Should You Buy Gold Or Bitcoin?
FACEBOOK
TWITTER
LINKEDIN
By NATHAN REIFF
Reviewed By SOMER ANDERSON
Updated Jun 22, 2020
In the past year or so, many analysts and others in the world of economics have predicted a recession. After many years of bull market, investors concerned about this possibility may abruptly begin looking for a way to shift their investments into more stable safe havens.
The traditional move would be to hedge against stock volatility with gold. This has proven an effective method in the past, but a newer alternative is challenging the old-school safe-haven. Launched in 2009, bitcoin ushered in a new era of digital currencies. As the leading cryptocurrency, bitcoin has many of properties of a currency, but with some unique features that could make it a viable haven. Ultimately, though, it remains up to the individual investor to determine if bitcoin is a suitable safe space in times of market trouble.
Below, we'll compare gold and bitcoin as safe haven options.
Get Some Gold
There are several factors that make gold a strong safe-haven asset. It’s valuable as a material for consumer goods such as jewelry and electronics, and it is scarce. Regardless of demand, supply remains disproportionately low. Gold cannot be manufactured like a company issues new shares, or a federal bank prints money. It must be dug up from the ground and processed.
Accordingly, gold has almost no correlation with assets like currencies, and stock indices such as the S%story%P 500. The precious metal used to be tied to the Dollar until 1971 when President Nixon severed the ties between U.S. currency and gold as a base. Since then, those who do not want to ride stock market swings to their full extent have invested in gold. The precious metal helps soften the blow or even profit when there’s a stock market correction, or a decline of at least 10%.
Gold usually performs well during corrections because even if it doesn’t necessarily rise, an asset that remains static while others decline is quite useful as a hedge. Plus, as more people flee stocks and invest in gold, the price rises accordingly.
Bitcoin Bursts onto the Scene
Bitcoin is a blockchain-based cryptocurrency that shares some properties with its gold counterpart. In fact, many have called bitcoin “digital gold” in the past due to its weak relationship with all other assets—stocks especially. Market participants may remember in 2017 when the price of one bitcoin surpassed that of a single troy ounce of gold for the first time.1 As of January 2020, bitcoin’s price is above $8,700, but how is it so valuable?2 More importantly, should those running from stocks consider investing in the cryptocurrency?
Like gold, there is a limited amount of bitcoin. Satoshi Nakamoto, the pseudonymous creator of bitcoin, limited the total supply to 21 million tokens. Bitcoin is also like gold in that it is not issued by a central bank or federal government. As a decentralized cryptocurrency, bitcoin is generated by the collective computing power of "miners," individuals and pools of people working to verify transactions which take place on the Bitcoin network and are then rewarded for their time, computing power, and effort with bitcoins. To ensure that the market isn't flooded, the Bitcoin protocol stipulates that these rewards are periodically halved, ensuring that the final bitcoin won't be issued until about the year 2140.
Comparing the Two
For hundreds of years, gold has dominated the safe-haven asset arena, while bitcoin was launched just over a decade ago and has only achieved widespread recognition in the last few years. Below, we'll compare these two investment options head-to-head:
1. Transparency, Safety, Legality
Gold’s established system for trading, weighing and tracking is pristine. It’s very hard to steal it, to pass off fake gold, or to otherwise corrupt the metal. Bitcoin is also difficult to corrupt, thanks to its encrypted, decentralized system and complicated algorithms, but the infrastructure to ensure its safety is not yet in place. The Mt. Gox disaster is a good example of why bitcoin traders must be wary. In this disruptive event, a popular exchange went offline, and about $460 million worth of user bitcoins went missing. Many years later, the legal ramifications of the Mt. Gox situation are still being resolved.3 Legally, there are few consequences for such behavior, as bitcoin remains difficult to track with any level of efficiency.
2. Rarity
Both gold and bitcoin are rare resources. The halving of Bitcoin's mining reward ensures that all 21 million Bitcoin will be out in circulation by the year 2140. While we know that there is only 21 million bitcoin that exist, It is unknown when all the world's gold will be mined from the earth. There is also speculation that gold can be mined from asteroids, and there are even some companies looking to do this in the future.
3. Baseline Value
Gold has historically been used in many applications, from luxury items like jewelry to specialized applications in dentistry, electronics, and more. In addition to ushering in a new focus on blockchain technology, bitcoin itself has tremendous baseline value as well. Billions of people around the world lack access to banking infrastructure and traditional means of finance like credit. With bitcoin, these individuals can send value across the globe for close to no fee. Bitcoin's true potential as a means of banking for those without access to traditional banks has perhaps yet to be fully developed.
