Gold is the safest investment in the world - everyone knows that. And this is not surprising, since the position of gold in the market is particularly stable and supported by moderate growth rates.
Despite this, recently investors have begun to invest in other investment instruments - cryptocurrencies. Many have already managed to appreciate them, as evidenced by the growing popularity. This trend is explained by the fact that gold and cryptocurrencies have common characteristics, contributing to the growth of attractiveness and popularity among investors.
Similarity of assets
Firstly, both gold and bitcoin have limited emissions. Secondly, the value of assets is approximately the same in all regions of the world. Thirdly, they are used as a safe haven in the face of global shocks. When the country's economy becomes unstable, people start massively buying up gold and bitcoin.
It is also worth noting that, unlike national currencies, which can be issued under the leadership of the government in “packs”, gold and bitcoin have an exhaustible resource, for the extraction of which people have to make an effort. In the case of gold, this is the extraction of precious metal in mines. Bitcoin mining is carried out using mathematical calculations.
At the same time, Bitcoin is considered to be an improved alternative to gold, as it includes a number of advantages:
- lack of fake ability;
- lack of need for transportation;
- payment instrument;
- the convenience of use.
As we see both assets have potential, but still which is better?
Volatility vs Stability
If gold attracts capital due to its stability, then in the case of bitcoin, the opposite is true - traders are interested in this cryptocurrency precisely because of its volatility.
Judging from the gold price chart, we can conclude that during the year the price of the ingot was relatively stable. The price range per ounce is around $ 150. In this case, when buying on the bottoms and selling at the peak, the maximum profit of the investor was a little more than $ 100.
If investments were made in bitcoin, then a completely different picture emerges. Over the 2017 year, bitcoin has increased 20 times. And although today its price continues to decline, but the profit in any case is obvious.
Even if you buy one bitcoin for $ 1000 and fix the income today, the investor makes a profit and 6 times. Not to mention the daily and monthly jumps in the price of cryptocurrency, which traders so skillfully use to create entire capital.
Recently, one can often come across statements that bitcoin is a bubble that has already burst. But there is no clear justification for these claims. The situation with bitcoin today does not fall under the concept of an inflated bubble, and the only thing that can be said with certainty is that cryptocurrencies are classified as assets with increased risk.
If gold is more convenient to use as a means of saving, since judging from the graph the maximum fall range was 70 $, or about 5% over a period of several months, then bitcoin and its threefold decrease (from $ 18000 to $ 6000) indicates its instability. Moreover, such price fluctuations require certain skills and endurance.
That is, if investors are looking for an instrument that will retain the value of their assets for many years, then the best solution is to invest in gold. If a trader intends to make money on speculation, then cryptocurrencies are a more attractive option.
Buying Gold for Bitcoins
The best way to diversify risks is to store your savings in these two assets at the same time. So, the trader can leave part of the savings in gold, which will bring long-term benefits, but after a long time, and store the second part in cryptocurrencies, engaging in constant trading and making profit at daily price surges.
In addition, if a trader wants to change the ratio of his portfolio by converting cryptocurrency to gold and vice versa, then such intentions will not amount to much effort.
Already today, some companies offer such services, which thereby allow holders of digital gold to exchange for gold bullion on one platform. In addition, the fall in cryptocurrency prices caused a considerable demand for the services of such services. In 2018, according to CoinInvest, a company specializing in the purchase and sale of gold and silver bullion, cryptocurrency owners began to actively convert their savings into gold. This activity is primarily due to falling prices and an increased risk of investing in digital currencies.
Conclusions
It is safe to say that both gold and bitcoin are in special demand among investors. But while gold is attractive for its stability, investments in bitcoin, although characterized by high risks, can bring their owners justified profit. Therefore, each investor must decide for himself which instrument is best for investing, as well as determine the objectives of the investment. In any case, portfolio diversification is the best option for a successful investment.