The go-to safe alternative currency for many has been gold. Whenever there’s been political or economic uncertainty, people would buy and store gold. Things are no longer so black and white.
Recent technologies have been incredibly disruptive for several industries—including investments. Whereas gold was seen as the smart investment for many centuries, the rapid rise of bitcoins has seen some experts debate as to which alternative currency is superior.
What’s a Bitcoin?
In a nutshell, a bitcoin is a form of digital currency. No government or governing body controls it. Instead, it’s produced and maintained by people and businesses. The software is run constantly on computers around the world. It’s built on blockchain technology, meaning it is decentralized and fully transparent.
Why Invest in Bitcoins?
Despite some skepticism when it first debuted, bitcoins have been growing in popularity as an investment opportunity. Just last year, it managed a growth of 190% over the previous year. A reason for the rapid increase in value has to do with its decentralized nature. There is no one bank or banks that can just print more bitcoins and the supply is tightly controlled. The bitcoin model is also being increasingly adopted by different financial institutions and industries.
The Problem of Bitcoins
Due to the nature of bitcoins, there’s little oversight over the system. As a result, there’s been several scandals and high profile cases of fraud reported over its lifespan. This makes investing in bitcoins harder than it is in gold.
With gold, all you have to do is go to your local jeweler, precious metal dealer or even cash-for-gold store to begin investing. There isn’t a safe way for those seeking to invest in Bitcoins to do the same.
Another advantage gold has over bitcoins is credibility. Gold has been traded for thousands of years. It has built a reputation for itself through its history and intrinsic utility. Bitcoins on the other hand are little more than an abstract concept for most people. This legacy means that everyone understands the value of gold, making it easier to trade, unlike bitcoins. There’s also the uncomfortable fact that bitcoins would be literally non-existent if the internet went away.
That Said…
Despite the downsides of bitcoins, they aren’t a clear winner over gold as an investment option. Both are speculative investments in the end as the investors assumes some level of risk. Which constitutes the bigger risk is ultimately up to individuals and their circumstances. Neither pays dividends and they are both showing sings of growth. So, choose the one that best compliments your investment portfolio.