People often say that Bitcoin is some kind of ‘digital gold’ but this claim is rather provocative. In fact Bitcoin is a much better long-term investment than gold. Want to know why?
We’ve already covered the reasons why Bitcoin may be the best choice during the WWIII.
Though gold still was a tough competitor and boasted some merits of its own.
But if we are not talking the apocalypse right now the stakes are slightly different.
And Bitcoin seems to have some advantages over the gold. Volatility – the only substantial let-down of Bitcoin – should also be taken into account. There is no doubt about that. But still, Bitcoin vs gold is a fight with a rather predictable winner.
Let’s see why you should consider Bitcoin, not gold, as the long-term invertment.
Five reasons why Bitcoin could be a better long-term investment than gold
Let’s take a look at some of the conventional arguments investors cite when praising gold as an investment and why Bitcoin might be an even better long-term option.
Bitcoin vs gold in value retention
One of the most common reasons to buy both gold and Bitcoin is that they have a history of holding their value through times of economic uncertainty.
This fact has been well documented.
There’s no denying that gold has offered some of the best wealth protection historically, but it doesn’t always maintain value.
Gold traders have also been subject to long bouts of price declines.
For example, a person who bought gold in September of 2011 would have had to wait until July 2020 to get back in the green. And if they continued to hold, they would once again be near even or underwater.
Bitcoin looks promising though. As it has never taken more than three to four years for its price to regain and surpass its all-time high.
That is an evidence that on a long-term timeline, BTC could be a better store of value.
Bitcoin may be a better better inflation hedge tool
Gold has historically been seen as a good hedge against inflation. Simply because its price always tended to rise alongside increases in the cost of living.
But, though Bitcoin is much younger than gold, it has already shown its ability to grow exponentially.
For example, gold has seen a modest gain of 21.84% over the past two years. But the price of Bitcoin has increased 311% during the same period of time.
Now take a moment to consider this.
We live in a world where the overall cost of living is rising faster than most people can handle.
And with Bitcoin you clearly have a chance to be a step ahead. In other words, holding an asset such as Bitcoin gives you an opportunity to outpace the rising inflation.
Moreover, holding Bitcoin gives a chance not only to maintain your wealth, but also to increase it.
Bitcoin sometimes even mirrors gold
Gold is considered a crisis commodity. Because it hold its value during times of geopolitical uncertainty. People often want invest in gold when world tensions rise.
Unfortunately for people located in conflict zones or other areas subject to instability, carrying valuable objects is a risky proposition, with people being subject to asset seizures and theft. And that makes it difficult to preserve wealth when fleeing from a war conflict zone.
Many people in Ukraine have been stuck in such obstacles during the Russian invasion in spring 2022.
Bitcoin offers a more secure option for people in this situation. You can simply memorize a seed phrase and travel without fear of losing their funds.
Having reached safe destination, they can restore their wallet and have access to their wealth.
Fiat money keep losing their value
The U.S. dollar has been strong in recent months, but that is not always the case.
During periods where the dollar’s value falls against other currencies, investors have been known to flock to gold and Bitcoin.
While gold has been the go-to asset for millennia, it’s not widely used or accepted in our modern digital society and most people in younger generations have never even seen a gold coin in person.
For these cohorts, Bitcoin represents a more familiar option that can integrate into people’s digitally-infused lifestyles, and it doesn’t require extra security or physical storage.
Bitcoin is scarce but gold isn’t
Many investors and financial experts point to scarcity and supply constraints for gold following years of declining production as a reason gold is a good investment.
But of course, gold is not scarce by its nature. It’s the question of the economic necessity only. Once the gold miners see the need in throwing more gold to the market, they can do it. The only thing is that it if difficult to do instantly.
It can take five to ten years for a new mine to reach production. So rapid increases in supply are unlikely and central banks significantly slowed their rate of selling gold in 2008.
It is estimated that there is still more than 50,000 metric tons of gold in the ground. If the price rises gold miners will be happy to try to extract it all.
It means gold will never reach the promised land of ‘true scarcity’.
The more the price inches up, the more gold is mined.
But the increasing gold supply works against price, eventually lowering it.
Bitcoin is another kind of animal.
Bitcoin has a fixed supply of 21 million BTC. That’s the limit of tokens to ever be produced.
And its issuance is happening at a known rate. The public nature of the Bitcoin blockchain allows for the location of every Bitcoin to be known and verified. So no surprises here. We know exactly how more Bitcoins are there to appear. And we know when and how will they appear.
So Bitcoin wins the scarcity debate, hands down, and it is the hardest form of money created by humankind to date.