Bitcoin: 5 Reasons Why It Can Be A Better Investment Than Gold

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The emer­gence of forty-year high infla­tion read­ings and the increas­ing­ly dire-look­ing glob­al econ­o­my has prompt­ed many finan­cial ana­lysts to rec­om­mend invest­ing in gold to pro­tect against volatil­i­ty and a pos­si­ble decline in the val­ue of the Unit­ed States dollar. 

For years, cryp­to traders have referred to Bit­coin (BTC) as “dig­i­tal gold,” but is it actu­al­ly a bet­ter invest­ment than gold? Let’s take a look at some of the con­ven­tion­al argu­ments investors cite when prais­ing gold as an invest­ment and why Bit­coin might be an even bet­ter long-term option.

Reasons Why Bitcoin Is A Better Choice

- Adver­tise­ment -

One of the most com­mon rea­sons to buy both gold and Bit­coin is that they have a his­to­ry of hold­ing their val­ue through times of eco­nom­ic uncertainty.

This fact has been well doc­u­ment­ed, and there’s no deny­ing that gold has offered some of the best wealth pro­tec­tion his­tor­i­cal­ly, but it doesn’t always main­tain val­ue. The chart below shows that gold traders have also been sub­ject to long bouts of price declines.

Gold has his­tor­i­cal­ly been seen as a good hedge against infla­tion because its price tend­ed to rise along­side increas­es in the cost of living.

- Adver­tise­ment -

But, a clos­er look at the chart for gold com­pared with Bit­coin shows that while gold has seen a mod­est gain of 21.84% over the past two years, the price of Bit­coin has increased 311%.

In a world where the over­all cost of liv­ing is ris­ing faster than most peo­ple can han­dle, hold­ing an asset that can out­pace the ris­ing infla­tion actu­al­ly helps increase wealth rather than main­tain it.

Often called the “cri­sis com­mod­i­ty,” gold is well-known to hold its val­ue dur­ing times of geopo­lit­i­cal uncer­tain­ty as peo­ple have been known to invest in gold when world ten­sions rise.

Unfor­tu­nate­ly for peo­ple locat­ed in con­flict zones or oth­er areas sub­ject to insta­bil­i­ty, car­ry­ing valu­able objects is a risky propo­si­tion, with peo­ple being sub­ject to asset seizures and theft.

The U.S. dol­lar has been strong in recent months, but that is not always the case. Dur­ing peri­ods where the dollar’s val­ue falls against oth­er cur­ren­cies, investors have been known to flock to gold and Bit­coin.

If var­i­ous coun­tries con­tin­ue to move away from being U.S. dol­lar cen­tric in favor of a more mul­ti­po­lar approach, there could be a sig­nif­i­cant amount of flight out of the dol­lar but those funds won’t go into weak­er currencies.

Many investors and finan­cial experts point to scarci­ty and sup­ply con­straints for gold fol­low­ing years of declin­ing pro­duc­tion as a rea­son gold is a good investment.

It can take five to ten years for a new mine to reach pro­duc­tion, mean­ing rapid increas­es in sup­ply are unlike­ly and cen­tral banks sig­nif­i­cant­ly slowed their rate of sell­ing gold in 2008.

That being said, it is esti­mat­ed that there is still more than 50,000 met­ric tons of gold in the ground, which min­ers would hap­pi­ly focus on extract­ing in the event of a sig­nif­i­cant price increase.



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