Bitcoin was introduced no more than a decade ago, while gold has been in the investment field as far as human history goes. Despite being ancient go-to commodity gold has been left behind by bitcoin in many aspects. Bitcoin took a boost once again, right with the start of 2021, by hitting a new all-time high. Therefore, bitcoin is most likely to outperform gold in investment portfolios throughout the year 2021.
Bitcoin and gold are seen as sources of investment along with safety from economic and political turmoil. These commodities act as safe havens especially when it comes to unbridled expansion and devaluation of major currencies, for example, the US dollar.
There is no doubt that both Bitcoin and gold will continue to be used for preserving portions of wealth by the investors. But, Bitcoin tends to offer a few more benefits than Gold. These inherent advantages are the reason why Bitcoin succeeded in outperforming Gold.
Also read: How to buy Bitcoin in 2 minutes
The question arises; from who does this investment demand comes? Traditionally the demand usually comes from investors who require a unique asset with the following qualities:
- Whose supply is limited.
- Which can be easily bought and sold.
- One that is accepted worldwide (universal).
- Which is a stable source of storing wealth, even when there are threats from economic and political turmoil?
It is a fact that both Bitcoin and Gold fulfill all the requirements mentioned above, and there is no doubt that investors will keep buying both the commodities in order to protect their portfolio and diversification. But once again, Bitcoin is most likely to keep staying a step ahead of Gold.
Reasons why Bitcoin will win this race:
- The limited supply of Bitcoin and Gold:
The reasons behind the limitation in the supply of both Bitcoin and Gold are different. The production of Gold is a very difficult and labor-intensive task. Moreover, it takes a long time for it to be available for the investment, and it is also restricted to the geographical areas where there are resources of the Gold present. All these factors make up the limited supply of Gold.
- Easy buying and selling
Anyone can buy Gold easily, in several different forms i.e. jewelry, bricks, or nuggets. Moreover, exposure to Gold’s price is also achievable through ETF or any investment fund. Sounds easy, obviously! But, it requires effort and time to buy gold and also an investment account in order to buy ETF or a Gold fund. Also, there is kind of an age restriction for buying Gold.
On the contrary, for buying Bitcoins all you need is a Bank account and an application (App). Every person, who has a mobile phone, regardless of his age can easily buy Bitcoin. Older people are not so savvy regarding technology, but as time is passing they are also learning.
- Widely accepted exchange medium
There is no lie in saying that Gold is accepted almost everywhere as an exchange medium. But would someone accept Gold instead of currency? Let’s be honest, can you buy something you like online or in a store by offering Gold? Of course, you cannot.
On the contrary, Bitcoin is accessed by all our electronic devices, and the use of Bitcoins as a currency is also starting. Don’t you think it will be easier to pay through Bitcoins instead of offering Gold?
There is no doubt that Bitcoin can offer investors a wider range of benefits, but the volatility of this cryptocurrency makes it harder to find reliable entry points. This property makes Bitcoin a very good asset for trading rather than investing in it. Even with this point cleared, one must trade Bitcoin, but not without all the tools for risk management.
However, Bitcoin might be the next Gold. As the CEO of Bitpanda, Eric Demuth says, “We’re seeing it emerge as a part of the recommended allocation strategy for institutional investors and investment banks. This underlines just how important this asset has become in the world of investing. Right now, we are seeing a dramatic increase of new retail customers entering the market on a daily basis… Bitcoin is about to become gold for the 21st century.”