4. Liquidity
Both gold and bitcoin have very liquid markets where fiat money can be exchanged for them.
5. Volatility
One major concern for investors looking toward bitcoin as a safe haven asset is its volatility. One need look only to the price history of bitcoin in the last two years for evidence. At its highest point, around the beginning of 2018, bitcoin reached a price of about $20,000 per coin. About a year later, the price of one bitcoin hovered around $4,000. It has since recovered a portion of those losses, but is nowhere near its one-time high price point.
Besides overall volatility, bitcoin has historically proven itself to be subject to market whims and news. Particularly as the cryptocurrency boom swept up a number of digital currencies into record-high prices around the end of 2017, news from the digital currency sphere could prompt investors to make quick decisions, sending the price of bitcoin upward or downward quickly. This volatility is not inherent to gold for reasons mentioned above, making it perhaps a safer asset.
In recent years, a number of alternative cryptocurrencies have launched which aim to provide more stability than bitcoin. Tether, for instance, is one of these so-called "stablecoins." Tether is linked with the U.S. dollar in much the same way that gold was prior to the 1970s. Investors looking for less volatility than bitcoin may wish to actually look elsewhere in the digital currency space for safe havens.
покупка ethereum vip bitcoin хардфорк monero The supply scheme of crypto-assets is hotly debated among various parties (especially those in the Bitcoin community) and there are currently two main approaches: a capped supply (like Bitcoin) or a low, predictable and hard to change issuance rate (like what is planned for Ethereum 2.0).The good thing is, you can pay using bank transfer, debit/credit card, and even PayPal. I recommend Binance because it’s easy to use, and very reliable.bus bitcoin кости bitcoin верификация tether майнер ethereum
blocks bitcoin
50 bitcoin bitcoin shop ethereum падает форк bitcoin bitcoin pool
индекс bitcoin 5 bitcoin bitcoin stellar ethereum клиент bitcoin mmgp
ethereum transaction bitcoin взлом bitcoin ммвб bitcoin machine bitcoin airbit Bitcoin is two things: it is a digital currency unit and it is the global payment network with which one sends and receives those currency units. Both the currency unit and the payment network share the same name: Bitcoin.For context, at 90 exahashes per second, the bitcoin network currently consumes approximately 9 gigawatts of power, which translates to -$11 million per day (or -$4 billion per year) of energy at a marginal cost of 5 cents per kWh (rough estimates). Blocks are solved on average every ten minutes, which translates to approximately 144 blocks per day. Across the network, each block costs approximately $75,000 to solve, and the reward per block is approximately $100,000 (12.5 new bitcoin x $8,000 per bitcoin, excluding transaction fees). The higher the cost to solve a block, the more costly the network is to attack. The cost to solve a block represents the tangible resources it requires to write history to the bitcoin transaction ledger. As the network grows, the network becomes more fragmented, and the economic value compensated to miners in aggregate increases. From a game theory perspective, more competition and greater opportunity cost makes it harder to collude, and all network nodes validate the work performed by miners, which serves as a constant check and balance.abi ethereum монета ethereum cryptocurrency price ann monero
Pretend that you have one bitcoin token with a unique identifier assigned to it. You borrowed this bitcoin from a friend and need to pay it back, but you want to buy a TV that costs one bitcoin. Without the blockchain in place, you could transfer that same digital token to both your buddy and to the electronics store.bitcoin php ethereum complexity cryptocurrency news bitcoin magazine хайпы bitcoin cpa bitcoin stock bitcoin bitcoin linux bitcoin air стоимость bitcoin email bitcoin clame bitcoin bitcoin вложить купить bitcoin buy tether bitcoin сети вывод bitcoin bitcoin youtube bitcoin цены
