for services, food, and clothes. Hundreds of stores around the world accept this currency, especially those in the European Union and the USA.

The use of Bitcoin in gambling is gaining momentum. With its help, you can bet in sports, and the number of such bets is growing at a fast pace. This currency is also used for trading on exchanges. It all depends on which project you take part in, and whether cryptocurrency can be used in these projects. Use of Bitcoins allows you to spend your money anonymously without issues and questions. The latter attracts more and more customers.

The most reliable way to trade Bitcoin is to use online exchanges. Active traders make money on short-term Bitcoin price fluctuations by using various cryptocurrency arbitrage strategies. 

Bitcoin vs gold: What to Buy?

So, what is better for investment – Bitcoin vs gold? There is no right answer. Everything depends on the purpose of your purchase.

  1. For short- and mid-term investment, it is better to choose Bitcoin. BTC is prone to serious fluctuations, as many people buy low and sell high, when the price rises by 5-50%. 
  2. For long-term investment, gold proves to be a more efficient option. You can use the help of analysts to calculate how much gold should be bought and when it is expected to grow in price. Generally, long-term gold investments (5-10 years and longer) can bring you about 30% profit.
  3. Need to keep the money and use it as a means of payment? Then Bitcoin is a more convenient option for you. It is accepted in many stores, and a Bitcoin debit card will make it possible for you to pay with crypto anywhere. 

Time to Buy Bitcoin 

You can buy Bitcoin instantly with USD, EUR, or other cryptocurrencies using Changelly. ID verification is not required, and transaction fees are low.

Buy BTC.jpg
Buy Bitcoin instantly at Changelly

Summary

It’s up to you to decide whether you want to store your money in Bitcoin or gold: both have their benefits and drawbacks. However, if you need not just a storage solution, but also a means of payment, you should really consider going with cryptocurrencies.

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