The Covid-19 pandemic has taught us many lessons about various aspects of life, but one of the most important ones was about savings and investments. Those who made wise and calculated money decisions were the ones whose lifestyle was left uncompromised during the tough phases of lockdowns.
What we have seen during the pandemic is that people have moved into safe haven assets. Investments in gold have given good returns. But diminishing the shine of yellow metal, the cryptocurrency outperformed gold. This is why cryptocurrency is the new hot cake in terms of investment.
Earlier, the traditional move was to hedge the volatility of stocks with gold. It was a very effective method in the past, but a new alternative has emerged that challenges the old school safe haven method.
What speaks in favour of gold?
- Yellow metal is valuable as a material for making consumer goods such as jewelry and is not widely available.
- Regardless of demand, supply remains disproportionately low.
- Gold cannot be manufactured. The company can issue new shares, the federal bank can print dollar bills, but there is no such case with gold. It must be dug up from the ground and processed.
What speaks in favour of cryptocurrency?
- Bitcoin is a blockchain-based cryptocurrency that shares some characteristics with gold. In fact, many have called Bitcoin "digital gold" in the past due to its weak relationship to all other assets, especially stocks.
- Like gold, there is a limited amount of Bitcoin.
Comparison between gold and cryptocurrency
- On the basis of legality, transparency and safety, gold ranks higher than cryptocurrencies.
- In terms of rarity, both are rare.
- Regarding liquidity, both are good.
- Talking about volatility, Bitcoin is more volatile compared to gold. The yellow metal has a long history of being less volatile than cryptocurrencies.
- Gold has an unmatched accessibility to people of all economic levels and technological knowledge.
- Most importantly, gold is the fundamental currency of central banks.
- Bitcoin has registered 100-fold improvement over gold as a store of value. The world realizes this and begins to change the price of digital currency in real time.
- Although Bitcoin has risen several times in recent months, it is likely to continue to rise in terms of the US dollar for years to come.
- Perhaps, the market value of Bitcoin will exceed the market value of gold by 2030.
- Both gold and cryptocurrencies have their own advantages and disadvantages. It all depends on the absolute discretion of the investor where he wants to invest.