gold vs bitcoin chart

gold vs bitcoin chart

Historically, the alternative asset class has been gold. People generally sell their securities and invest the earnings in gold whenever they lose confidence in the worth of the companies they own or even in the value of any currency. But recently, Bitcoin has suddenly become popular. Money can now be stored in other places besides just gold in times of crisis. Bitcoin is becoming a practical substitute. Given the enormous price increase Bitcoin has had recently, it appears to be eclipsing gold at the moment. While the price of Bitcoin is skyrocketing, the price of gold is declining.

Many detractors think Bitcoin is likely the biggest bubble the world has ever witnessed. In terms of scope, it's frequently contrasted with Tulip Mania. According to Warren Buffet, Bitcoin is a reliable method of sending money. But checks and money orders are too! Why should Bitcoin be worth $20,000 while checks and money orders aren't?

Tangibility

The first and most significant distinction is that gold is a real, tangible good. Investors have direct access to it. Bitcoin, on the other hand, is a virtual currency that only exists online. It doesn't really exist. It is incredibly difficult to compromise gold or lessen its purity. The proper way to look for pure gold is well known to the public. Bitcoin, meanwhile, is mainly uncontrolled. It can therefore be manipulated. Bitcoin is even more vulnerable to scams due to the lack of regulatory organisations in place.

The previous significant price increases in Bitcoin are not a coincidence. This was most likely caused by insider trading at higher prices. This gives the appearance that the price is going up, luring potential investors in from the sidelines. The original con artists then sell off their stock, liquidate their holdings, and vanish. The fact is that Bitcoin is exceedingly challenging to trace. Even if there is cyber theft and millions of dollars are lost, investors have very limited recourse. This is the reason why people use Bitcoin as an intermediate asset class rather than as a final location to store value.

Preference for Liquidity

The main aspect of an alternative asset class is liquidity preference. In other words, if there was a crisis, which would you rather hold: gold or bitcoin? In most instances, the answer to this question is unavoidably perfect. There is a long history of gold enduring crises. It has been utilised by numerous civilizations for ages. When the value of fiat money reaches zero, gold takes over as the standard unit of account. There is no government making this choice. Instead, the market itself absorbs it. Gold may still be used to exchange for products and services even during times of crisis, like the hyperinflation in Venezuela! Bitcoin is still a young technology with no track record of surviving economic downturns. It is challenging to even imagine,how Even in a catastrophe where there is no energy and the infrastructure for online transactions is badly degraded, Bitcoin will still function.

Stability

For many years, gold's price has remained largely steady. It is true that prices have increased and even decreased. None, though, has made as much of a splash as Bitcoin. The price of Bitcoin has been rising by 10% every day for the last few days! The price has quickly increased from $1,000 to $20,000! Bitcoin is not a reliable store of value as a result. Price swings occur extremely quickly. As a result, investors' returns on investment may range significantly from what they paid for Bitcoin initially.

Energy Consumption

The biggest enigma around Bitcoin is how energy-efficient it is. Bitcoin uses a lot of electricity, which is a catastrophe. One Bitcoin is mined using the energy produced by burning 12 barrels of oil! Right now, Nigeria, a nation of more than 90 million people, uses less energy than all of the Bitcoin mining activity worldwide. It is anticipated that as mining activity increases, China will use more energy than Japan, the second-largest economy in the world. The Bitcoin paradigm has a serious weakness in this regard. The planet already lacks sufficient energy. It would not be wise to use resources meant for basic human needs to execute financial transactions. Gold, on the other hand, is unaffected by these issues. Gold mining doesn't require a lot of energy. It has been done for ages and is probably going to keep happening.

In the end, Bitcoin appears to be a fad, if not a swindle. It is not even close to being as dependable as gold has historically been as an asset class. People might favour Bitcoin over gold in the near future. But the bubble will eventually pop, and gold will once more reign supreme among alternative asset classes.