The Bitcoin vs. Gold debate has been going on for a decade, ever since people started taking financial freedom more seriously. With its decentralized nature, Bitcoin started to challenge gold, a popular investment option and store of value around the world. Now, as both financial assets have reached their peak, the question of which is the better investment and where to invest this December has become more serious with the rising prices of gold and Bitcoin.
Bitcoin vs. Gold Investment, Which is Better?
Bitcoin has become a popular investment opportunity due to its decentralized nature and high returns. What’s more, the price of Bitcoin has surpassed the $100,000 mark and is currently trading at $103,300. This is a significant milestone as the coin is trading at less than half of its current value. Gold, on the other hand, has been in use for 5,000 years and has been in high demand for hundreds of years. However, Bitcoin has become a strong competitor in the past few years, sparking the Bitcoin vs. Gold investment debate. Even Federal Reserve Chairman Powell asked netizens to compare Bitcoin with gold instead of the US dollar.
Comparing the two assets through various parameters
2024 is an interesting year, with cryptocurrencies and other major financial markets achieving many milestone accomplishments. This has sparked debates about investing in Bitcoin versus gold and which is the right investment opportunity before the end of the year. To understand this, there are four parameters to analyze to determine which is better.
1. Performance Overview
Both assets have achieved significant growth this year. Just a few hours ago, Bitcoin reached an all-time high of $103,900. Currently, Bitcoin is trading at $102,600, up 132% year on year. Additionally, Bitcoin's market cap is $2.03 trillion, with a trading volume of $125.97 billion, making it the seventh-largest asset in the world. On the other hand, gold is the largest asset, with a market cap of $17.937 trillion. Just two months ago, gold prices reached an all-time high of $2,790; it is currently trading at $2,675.
Interestingly, despite the low price of gold, its supply and usage are quite high, which makes its market value so high. However, Bitcoin's limited supply (21 million) is increasing investor interest, resulting in high demand and high prices. Overall, Bitcoin is leading in growth compared to gold.
2. Main Features
Bitcoin is a digital asset that is completely different from gold. It has a decentralized characteristic, meaning the asset is not subject to interference from any third party, bank, or government. It allows for cross-border transactions and has no physical form to store. More importantly, its supply is limited because the number of tokens available for mining is finite. This ultimately drives up the price of Bitcoin.
On the other hand, gold is a physical asset. It has been used for thousands of years. Its physical nature limits its direct trading/transfer, unlike Bitcoin, which can be shared with anyone anywhere in the world with just a few clicks of a mouse. Nevertheless, it is accepted worldwide and has reliable value storage. Therefore, even central banks store it to support the value of their local currencies. Additionally, it has emotional value as it is widely used in jewelry and other manufacturing.
In this case, Bitcoin and gold ultimately tie, as both assets have irreplaceable functions.
3. Demand and Future Prospects of Bitcoin vs. Gold
The key features list clearly indicates a high adoption rate, and both assets have substantial demand worldwide. For Bitcoin, demand is driven by limited supply, Bitcoin ETFs, institutional adoption, the U.S. elections, outcomes, etc. It also includes plans for the U.S. to establish Bitcoin reserves.
Interestingly, many other countries are also working towards the same goal. These are the main reasons for the continuous rise in Bitcoin prices. Some analysts even claim that Bitcoin prices could reach $250,000 or even higher in the future.
On the other hand, the demand for gold is driven by high usage in jewelry and other industries, central banks holding it as reserves, and investor trust in this asset. However, the growth potential of gold prices is also limited, with gold prices only rising by 31% in 2024.
Despite gold's long-term usage and huge demand, in this category, Bitcoin investment has won the battle between Bitcoin and gold.
4. Volatility and Security
The cryptocurrency market is highly volatile, with the potential for both high returns and crashes, and Bitcoin is no exception. It often faces sudden trend reversals that lead to massive gains or losses. Therefore, it is not entirely suitable for beginners, but it has higher stability and growth potential compared to other cryptocurrencies. In terms of security, Bitcoin transactions occur on the blockchain. This makes it transparent and free from third-party interference. However, at the same time, there are certain risks related to hackers, scams, and even regulatory issues.
Gold does not have such hacking and regulatory issues. However, its physical nature creates storage problems, requiring additional maintenance and insurance. More importantly, despite secure storage, there is still a risk of theft, making it a trickier investment. In any case, its lower volatility makes it safer than Bitcoin, but it limits its growth rate.
What to invest in Bitcoin vs. Gold in December?
Interestingly, investing in Bitcoin and gold is the best way to beat inflation. Both assets have some unique features that contribute to their growth. More importantly, through accurate investments, they can help investors escape financial burdens and fiat currency traps. However, in the debate between Bitcoin and gold, the conclusion is challenging, as it depends on the investor's perspective and investment needs. If someone seeks relatively faster growth but is willing to take risks, investing in Bitcoin is the right choice. However, at the same time, for those seeking stability and long-term investment, gold is the correct choice. Additionally, individuals need to consider many other criteria before choosing the best investment between the two. In this debate, even Robert Kiyosaki commented that the quantity held is what matters most, not the asset.
