DeutschEspecially in times of low interest rates for classic investments such as overnight or fixed deposits, investors are rightly looking for profitable alternatives. Surprisingly for some investors, Bitcoin can certainly compete with the “safe haven” gold in terms of profitability and other important criteria. Interestingly, Bitcoin is often referred to as “digital gold”. Accordingly, the comparison of both investments is obvious. At this point, we ask about the similarities and differences on the one hand and, on the other hand, whether the world’s first digital currency might even perform better than gold in comparison. This can be a good argument for buying cryptocurrencies.
Traders are Increasingly Well-Disposed towards Bitcoin
Although Bitcoin has been around for more than a decade and has established itself as a digital currency, numerous rumors circulate about its functions as well as advantages and disadvantages. And even within the crypto community, the currency is viewed differently. Especially as a way to store assets, some financial professionals today advise you to use Bitcoin. Increasingly, the currency is mentioned even before gold. Surprisingly for some readers, the best-known digital currency is also and especially ahead of the precious metal as a means of payment. More and more shops on the Internet, but also isolated sectors of the “real” world such as gastronomy or tourism allow cryptocurrencies as a payment model. This also applies to some other important coins such as Ethereum and various other coins from the current top 30 of the altcoins. Above all, the “Bitcoin offshoots” such as Bitcoin Cash benefit from this opening of trade and economy for the new technologies.
Bitcoin also Has a “Natural” Limit
Of course, there are advantages on both sides when it comes to comparing gold and Bitcoin. Gold performs well due to its high acceptance as a means of exchange for millennia. At the same time, the precious metal has long served as a hedge against fiat money such as the US dollar. The high demand in the industry and the limited available resources of gold will continue to drive up the price. However, there is also an upper limit for Bitcoin, which is 21 million units. It is precisely this fact that is gradually attracting more interest in the digital currency from institutional investors. So there is no clear winner on this point. This is also illustrated by the recent jumps in the prices of gold and Bitcoin. However, cryptocurrencies as a whole continue to have a difficult time from the state side. Regulatory authorities are more likely to put obstacles in the market’s way than to accept it and recognize its potential. Gold continues to enjoy a better reputation here.
Gold and Bitcoin Prove to be Stable
States or the respective central banks hoard large quantities of gold in their vaults as usual. But gold is no longer a means of payment, as is well known, while Bitcoin is becoming increasingly established. Let us now look at some of the most important parallels and differences between gold on the one hand and the digital currency Bitcoin on the other. One similarity can be seen in the stability of both assets. While Bitcoin does not exist in a physical form at all, the precious metal only has – in a positive sense – a very slow decay on a physical basis. Both models have a limitation, Bitcoin through its maximum amount defined by the developer, gold through its natural availability.
1. The Effort Involved in Buying and Selling
An advantage of the most important cryptocurrency is the ease of handling when transferring. As a physical asset with a not to be underestimated weight, gold is always associated with an effort when it comes to a change of ownership. Bitcoin shares (or complete coins) can be transferred from one wallet to another within seconds. Trading via the digital exchanges such as Binance is therefore pleasingly fast. However, providers and customers must meet the corresponding technical requirements. Gold can be handed out anytime and anywhere without such conditions.
1:0 Bitcoin vs. Gold
2. Storage after Bitcoin Purchases without Major Effort
Gold buyers also have to think about storage because of the physical purchase. The home safe causes additional costs, the safe storage at banks and other service providers also involves fees. Bitcoin holders only need a wallet, which, depending on the variant, only means low costs. A hard wallet as an external storage medium is usually the “most expensive” alternative here. However, costs are usually only incurred once here, similar to the safe for gold reserves.
However, Bitcoin fans have to remember their access data and protect it securely against access by third parties. While criminals have little chance of stealing gold from a bank vault, the risk in the WWW is higher in comparison when trading cryptocurrencies. If I also lose my user data for the Bitcoin wallet, good advice is usually expensive. Some users no longer have access to their digital savings after a data loss.
2:0 Bitcoin vs. Gold
3. Bitcoin Beats Gold in Terms of Division Options
Although gold can certainly be traded in quantities of a few grams. Bitcoin clearly outperforms the precious metal in the comparison due to its very good divisibility. In the context of payments, for example, gold does not leave a very good impression here. The smallest unit of Bitcoin, the “Satoshi”, corresponds to a share of 0.00000001 Bitcoin. Gold could hardly be divided to this depth even with the greatest technical effort. So you can also transfer very small amounts in Bitcoin, which is an advantage when shopping online.
3:0 Bitcoin vs. Gold
4. Natural vs. Digital – Comparison of Origin
This point does not require extensive explanation: The source for the precious metal is known to be nature. There are mines all over the world where gold is mined. Bitcoin mining, on the other hand, is purely digital on computers and using special software.
4:1 Bitcoin vs. Gold
5. Acceptance – Gold Wins (so Far) Due to Long Tradition
Even if gold, as I said, is basically no longer a means of payment, the precious metal enjoys an excellent reputation. The Bitcoin, which is still young in comparison, still has some catching up to do in this point. A clear regulation at national and international level as well as acceptance in trade could soon ensure that Bitcoin and with it the entire world of cryptocurrencies no longer lead a niche existence. The increasing media coverage also serves the coin as protection.
4:2 Bitcoin vs. Gold
Both Markets are Dominated by Large Participants
Bitcoin and gold prove to be comparable when it comes to the question of the distribution of current capacities. Here as there, a few large industry representatives often decide the market, while normal investors tend to participate in trends on a small scale. While banks and especially central banks are involved in precious metals, crypto exchanges, trading platforms and large investors primarily own a significant portion of the available units. Whether Bitcoin or precious metal wins the race in comparison ultimately depends on the investor’s goal. As current market developments show, both asset classes can generate high returns in speculation. As a means of payment, the cryptocurrency leaves the physical raw material gold behind.
Take a look at the above and decide based on your own wishes what suits you best. Don’t forget to let the comparisons of gold to other assets such as stocks or real estate take effect on you!
Get started now and buy Bitcoin: To our Bitcoin entry
Part 1: Bitcoin or Gold?
Part 2: Bitcoin or Stocks?
Part 3: Bitcoin or Real Estate?
Part 4: Bitcoin or ETFs?
