What to expect in this article:
- Our top 10 reasons on what makes Bitcoin better than gold
- Frequently asked questions, according to google, on gold-bitcoin topic
When stock markets head south – people used to lean on gold as a safe haven.
When fear of war heats up – people used to run to gold to save their wealth.
We say ‘used to’ because gold is now facing stiff competition for the ‘safe haven’ title from Bitcoin, especially among millennial’s.
Millennial’s were mocked for their ‘irresponsible’ investment frenzy on a ‘internet money’, as recent as 2017, however, those same mockers are now looking at Bitcoin differently. Thanks to the entry of Financial giants like Fidelity and others who are offering their investors opportunity to get into Bitcoin and cryptocurrency.
All of a sudden, Bitcoin went from ‘fake internet money’ to ‘non-correlated asset’ that offered unparalleled hedge.
Even before Fidelity caught the wind, Millennial’s knew why Bitcoin was better than gold. Here we are listing just 10 of them. We call them ‘top 10’ as a click bait. Click bait or not, we believe that these reasons make Bitcoin a great contender to Gold.
1. Ban resistant:
In 1933, Franklin D Roosevelt issued an Executive Order (6102) “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.” Just like that, people were ‘forbidden’ to hold the gold. It took a good 40 years for gold to become legal in America. Government cannot ban Bitcoin. People can hold, transfer and transaction in Bitcoin with or without government because Bitcoin runs on Math, not bureaucracy.
2. Easy to Carry:
Unlike gold, Bitcoin is digital and that makes it a lot easier to carry it with you anytime and you don’t need an extra space to carry or hold them either. You could move billion dollars worth of Bitcoin without leaving your room. To move a billion dollars worth of gold will take a lot of logistics, customs, clearances, middle men, insurance and cross a lot of red tape.
3. Cross border:
You can cross borders with your bitcoin without a blink. If one tries to cross the borders with 1 KG gold ($50K in value) – they could face a lot of hardship, penalties, customs duties and so on. And in some cases, have their gold seized without reason, as DEA did to this woman who was carrying her dad’s retirement savings (and she wasn’t even crossing the border!).
4. Limited in supply:
The biggest factor that works in the favor of bitcoin is its very limited supply. And the fact that there are only 3 million more Bitcoins to mine makes it even more dearer. When it comes to Gold, approximately 2500 tons of Gold is mined every year across the world. No one knows with certainty if there is a cap on how much gold we can extract from the earth.
5. Counterfeit free:
One always needs to be careful before buying gold as it can be faked or mixed with non-precious metals. There have been tons of occasions when people have been tricked into buying ‘not so pure gold’ (fake, mixed with other metals, not accurate weight, etc.,). This is quite impossible with bitcoin as every bitcoin can be tracked from its inception to its latest ownership status.
There is a limit on how far you can divide your gold. Bitcoin is divisible into fractions in the millionth, also called ‘Satoshis’. The technology is evolving every day and some believe that we will soon be able to conduct micro transactions using bitcoin. That means, someone can be paid a penny in a micro transaction using bitcoin with even smaller fee. Gold cannot claim that – there is hardly any value for speck of gold.
7. High upside:
Believe it or not, Bitcoin is still a nascent technology and there are new innovations taking place every day on it. That makes it impossible to gauge its potential future value. One could argue that this ‘unknown’ is Bitcoin’s greatest downside – that argument is not without merit, although we tend to be very optimistic about the upside.
8. Easy to trade:
Bitcoin can be easily traded online on a number of exchanges. And the traded bitcoin can be easily converted into any local currency or an equivalent pairing. You cannot sell your physical gold online without transferring the physical possession.
Bitcoin can be used as digital currency to buy and sell stuff. You can transact while on the go on your smartphone or a laptop. Try carrying a gold bullion with you and see if you can buy a sandwich with it.
10. More than an asset:
Gold is just an asset. At the most, it may be used as currency where it is accepted (which we presume is very few places). Bitcoin is not only a ‘non-correlated asset’, it is regarded as a global digital currency. But beyond those two use cases, Bitcoin represents the blockchain technology itself. It is the very genesis of blockchain technology that could change the world. In that sense, Bitcoin is a safe haven asset, currency and a technology that could change the world as we know it, gold cannot claim.
11. Bonus Reason – Dividends:
Let’s add one more reason just for the kicks. If you held 10 grams of gold in a safe for 5 years and when you open the safe – you find 10 grams of gold, nothing more and nothing less. Obviously, if market went upward – it might be worth a bit more but that’s about it. If you stored bitcoin in the right wallet for 5 years, when you come back to the wallet, you will find your Bitcoin along with all the forked coins. Some of these forked coins are now worth $300 or more each. In addition to the asset appreciation, you stand to gain all the forked coins which could be worth something and one could look at this as ‘Bitcoin dividends’.
Frequently asked questions on Bitcoin and Gold
While we are on the topic of Gold and Bitcoin, here are some frequently asked questions on google:
FAQ 1: Can I buy bitcoin with gold?
If all the reasons listed above make you drool and you want to exchange your gold for bitcoin. Is that even possible?
Vaultoro claims to provide trading option between gold and crypto. That is, you can buy bitcoin with gold and you sell your bitcoin for gold. We have not reviewed or vetted this option, but it is just cool to see that such an option actually exists. Their video explains how Vaultoro works.
FAQ 2: Is Bitcoin based on gold?
No. Bitcoin and gold have only one thing in common. They both are now regarded as financial assets. However, bitcoin is not based on gold. But if you think deeply, Bitcoin needs internet and computer processors to mine, transact and exist. And the internet and computer run on processors and processors have gold in it. So this question is not as silly as it appears to be! Deep!
FAQ 3: What is the best gold backed Cryptocurrency?
While we are not invested in gold backed crypto, since this is a commonly raised question, here are a few options that you could research on:
- Perth Mint Gold Token: The first (and probably only at this point) government backed cryptocurrency that is also backed by gold. Learn more at Perth Mint Gold Token official page.
- Paxos Gold: According to their official page, “each token is backed by one fine troy ounce (t oz) of a 400 oz London Good Delivery gold bar, stored in Brink’s vaults. If you own PAXG, you own the underlying physical gold, held in custody by Paxos Trust Company.”
- Digix Gold: Digix claims to be the ‘finest gold tokenized’. Their 1 token is worth 1 gram of gold. Here is a video that explains how Digix Gold works.
There may be more options out there, but these seem to come out as top choices. If we were to pick one – we would pick Perth Mint Gold Token.
Thank you for reading the article.
Have you bought bitcoin instead of gold for any other reason? let us know.
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