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Which Is a Better Investment: Gold or Crypto?

What fundamental parallels and distinctions exist between gold and cryptocurrencies? Can bitcoin take the place of gold as a hedge against inflation? Visit our necessities section.

The cryptocurrency market has experienced a wild ride.

The cryptocurrency sector was plagued by scandals, declining prices, and the exodus of investors to safer havens like gold and precious metals.

This has caused some investors to wonder whether Bitcoin in particular, along with other cryptocurrencies, can provide a similar role to gold in an investment portfolio.

Let's start with the fundamentals and examine the main parallels and contrasts between gold and cryptocurrency.

How do gold and cryptocurrencies compare?

Bitcoin and gold are both in short supply.

Despite the fact that gold has been used for ages, its supply is limited. The total supply of Bitcoin is also only 21 million.



Bitcoin and gold are both alternatives to fiat money.

Gold may be exchanged for cash in nearly any currency and was once used as money. In the meantime, Bitcoin is becoming more and more incorporated into numerous international payment systems.

Bitcoin might have an advantage over gold as a medium of exchange, though, as it is a fixed unit of account that is simple to divide and transfer.

Contrarily, gold may not be as readily convertible on the spot, particularly if you own larger gold bars.

What distinguishes gold from cryptocurrencies?

Compared to bitcoin, gold has been around considerably longer.

Since it originally surfaced in 2009, bitcoin hasn't even fully developed as an asset. Yet, given that it has a history that spans more than 5,000 years, gold is what you might refer to as its elder peer.

Bitcoin is not often seen as a safe haven, unlike gold

The World Gold Council claims that due to its high level of speculation and volatility, bitcoin is not a safe-haven asset. Gold, on the other hand, has a history of serving as a safe haven.

Bitcoin has historically been more volatile than gold

Like many assets, gold prices go up and down, but not as much as bitcoin.

Since launching, bitcoin prices have been 4-5 times more volatile than gold’s. According to Bloomberg Intelligence, Bitcoin’s average intraday price change in the past three years has topped 5%, while gold’s volatility has been somewhat stable.

Take a look at the chart below that compares gold, bitcoin, and stock market volatility in 2022.

As you can see, by the end of the year, gold was up 4%, while bitcoin dropped 18%.

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