Bitcoin Looks Poised to Dethrone Gold Globally
It may seem absurd to compare Bitcoin and gold, but the truth is that there are several common talking points between them. Bitcoin is the most famous cryptocurrency on the market today with an outlook. In fact, many individuals tend to believe that Bitcoin can become the gold of the Cryptocurrency age. This is possible since Bitcoin has shown some quality features that are reminiscent of gold.
The main difference between Bitcoin and gold as a currency is that Bitcoin lacks a physical form which is not the case with gold. Also, gold has been there for decades while Bitcoin is a relatively new cryptocurrency formed only a few years ago. However, despite these few differences, they have more in common than you might be aware of.
Bitcoin as the New Gold
In this Bitcoin review, let’s look at some of the major ways Bitcoin compares to gold and the reasons why it may be considered the new gold on the market today.
Check out this summarization of the two commodities similarities:
1. Scarce and Limited in Total Production
What determines the value of major currencies in the market today is demand and supply. In the cases of Bitcoin and gold, both are scarce and have a limited cap production mainly due to increased demand.
The value of Bitcoin has increased dramatically over the past few years, and that explains its reduced supply. In the future, we expect to see more scarcity in the market if the value of Bitcoin stands.
Over the years, gold has been the most valuable metal in the world, and it still is even in the current market. The value of gold is mostly associated with the highly limited quantity in the market approximately 171,000 tons.
Over the years, gold has maintained its value; it averages annually at a rate of approximately $1,000-$1,200 per ounce. In the year 2000, gold was priced at about $200 per ounce, and once it bounced back from these low values, it became a valuable long-term asset in the market.
Initially, the value of Bitcoin was quite low; it was only being traded for a few dollars. Over the last course of 2017 however, Bitcoin has experienced many ups and downs, it’s highest up reached almost $20,000, but it has since fallen down again, maintaining its value at approximately $6000. No other cryptocurrency has taken the no.1 spot on the crypto market.
Currently, gold is valued at around $1200 while Bitcoin is valued at about $6338. The biggest uncertainty surrounding Bitcoin is its stability; as a currency, its value has been highly volatile on the market. As for gold, over almost two decades, its value has steadied encouraging regular investors and governments to invest in it. It seems that for Bitcoin to reach the same steady level as gold and counter-act its instability, investors will need to invest long-term.
3. Transfer and Fees
In this case, Bitcoin has a number of advantages over gold. This is mainly because of the anonymous feature of the Blockchain technology. In some cases, however, this could encourage illegal activities. The fact that Bitcoin uses Blockchain technology makes it better in preventing fraudulent activities.
This can be so appreciated since it records securely every single transaction made in its systems and once a transaction is recorded, it cannot be tampered with. This makes Bitcoin a faster, safe, and more comfortable way of transferring money.
Transferring gold physically can be quite awkward and slow as compared to Bitcoin which is transferred online within a few seconds. In addition, the fees charged when exchanging Bitcoin are minuscule as compared to gold. This makes Bitcoin far way more attractive as a mode of exchange in remittance markets.
4. Both Gold and Bitcoin are Mined
Yes, both Bitcoin and gold are mined. However, the process of mining is very different. Gold is mined physically from the earth while Bitcoin mining involves the use of powerful computer encryptions.
This fact means that both Bitcoin and gold are safe forms of currencies since they can’t be printed recklessly by central banks or any other entity.
5. Store of Value for Unstable Currencies
Bitcoin can be used as a store of value in countries with uncontrolled and volatile currencies. For instance, in Venezuela, Bitcoin has been widely accepted by businesses for smaller transactions including buying food and movie tickets. This is a counteraction to the country’s increased inflation: around 2616%.
Gold seems to have retained its value for centuries. Gold coins that were used hundreds of years ago are still valuable today. Maybe it is due to the long history of gold, but it does not look like its value will disappear any time soon.
In comparison, fiat currencies are at the mercy of the economy, big banks, and governments. No matter how much of a fiat currency you own (or how rich you are) if one of these three controls goes belly up, your worth does too. By owning gold or bitcoin, you are outside the reach of these controls, which makes them both so much more valuable than their worth lets on.
At the end of the day, many individuals and investors seem to like Bitcoin in the same way that people used to be intrigued by gold. The security, speed, transparency, and efficiency of Bitcoin systems are promising. Even in a massive global economic downturn, Bitcoin is most likely expected to thrive.
Featured Image: DepositPhotos/ outsiderzone
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