safe-haven-asset

Bitcoin and Gold are two assets that have a lot of die-hard true believers, people for whom the asset class seems like safe-haven. They also each have severe critics who argue that one or the other is not a good investment at all. Since BTC’s creator, Satoshi Nakamoto, envisioned Bitcoin as a kind of digital gold, a lot of crypto supporters started claiming that Bitcoin is going to become a “digital store of value.” 

This raises the question — how similar are they as an investment? Which is the most safe-haven asset: Bitcoin or Gold?  

Let’s dig in and compare Bitcoin to gold. Here is an infographic to help you get the gist:

Gold VS Bitcoin

Bitcoin and Gold Similarities

  • Both of them are globally accepted.

Even though Bitcoin has just started its way to mass adoption, more and more companies are beginning to accept BTC as a payment method. Gold, on the contrary, has served as money for much more longer, proven its value through the ages.

  • Both of them are speculative.

Both investments have a speculative nature since there are too many factors that influence the price of both.

  • Costly to mine.

Though mining methods are rather different, both of them have to utilize expensive equipment and serving costs. While Bitcoin mining involves high electricity costs, gold mining uses human resources to mine.

  • Limited in supply.

BTC is capped at 21 million coins and gets harder and harder to mine within time. More than 8-% of all coins have already been mined. Gold supply is dependent on the amount mined out of the earth’s crust. It is estimated that 165,000 tonnes exist above ground today, and about 4,500 tonnes are adding from mining per year.

  • Both of them have safe-heaven properties in economic collapses.

People use Bitcoin and gold to hedge their funds in times of political and economic uncertainties, money devaluation, and instabilities.

Bitcoin and Gold Differences

Thought Bitcoin and gold have so much in common, they are totally different assets.

  • Tangibility

Gold is a physical asset, while BTC is fully electronic (digital).

  • History

Gold has thousands of years of history backing it, while Bitcoin is only a decade old history.

  • Risks & Returns

Gold has lower risk and lower returns, while with Bitcoin, both risks and returns are higher.

  • Volatility

Bitcoin is more volatile than gold.

  • Government Control & Liability to confiscation.

Gold is under the control of Futures Market, while Bitcoin is not controlled by any party, and opposite to gold can’t be confiscated. On the other hand, the lack of government control makes Bitcoin more susceptible to scams.

  • Fungibility

Bitcoin is easier to send and receive than gold.

What is the Most Safe-haven Asset?

In general, considering all these differences and similarities, we may assume that gold is still a winner, as it has proven its value through the ages and got the most important thing – people’s loyalty. People have always been fascinated to hold precious metals since they are tangible and can be kept at hand. Bitcoin, on the contrary, is digital, which makes this type of investment psychologically more difficult to make. Though in general investors get lower returns from gold compared to BTC, risks of losing are also lower. Apart from that, gold has relatively lower volatility on the market.

One of the primary differences is the government’s stance on these two assets. Bitcoin enthusiasts bet on it since the government does not control BTC, they cannot confiscate it. Being a great plus for Bitcoin, it is a minus too, as it prevents investors from entering because they are afraid of scams.

Summing it up, gold is still a winner. People tend to turn to gold as the most safe-haven asset in times of political and economic uncertainties. It has always been a smart addition to any portfolio due to its historical reliability and real value.

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