In this article, I will try to write about Bitcoin vs Gold, the similarities and differences.
What is Bitcoin (BTC)?
“Bitcoin (BTC) is a cryptocurrency created in January 2009 by Satoshi Nakamoto whose identity is still a mystery for all of us.
Bitcoin is the first decentralized cryptocurrency that you can send by using the internet without a third-party involvement (like banks etc.).
Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain”.
If you want to read more, you can check this link.
As there are no third party involvement, Bitcoin does not have a central authority to print and distribute Bitcoin.
In case of that, there are miners that use computing power to solve a mathematical problem.
When a problem solved, a new block created in the blockchain. The miner that founds the block gets a certain number of BTC as a reward in exchange.
This process is called MINING.
What is Gold?
Gold has always played an vital role in the international monetary system.
First Gold coin were produced in Lydia, Western Turkey, in the 6th century BC.
By the late 19th century, many of the world’s major currencies were fixed to gold at a set price per ounce, under the term ‘Gold Standard’.
The rise in gold supply depends on miners’s extracting the precious metal from the ground. After mining, gold can be processed for goods such as jewelry.
Furthermore, it can also be bought in many different forms like bullion and traded like a financial instrument (e.g. exchange-traded funds, gold futures etc.)
- Both can be considered as safe-haven assets.
- They are both convertible into fiat currencies.
- Both can be recognised as a currency and a store of value.
- Supply of both are limited.
- BTC and Gold, both have mining process.
- Gold and BTC are alternatives to the fiat money.
- Bitcoin and blockchain technology is very new when compared with Gold.
- The clear advantages that gold has over bitcoin are trust and reliability. As BTC is a new currency, it needs some time for daily adoption. This may also turn a huge potential for BTC as it is new.
- Gold has an internal value where BTC depends on technology.
- You can physically hold gold where BTC is virtual.
- While gold is obtained through physical mining, bitcoins must be “mined” virtually through the deciphering of special computer encryptions.
- Gold mining is 23 times more costly than BTC mining.
In my opinion, I like to invest both of them as I personally do believe that the fiat money will not be around in 3-5 years.
Both have advantages and disadvantages when compared with each other.
In addition, for a long term investment, I believe that both will bring some good profit to the holders.