Cryptocurrency versus gold – Which one is better?
Cryptocurrencies have potential to be the new digital money. Bitcoin, Ether (Ethereum), Litecoin and a few thousand other “crypto” currencies have become very popular, despite some huge volatility.
Bitcoin (BTC) has been around for ten years (since 2009), but it is still considered a birthing technology that is prone to serious price swings thanks to market fluctuations and perhaps manipulation. In late 2017, Bitcoin reached a high of nearly $20,000 and left many early crypto investors feeling like they had made the right choice. The news surrounding the currency’s rise caused a mad rush to all things crypto. Then in 2019 the crypto space crashed back to earth, with Bitcoin now trading at US$4,076 a coin. However for those that got in right at the beginning they are still up an amazing 2,913%.
One advantage of Bitcoin is, it is said to have a limited supply as there are only 21 million Bitcoins that can be mined in total. Bitcoin transactions work on the blockchain – a decentralized ledger to record all transactions. Bitcoin mining is where decentralized hard drives process all the global Bitcoin transactions, and in return they are paid in Bitcoin.
One great thing that came along with cryptocurrencies was Blockchain. It could be the future for all digital document storage as it was designed to be a secure digital ledger that can be added to, but not altered. Blockchain should survive even if some cryptocurrencies fail.
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Gold is also very limited in its supply, as it is so rare, and expensive to find and mine. Also gold has many centuries of history of being a valuable metal, and a store of wealth. From the ancient Egyptians to the modern U.S. Treasury, there are few metals that have had such an influential role in human history as gold.
In 1792, the US Congress passed the Mint and Coinage Act. This Act established a fixed price of gold in terms of U.S. dollars. Gold and silver coins became legal tender in the United States. With gold now being a US legal tender many gold rushes occurred throughout the 1800s. Since a single gold nugget could make someone a millionaire, prospectors rushed to far flung corners of the planet in search of riches. Gold has been giving humans gold fever since the ancient Egyptians. There’s no single reason why gold has been seen as an exceptionally luxurious metal throughout all of human history other than its shiny and attracts the eye, and it is quite rare.
The talk is gold may rally in 2019 and outperform all asset classes, pushing the price towards $US1,500. Some also say the next cycle peak could reach $1,900 an ounce, maybe sometime next year.
Gold versus Cryptocurrency
Certainly in the past year gold has been the better bet, as gold has maintained its value while most cryptocurrencies (led by Bitcoin) have fallen heavily. And yes it is probably true that older investors like gold and the younger ones like cryptos. Gold has been around since ancient times and has credibility as an investment. Cryptocurrencies are very much new to the market and are a volatile asset, for now, that will one day find their place in the finance market. So probably a good idea to own both, just be careful to choose an established safe cryptocurrency.
Given current sentiment I think gold will do better than Bitcoin in 2019. But I could easily be wrong. I am happy to hear your views in the comments section below.
Some gold related mining companies that we follow
- Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY)
- Angkor Gold Corp. (TSXV: ANK)
- Eastmain Resources Inc. (TSX: ER | OTCQX: EANRF)
- Golden Arrow Resources Corporation (TSXV: GRG | OTCQB: GARWF)
- Goldplay Exploration Ltd. (TSXV: GPLY | OTCQB: GLYXF)
- Harte Gold Corp. (TSX: HRT)
- Noble Mineral Exploration Inc. (TSXV: NOB)
- Pancontinental Resources Corp. (TSXV: PUC)
- Searchlight Resources Inc. (TSXV: SRCH)
- Signature Resources Ltd. (TSXV: SGU | OTCQB: SGGTF)
- TerraX Minerals Inc. (TSXV: TXR)
- TNR Gold Corp. (TSXV: TNR)
- Vangold Mining Corp. (TSXV: VAN)
- West Red Lake Gold Mines Inc. (CSE: RLG | OTCQB: RLGMF)
Matthew Bohlsen holds a Graduate Diploma in Applied Finance and Investment (similar to CFA), and a Graduate Diploma in Financial Planning. He has 30 years ... <Read more about Matthew Bohlsen>