For the longest time – for centuries, even – gold has been among the most coveted precious metals alongside silver and platinum. It, as well as fiat currency used on a daily basis, has a dominating presence in the world of finance. So much so that from the 19th century to the early part of the 20th century, there was a monetary system known as “the gold standard.”
However, as technology advances and a lot of fields become more digital, there eventually came a formidable competitor in the form of cryptocurrency. The driving force behind this change is Bitcoin, the most popular digital currency on the market. Because of this innovation, there is an array of digital currencies to choose from and various trading platforms to use, such as the Gold Exchange.
A hot debate on Wall Street pertains to whether or not Bitcoin will go on to rival gold as an inflation hedge. Indeed, the tension between the two assets has piqued the curiosity of many and has them asking, “Which one should I be investing my into?” Not only that but is there a way that investors could put their money towards both?
Gold’s overall appeal of being the oldest form of currency in the world goes beyond being a long-standing tradition; it is the unique properties. There have been many cases made for why gold is the superior asset. Therefore, as a general consensus, the following reasons are why gold has retained its relevancy and continues to do so:
- No one’s making any more. Unlike fiat currency, a politician cannot simply will more gold into existence. Despite many attempts over the years, no technique can create more. Part of gold’s value is inherently tied to its supply, which limits the effects of inflation or causing deflation. This makes it ideal for savers.
- Counterfeiting is exceedingly difficult. The unique properties of gold mean that specialists now have numerous ways of validating the authenticity of bars and coins.
- It is easy to turn into coins and lasts forever. Many physical items have acted as currency over the years, but gold emerged as the champion. This is mostly because it can be beaten to a pulp and bear no adverse effects. It can also be divided into identical pieces and remain that way. Gold is an inert metal that will never decay and can be pounded into a strip a few atoms thick without fracturing. At the same time, it is soft and easy to shape. This makes it perfect for creating stable coins and bars.
Gold is the king of precious metals for a reason. It has clear-cut uses and demand, regardless of if it is acting as a safe-haven investment.
Bitcoin is a cryptocurrency that is blockchain-based and shares certain properties with gold. In fact, it is not uncommon for people to refer to Bitcoin as “digital gold” due to its feeble relationship with other assets, especially stocks.
Bitcoin and other similar cryptocurrencies give people the ability to transact with one another through the Internet and from anywhere in the world. What’s more, they can trust the results as fraud-free. Bitcoin utilizes cryptography, which is the same mathematics and computer science that protect electronic communications. With this technology, Bitcoin can make sure that coins cannot be duplicated or forged. Theoretically speaking, unlike with cash or gold bars, the bitcoin that traders receive is authentic in a matter of seconds.
Due to Bitcoin being digital, it is transferrable to other users and sold for its dollar (or euro) value. One can easily send their bitcoin in person via a QR code or with an exchange service that will digitally connect to buyers.
The world has changed and will only continue to change. For centuries, gold was once the only answer for what was to be the alternative financial system. However, the younger generation is comparatively more digital. They seek out a way to transact, store, and use digital assets and goods. Nowadays, Bitcoin appears to be the new safe-haven for many – if not all – millennials.
Meeting in the middle
For those stuck in the middle, there is a viable third option: stablecoins. Gold-backed cryptocurrency is a type of crypto stablecoin wherein each token is pegged to physical gold. The token price is tied to the current gold price, so there is considerably less price volatility than Bitcoin or other altcoins.
This unique crypto type provides users with the best of both worlds. It has the immediate processing and privacy or security of crypto payments, as well as the volatility-free valuations of fiat currencies. If choosing between gold and crypto is too daunting, stablecoins are always a possibility.