Investing option: Gold vs BITCOINS

In many parts of the world there is always a debate taking place about is investing in gold more worth or investing in bitcoins? There are many people who promote GOLD and others who are advocating BITCOIN. What’s interesting about this debate is that all of us who are pro-gold and pro-Bitcoin are anti banking. Massive theft of purchasing power is taking place every day due to the endless money printing of the central banks, and we all want to promote and pursue strategies for asset protection that minimize risk.

In this article, I would throw light on the advantages and disadvantages of investing in gold and bitcoins. Readers should make up their own investment plan regarding the same.

BITCOIN advantages and disadvantages

Bitcoin is a extraordinary innovation with extraordinary advantages over physical currency, including its rapid speed of transfer, its mathematically limited coin supply and its distribution, decentralized blockchain which avoids all government regulation. No government regulation means decentralised currency flow. Bitcoin is also called “Escape” currency as it is easily portable. You can “carry it” with you without carrying anything.

On the downside, Bitcoin is highly volatile. It also suffers from online theft. Bitcoins are subject to instant wipe-outs. The Mt. Gox online wallet decided one day to steal everybody’s Bitcoins and escape to the Bahamas (or somewhere). People lost what would now be worth literally billions of dollars’ worth of Bitcoins. Even popular online wallets like Coinbase are now engaging in the outright theft of Bitcoins. Coinbase, for example, is currently stealing Bitcoins from all users in Wyoming, and this outright theft of Bitcoins could expand to other states. If you run your own Bitcoin wallet, you can lose everything if your computer is stolen or suffers a fatal crash. This is like the way that cash or gold can also be physically lost or stolen. (Source: Investopedia)

Summary of Bitcoin:

Excellent portability

Excellent anonymity

Decentralized and no government-proof

Highly volatile, can lose 50% of value literally overnight

Subject to irreversible theft from dishonest online wallets such as Coinbase

Completely non-regulated, which is both good and bad

Instantly useless in a solar flare, EMP or nuclear war that takes down the ‘net

Risk of ownership of Bitcoin is HIGH because it’s not “real” until you trade it for something that is real

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GOLD advantages and disadvantages

Gold is instantly recognizable as having value in the real world. It’s a precious, physical substance. Unlike Bitcoin, Gold is a universal store of value. Gold can be traded for many activities. Gold is, essentially, the “ultimate currency” for human civilization. Because gold is real, it cannot simply “vanish” due to technical glitches, nuclear war, EMP attacks or other large-scale disasters. Gold is impermeable to all such events, and even if you melt it with fire, it’s still gold. Gold, in other words, will still be around long after Bitcoin has crashed or been abandoned for some other crypto currency. It’s a real substance with real value that’s only slightly impacted by changes in human emotions.

The disadvantages of gold include its ability to be stolen. The transactional cost of converting gold into physical currency is high. The possibility of you losing your physical gold in a flood, tornado or other natural disaster. Gold is difficult to carry across borders in large quantities, as governments seem to take a huge interest in people who carry large sums of precious metals. Buying and selling gold is also trackable.

Thus, gold can be instantly lost just like Bitcoin, but it can’t be lost based purely on emotions such as FEAR. Gold has inherent value rooted in much more than psychology.

Summary of Gold:

Good portability, but large quantities are hard to move (if you own so much gold that you can’t carry it, by the way, you are pretty well off in this world)

An excellent store of value, will continue to exist no matter what the psychology of other markets

Cannot simply “vanish” — will outlast solar flares, EMP, nuclear war and natural disasters

Can be stolen or lost

May be confiscated by governments

Gold purchases can theoretically be tracked by governments if you buy gold with credit cards or bank transfers

Has universal, long-term value and utility

Risk of ownership is relatively LOW, because even if everything goes wrong in the world, your gold is still gold

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Conclusion:

Gold is an excellent store of value, but Bitcoin is the ultimate getting out of the currency regime and fleeing with your life. Gold, silver and land should be your “hard” assets that store wealth. Land has all sorts of advantages, including the fact that it’s very hard to have land stolen from you. Gold, silver are portable and universal representations of value.

Bitcoin is the last ditch crypto-currency for fleeing with your life. You can flee with Bitcoin in your pocket (on a thumb drive), leave behind everything else, and still have some usable money when you arrive at your destination.

The bottom line

Bitcoin isn’t REAL, while Gold is real the moment you buy it and possess it. If you want to reduce risk in storing assets of value, gold is a far better choice than Bitcoin. If you are looking to bet big and try to outsmart everybody else for a gain, then Bitcoin is a speculative betting house that might suit you just fine. My best advice for everyone right now is to focus on preserving asset rather than trying to “make money” by timing markets.

 
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