Gold vs Bitcoin: Which is the best store of value?
Hello Friends Gold has been considered valuable for over 6,000 years. The price of gold in antiquity is unknown, but it began to be used as money around 550 B.C.
The current price of gold has experienced significant performance from its inception to its all-time high. In contrast, bitcoin was created in 2009 and its first recorded price was 9 cents in July 2010. Bitcoin has experienced extremely volatile performance and has reached significant all-time highs.
supply and demand |
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The bitcoin supply is programmatically fixed at 21 million bitcoins. New btc cryptocurrencies are created every 10 minutes and it halves every 4 years. Bitcoin's current annual inflation rate is approximately 1.7%.
On the other hand, it is estimated that there are some 210,000 tons of gold on the surface and some 60,000 tons still to be extracted. Every year between 2,000 and 3,000 tons of gold are extracted, generating an annual inflation rate of 1 to 2%. In addition to being a store of value, the main use case for gold is jewelry. More than half of the demand for gold in 2023 comes from the jewelry sector.
For its part, bitcoin has more room to grow in terms of demand, since only a small percentage of people understand its value. Bitcoin's primary use is as a digital way to store value and conduct transactions.
The price of Bitcoin tends to rise when liquidity increases. Despite its volatility, Bitcoin is still considered a store of value due to its liquidity sensitivity. In the long term, the price action of Bitcoin fits the definition of a store of value.
However, in the short term, the Bitcoin price tends to trade in line with risky assets such as technology stocks.
Gold as an alternative to Bitcoin |
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Like Bitcoin, gold tends to become popular when liquidity increases and there is significant political and economic uncertainty. During the last few years, there has been a growing demand for gold due to geopolitical uncertainty.
However, there are no guarantees that gold is a suitable store of value in technological terms due to its limited supply compared to potential new sources in space.
The behavior of the price of Bitcoin has been spectacular, but that of gold is more stable in the long term. The choice between the two depends on whether you are looking to make short-term gains or accumulate a long-lasting asset.
It is difficult to predict the market and time Bitcoin investments due to its volatility. As technology advances, there are no guarantees that gold will continue to be a suitable store of value.
In conclusion |
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Although gold and bitcoin are considered stores of value, they have significant differences in terms of history, price, supply, and demand. Both assets have their advantages and disadvantages, and their choice as a store of value depends on the investor's profile and individual circumstances.
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Both Bitcoin and Gold are used to store value but personally, I'd rather invest in Bitcoin
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