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Are Cryptocurrency and Gold Natural Enemies or Friends?

by Radhe Gupta
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It is not uncommon to hear Bitcoin enthusiasts argue that Bitcoin will ultimately replace gold as the world’s premier store of value. It is also not uncommon to hear gold bugs say that Bitcoin has no intrinsic value and will never be more than just a speculative asset.

What are your thoughts on the cryptocurrency vs gold debate? Is Bitcoin really going to replace Gold in terms of its role in society? Or, do you think Bitcoin should exist side by side with Gold as it still has a lot of advantages over Gold?

Bitcoin Outpaced Gold

Cryptocurrencies are the new gold. The cryptocurrency’s rise has outpaced that of many other assets this year, with Bitcoins up nearly 133% and Gold Index down about 4%.

Bitcoin is a popular option for investors who want to protect their wealth from the inherent risk of inflation, but some say that gold will always be king. George Milling-Stanley claims “it’s quite possible” bitcoin and other cryptocurrencies can coexist with traditional investments because they each fulfill different purposes in today’s economy – he says while one might serve as an excellent hedge against rising prices or crashing economies; another performs better when you’re looking at short term gains such low-interest rates on offer these days!

The Historical Promise of Gold to Investors

It’s not a secret that gold has long been considered a safe haven for investors. There is research to back this up – it can improve your risk-adjusted returns and minimize volatility in the process!

In addition, there are many other reasons why people still love investing their money into these yellow masses: they’re just beautiful; their color symbolizes wealth (as well as power), or maybe because we all know how much beauty means?

The gold market has been a great place to invest over the long term, with an improved risk-adjusted return. It also helps minimize volatility in this volatile asset class.

Investors should consider adding some of these precious metals into their portfolios if they are looking for stable values that will grow even during times when other investments may fall apart under pressure!

Can Bitcoin Buffer Against Inflation?

There are a lot of people who are attracted to bitcoin and other cryptocurrencies because they think it’s the future. With its market cap, there must be something special about this digital currency that attracts investors away from gold? We’ll have to wait until we see if their predictions come true!

Bitcoin can hedge against inflation because it is a finite resource. Bitcoin is also more portable and easier to store than gold.

Bitcoin is the first currency that’s limited in supply. Unlike other currencies, there will only ever be 21 million Bitcoin tokens out on circulation and because of this limitation we should expect them to retain some value over time– theoretically at least!

Who Has an Edge to Hedge?

Is Bitcoin a better hedge against inflation than Gold? 

The traditional notion of gold being the strongest inflation hedge has been thrown into question as it was not able to outperform other assets during this year’s meteoric rise in prices. Even though everything from housing costs and gas prices has skyrocketed, the price for one troy ounce remained stagnant over 12 months at $1,230 – which is where they were on Jan 1st, 2017 too!

Bitcoin is growing more popular as a safe asset. The Bitcoin mining has increased, and investors are betting that it will continue to do well even in the event that inflation rates increase significantly over time.

Gold has long been seen as the ultimate hedge against inflation. Bitcoin is increasingly becoming the preferred currency for investments due to its increased efficiency in comparison to gold. Bitcoin can survive in any economic climate because of its finite supply. 

Bottom Line

Bitcoin has been a phenomenal success this year, but it’s too soon to tell how well Bitcoin will perform over the long term. With only seven years of history so far and an inflation hedge whose value can be threatened by many people who are still skeptical about cryptocurrencies in general (even though they seem promising right now), there is much uncertainty surrounding these strange new currency units we call “Bitcoins”.

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