Bitcoin has opened its account in 2021 with a new all-time high above $34,000 and the sentiment is bullish about the cryptocurrency’s future in the year ahead and beyond.
Gold and Bitcoin are two popular currencies in limelight. Let’s have an insight into which one holds a better position-
Gold has been a very popular asset for years. Cryptocurrency like Bitcoin are relatively recent. Their history is not very old. Hardly a decade ago it started getting a place among the investible asset classes. The fact that though Bitcoin being a new entrant, is up by over 300 percent during 2020 whereas Gold is up 23 percent only.
Bitcoin started with $0.08 in 2008 and now it is trading above $60,000. It surely is a strong contender for Gold to defeat. There is a class of people who believe in this new age-digital gold. The economic value offered in blockchain technology makes it attractive. Bitcoin has made its way due to its practical value and acceptance by various international bodies.
Covid-19 has reduced the access to physical markets and hence Gold is taking the backseat. Bitcoin and Dogecoin are the new sensation globally. No wonder people of India as well are behind its charm. However, those in favor of Gold deny the fact and claim that the safe haven asset is generating double-digit returns. Gold has been an age old choice for the Indian investors and its glitter cannot fade.
Though there have been a lot of research being done to beat the Corona virus, the fear and anxiety shall be prevalent for another couple of years and the sentiment for Gold could be positive. Gold will enter the bull market as a result of inflation and devalued currencies.
Mt.Gox’s case proved that a blind plunge to invest in Bitcoins could be risky. Around 460 million dollars’ worth Bitcoins were lost leading to collapse of a popular exchange.
Both the Cryptocurrency and Gold have an inverse relationship with the US dollar. The purpose of the cryptocurrency must be fully understood as Bitcoin is yet to achieve its peak and prove its long term reliability
Both these assets are equally important and rare individually.
The question is-can Bitcoin replace Gold?
Institutional investors and investment banks are showing their interest in Cryptocurrency. Many new investors are looking for this upcoming 21st century gold. Gold is used for making ornaments and that is not going to change. The demand for Gold is likely to remain strong. Bitcoin is marching ahead because of blockchain technology. Those who do not have access to banking or other credit facilities are investing in cryptocurrencies.
Bitcoin market is highly volatile so attractive amongst short term investors. Gold on the other hand is for long term investors. One can trade in Bitcoin but must invest in Gold, it is as simple as that. Whether Bitcoin will replace Gold or not is a matter of time.
Go for Gold as it is a proven instrument to park your money. Bitcoin does have a bright future but could prove to be highly volatile and anonymous and hence deserves to be traded in or used as an alternative for short term investment to gain profits.
image credit – https://unsplash.com/@silverhousehd
Smrutirekha Bhoi