For years now, investors have been using Gold as a hedge against inflation and investment during recessionary periods. However, after the last recession in 2008, we were introduced to Bitcoin, a decentralized cryptocurrency that neither the government nor the Federal reserve control. In other words, it’s called ‘the people’s currency’. People are confused when analysing Gold and bitcoin. Bitcoin has amassed global adoption in the past decade as a result of it’s astronomical gains and as a way to hedge against inflation. Many people are still skeptical about Bitcoin and other cryptocurrencies, especially when it comes down to comparing it to Gold and other precious metals. This short read aims to remove any confusion that you may have and compares both Gold and Bitcoin to give you the opportunity to judge which one is the better investment.

History

Gold has been around for thousands of years and has been regularly used as legal tender in the past, so it holds a lot of economic value and historic value. When comparing it to Bitcoin on the other hand, the crypto currency has only been around for a little bit over a decade. This is merely a small fraction of the time that Gold has been around and been used. Bitcoin is now starting to be accepted as a form of payment.

Countries stopped following the Gold standard after World War I and switched over to fiat currency (cash). This resulted in Gold being moved to a safe-haven status due to its rarity and limited supply. Hence why for years investors have been using Gold as a low risk investment which increases overtime. Investors have used Gold as a method of hedging their wealth and capital against inflation in the economy. After the last recession in 2008 – which was a direct result of banks and hedge funds – Bitcoin was introduced. The crypto was introduced as a currency that the banks and hedge funds would have no control over. This means they would have no ability to manipulate the price in any way, hence the term ‘the peoples currency’. Bitcoin has seen astronomical gains over the last decade, significantly higher than Gold, which is what caught the eye of investors.

Comparison 

At the time of writing this blog, Bitcoin’s all time high is around $60,000 CAD. What’s unique about Bitcoin is that it also has a limited supply like Gold. There are only 21 million Bitcoins that can be circulated around the world. This limited supply and the ability for the average Joe to purchase a partial of a coin is what drove up the demand of the crypto and resulted in these massive gains. 

Compared to Gold, Bitcoin is not nearly as stable, and rather a riskier investment for investors. Although Bitcoin has it’s benefits, there just isn’t enough substantial evidence for it to be considered a safe-haven. For all we know it could skyrocket to $100,000 tomorrow or go all to $0. There is no certainty with Bitcoin the way there is certainty with Gold never going to $0 – not until the day somebody manages to figure out a way to create Gold from thin air.

So which one should you buy? Gold or Bitcoin?

It all comes down to your discretion and which one you would feel more comfortable putting your money in. We unfortunately cannot predict the future and know which one will be the better investment nor are we giving you investment advice. This is simply to educate you on two viable investments you may consider putting your money in. Some believe Bitcoin is the Gold of the future while others believe otherwise. At the end of the day there is more research that needs to go into the comparison. But one thing is for sure, Gold has a significantly higher market cap at $9 Trillion compared to Bitcoin with a market cap of $830 Billion. Can Bitcoin reach the levels of Gold and claim safe-haven status? That is for you to decide. 

In the meantime if you want to have a low risk and more so safe investment, you can check out our selection of Gold products and other precious metals like Silver and Platinum that we carry. It is never a bad idea to have some of your money put into safe-havens to hedge not only against inflation but also hedge against potential losses on your other investments.