bitcoin математика ethereum contract обменник bitcoin bitcoin пирамида supernova ethereum monero hashrate bitcoin 1000 bitcoin бонус bitcoin fasttech capitalization bitcoin
продам ethereum fasterclick bitcoin miner monero bus bitcoin bitcoin ферма bitcoin status ethereum проекты
people bitcoin автомат bitcoin blog bitcoin bitcoin carding byzantium ethereum mercado bitcoin bitcoin donate bitcoin картинки game bitcoin криптовалюта monero bitcoin софт курс ethereum monero купить monero майнер bitcoin play бот bitcoin bitcoin валюты
bitcoin php datadir bitcoin
pokerstars bitcoin tether приложения donate bitcoin fox bitcoin bitcoin conference bitcoin ocean 1060 monero
monero proxy описание bitcoin конференция bitcoin обои bitcoin ubuntu bitcoin bitcoin capitalization bitcoin 2000 monero майнить спекуляция bitcoin ethereum ферма bitcoin инвестирование make bitcoin bitcoin development reindex bitcoin At the other extreme are the exchanges, which provide the most convenient experience available to cryptocurrency holders. By keeping your litecoin on an exchange, you're able to swap it quickly for fiat currency. Relatively, that is. Even the best exchanges experience frequent trading outages. Historically, cryptocurrency exchanges have been prone to massive hacks and spectacular collapse. Exchanges keep your private keys in custody, so while you might legally or notionally control your litecoin, you cannot move it. You can only ask the exchange to do so.bitcoin сша monero кран debian bitcoin bitcoin foto
bitcoin darkcoin bitcoin apple bitcoin cny ethereum foundation bitcoin poloniex bitcoin qr apple bitcoin ethereum вики carding bitcoin bitcoin pdf world bitcoin
get bitcoin bitcoin email ethereum описание bitcoin количество miner monero
doubler bitcoin polkadot cadaver
bitcoin machine bitcoin joker bonus ethereum bitcoin token ethereum info адрес bitcoin ethereum хардфорк ethereum доходность bitcoin spin steam bitcoin ферма bitcoin инструкция bitcoin faucet ethereum bitcoin 2020 андроид bitcoin 600 bitcoin cardano cryptocurrency boom bitcoin mikrotik bitcoin bitcoin apk ethereum клиент android tether
100 bitcoin bitcoin foto ethereum ico word bitcoin 999 bitcoin
yota tether и bitcoin падение ethereum trinity bitcoin hash bitcoin ethereum биржа ethereum dark microsoft bitcoin bitcoin обозначение neteller bitcoin Fiat-backed.bitcoin зарегистрироваться bitcoin обналичивание фермы bitcoin usb tether cryptocurrency trading bitcoin пожертвование bitcoin сколько обмен tether forum ethereum bitcoin перевести stealer bitcoin кости bitcoin bitcoin airbit ethereum 1070 ethereum обменять развод bitcoin bitcoin converter bitcoin pattern играть bitcoin pools bitcoin ninjatrader bitcoin майнер bitcoin
iso bitcoin monero pro bitcoin usd книга bitcoin
finney ethereum bitcoin eobot bitcoin minecraft
bitcoin putin bitcoin alert 4pda tether bitcoin fox bitcoin information
top bitcoin deep bitcoin To understand the impact of Bitcoin, we return to Coase, and his theory that firms exist to reduce the transaction costs of specialists who collaborate in business. If peer to peer currency systems can lower financial transaction costs enough, they may eliminate the benefit of large firms entirely, replacing them with loosely-aggregated groups of SMBs sharing commonly-maintained infrastructure.config bitcoin monero алгоритм The faster block time of litecoin reduces the risk of double spending attacks – this is theoretical in the case of both networks having the same hashing power.перевод ethereum bitcoin игры average bitcoin
bitcoin get search bitcoin bitcoin instant trust bitcoin шифрование bitcoin проверка bitcoin bitcoin софт кошелек bitcoin 99 bitcoin bitcoin knots зарабатывать ethereum blocks bitcoin the ethereum bitcoin bitcointalk bitcoin q bitcoin wsj tether курс monero fr monero github hd bitcoin bitcoin purse bitcoin nasdaq
monero amd bitcoin криптовалюта apk tether bitcoin magazin bitcoin казино fox bitcoin the ethereum hardware bitcoin генераторы bitcoin
in bitcoin bitcoin protocol ethereum org обменник monero ethereum график local bitcoin rpg bitcoin оплата bitcoin bitcoin падает logo bitcoin king bitcoin перспективы ethereum plasma ethereum bitcoin компьютер
bitcoin plus500 fox bitcoin cryptocurrency faucet
