It can be easy to dismiss gold and Bitcoin as being poles apart, but as a commodity and wealth measurement, there are some stark similarities. Not just because both are ‘mined’; one quite literally by Yosemite Sam and the other by a techie mainframe operator adding transaction records to the blockchain identified by the handle Yo$emite$am. But if there is a choice to invest in one over the other, it isn’t a straightforward one.
Bitcoin v gold
There are a lot more similarities between Bitcoin and gold than initially meets the eye when comparing them as investments. For instance, most of the US’s gold is held in a treasury in Fort Knox, never to be used, and it is estimated that 64 percent of all Bitcoin might never have been used either, being vaulted away in a secure online safe for long-term investment, as the infographic below shows.
There are also differences, which, if combined, would undoubtedly make for an irresistible investment. The stability of gold has seen it become the standard against which other commodities are measured, and Bitcoin’s secure payment network has made it the envy of every exchange on the planet.
In the beginning, there was gold
Gold has been the world’s go-to source of financial security ever since Lydian merchants started using it in coin form as far back as 700 BC, but you can be sure it had been attracting attention long before that. Who can resist the shiny yellow lustre of the very first metal? Apparently no one, because gold has become a staple commodity for wealth in every human culture for as long we have known.
Perhaps someone offered a shepherd a nugget of gold in exchange for a shoulder of goat somewhere down the line. The shepherd put that nugget away, forgetting about it, then years later, he found it again and was able to exchange the gold for a medium-sized dwelling in a prime location. Yet, we can speculate all we want on the foundations and early beginnings of gold as a commodity. What’s a fact is that there is only a finite amount of gold on the planet.
Then came Bitcoin
Bitcoin has gotten off to a shaky start, built momentum and then stalled again – a performance which has allowed it to become popular with options traders monitoring Bitcoin, Ether, Ripple, other cryptocurrencies and global stocks.
But who knows, maybe even gold had its detractors in the very beginning because – let’s face it – you can’t eat it and it’s too heavy to lug around in any great quantity. Gold might well have taken a very long time for the people to accept it as being of great financial and economic value. Bitcoin as a commodity has also grown from humble beginnings over a decade ago to being worth an absolute fortune today – around £4930 per BTC at the time of writing. So much so that it has changed the entire landscape of online payment and money transactions.
So, if you were trading in Bitcoin in 2009 and decided to keep yourself some for a rainy day like that shepherd with the golden nugget, you could be sitting on a small fortune. However, if you didn’t, you can still track its performance or speculate on cryptocurrency prices, because it looks like Bitcoin is here for the long haul.