Bitcoin crossed $40,000 in the second week of January 2021 and is now trading around $31,000 while writing this article. It surged up to two folds from its previous all-time high in Jan 2021. So, Bitcoin enthusiasts are expecting that it will cross $50,000 towards the end of this year.
With Bitcoin’s outperformance, most traditional investors also started thinking about investing in it. Many folks also compared it with gold claiming that Bitcoin is as precious as gold. On the contrary, some people started arguing that it’s just a symptom of market mania. So, here I have shared the arguments for and against the motion; ‘Bitcoin the new gold.’
Is Bitcoin the New Gold?
Early Bitcoin investors have made a fortune by investing in Bitcoin the new gold through marketingdonut.co.uk. Read on to know what market participants say about it.
Safe Haven Asset
Many people compare Bitcoin with gold because they think itcan be used as a store of value. Since it can perform well during market uncertainties, they consider it to be a safe asset.
Last year, it gave significant profits to the investors even after the pandemic. Although the value dropped below $5,000 in March 2020, it performed extremely well during the lockdown. More importantly, it surpassed its previous all-time high in Dec 2020.
With the steady rise in its value, many Bitcoin investors said that it is the new gold. They also claimed that it could be used as a store of value during uncertain market conditions. On the other hand, some people rejected this statement saying that there is no physical existence of it, and it’s just a market hype, and it can fall to zero anytime.
Immune to Inflation
There are many investors who also believe that it is immune to inflation. Since governments issue monetary policy, they have the ability to inflate the currency during uncertain economic situations.
However, the government cannot change the value of Gold or Bitcoin. Since both of them are not under the control of the Government, they cannot change the value. Due to this similarity, many people consider it as digital gold.
On the contrary, some people argue that Bitcoin is not regulated and the government can ban it anytime. The comparison is not correct. You must know the facts before comparing them.
Another main factor for considering Bitcoin as the new gold is that they both have a fixed supply. Although the amount of gold is unidentified, it’s certain that there are some thousand tonnes of gold present on the earth’s surface. Since gold has been performing well for many years, there is a high demand for it.
Inherently, the total number of Bitcoin is 21 million units. Satoshi Nakamoto, the anonymous creator of Bitcoin, mentioned it in the whitepaper. So, with a fixed supply and rising demand, there is a scarcity of Bitcoin. Although only a decade has passed, Bitcoin’s popularity and engagement of the people is increasing at a rapid pace.
Apart from the above factors, here are some notable points that compare Bitcoin with gold.
Bitcoin vs. Gold
- Gold is stable, while Bitcoin is highly volatile.
- Bitcoin involves the risk of cyberattacks and scams, whereas gold is relatively safer.
- Gold can be used as a normal currency, but currently, it’s not a viable form of currency. On the other hand, some businesses are accepting Bitcoin as a payment option. Although it’s not a legal tender, some countries refer to it as a substitute for fiat currencies.
- You can easily buy and sell it, which is not that easy in the case of gold.
This article of mine can give you the idea of why Bitcoin is compared to gold by many people and experts. Now that you have known different reasons why some people refer to Bitcoin as the digital gold, what’s your opinion? Do you think Bitcoin is as valuable as gold, or it’s just a market maniac?