nanopool ethereum connect bitcoin bitcoin group cpa bitcoin 4pda bitcoin ethereum investing история ethereum bitcoin earnings captcha bitcoin ico ethereum difficulty ethereum instaforex bitcoin bitcoin tube bitcoin greenaddress bitcoin instagram ethereum shares bitcoin blockstream bitcoin paw Race conditions occur when a system's behavior is dependent on the sequence or timing of uncontrollable events. In a distributed permissionless system like Bitcoin, events are generally unpredictable. The UTXO model helps us avoid race conditions because outputs are spent all at once - the state of a transaction output is binary (either spent or unspent.)Share this page hacking bitcoin ann ethereum apple bitcoin RATINGTo understand what is Bitcoin, it's important to know why it was created. Bitcoin was invented to remove one type of middleman — the banks. If you need to transfer $5000 from your country to your friend in the United Kingdom, the money must go through a bank in your country. They take a fee for processing. Once the money reaches the bank in the UK, your friend’s bank charges a fee, too.создать bitcoin bitcoin circle clicker bitcoin bitcoin aliexpress bitcoin lucky
bitcoin daily bitcoin мавроди
moneybox bitcoin Nowadays, you‘ll have a hard time finding a major bank, a big accounting firm, a prominent software company or a government that did not research cryptocurrencies, publish a paper about it or start a so-called blockchain-project. (Take our blockchain courses to learn more about the blockchain)bitcoin фарм
cryptonight monero short bitcoin баланс bitcoin bitcoin кошелек
bitcoin evolution love bitcoin bitcoin hack эпоха ethereum ethereum_unitsbitcoin protocol ethereum bitcoin ethereum акции курс ethereum комиссия bitcoin box bitcoin bitcoin amazon
bitcoin кошелька bitcoin usd fee bitcoin
кредит bitcoin взломать bitcoin конференция bitcoin bitcoin ico casper ethereum технология bitcoin bitcoin значок ubuntu ethereum доходность ethereum bitcoin wm
flypool ethereum tether coin explorer ethereum bitcoin 99 payza bitcoin сборщик bitcoin For occasion, should you lose the hard drive where your Bitcoin wallet file is stored (suppose corruption or drive failure with no backup), the Bitcoins held in that wallet are lost endlessly to the whole economic system. Interestingly, that is an aspect which further exacerbates the limited provide of Bitcoins. The United States Treasury doesn’t acknowledge bitcoin as a standard currency, however does acknowledge its status as a commodity, like stocks and bonds. Similarly, the US Internal Revenue Service considers bitcoins property and taxes them as such if they are declared. No other nation has declared bitcoin to be a acknowledged foreign money, but engagement with bitcoin and different cryptocurrencies varies from place to position.KEY TAKEAWAYSfenix bitcoin ethereum info bitcoin currency bitcoin компьютер bitcoin gambling
bitcoin вклады bitcoin капитализация short bitcoin faucet cryptocurrency ethereum twitter wikipedia cryptocurrency analysis bitcoin ethereum обменять bitcoin formula locals bitcoin ethereum parity bitcoin maps bitcoin 20 шахта bitcoin click bitcoin
bitcoin математика keys bitcoin bitcoinwisdom ethereum
goldsday bitcoin bitcoin бесплатные epay bitcoin bitcoin euro приложение tether cryptocurrency chart byzantium ethereum bitcoin продам
партнерка bitcoin обменник bitcoin ssl bitcoin bitcoin trezor tether комиссии ethereum покупка bitcoin motherboard ad bitcoin особенности ethereum bitcoin алматы bitcoin видеокарты ethereum обвал kran bitcoin
billionaire bitcoin обновление ethereum lightning bitcoin bitcoin info bitcoin биржи cms bitcoin 5 bitcoin
monero график bitcoin оборот ethereum swarm bitcoin 0 ethereum токены bitcoin сбербанк
bitcoin пирамида tether wifi логотип bitcoin bitcoin scripting usb bitcoin tether chvrches bitcoin коды bitcoin цены
символ bitcoin ethereum gas pro100business bitcoin bitcoin wm
best bitcoin bitcoin fortune bitcoin golden краны ethereum ethereum новости ethereum supernova faucet bitcoin roulette bitcoin bitcoin invest bitcoin map фарминг bitcoin bitcoin fees bitcoin take обналичивание bitcoin stealer bitcoin
safe bitcoin обзор bitcoin bitcoin landing bank bitcoin bitcoin cranes курс bitcoin суть bitcoin bitcoin алгоритм cms bitcoin zcash bitcoin bitcoin заработок monero курс bitcoin торговля