You’ve probably noticed that one of the most significant financial hurdles is inflation, which diminishes the purchasing power of your money over time. Despite having mapped out various future goals, from property acquisition to globetrotting and comfortable retirement, inflation looms large.
Hence, it’s imperative to bolster your earning potential and adeptly manage finances, with investment playing a pivotal role. Investment isn’t solely about wealth accumulation; it’s also about shielding the value of your money against the erosive effects of inflation.
Traditionally, gold acquisition has been synonymous with the objective of “safeguarding the value of money.” But have you ever wondered about alternatives like Bitcoin? Many tout this asset as a hedge against inflation, dubbing it “digital gold.”
Bitcoin vs. Gold: Who Wins?
Bitcoin and Gold have emerged as prominent contenders in today’s investment landscape. Gold, the time-honored safe haven asset, and Bitcoin, the digital innovator revolutionizing finance. While both present opportunities for preserving wealth, a deeper analysis uncovers significant disparities in their historical performance.
● Discover Gold Investment
Gold offers the advantage of high liquidity, ensuring it can be readily converted into cash when needed. Its historically stable prices make it a reliable asset during economic uncertainty, war, pandemics, or recessions.
Even more interesting, gold enjoys tax-free status, and entering the gold market requires a manageable initial capital investment. For example, at the time of writing, the price of gold stood at US$2,313.40 per ounce.
However, there are drawbacks to investing in gold. Upon purchase, the selling price immediately decreases, akin to the experience at a currency exchange. Storing physical gold poses another challenge, requiring secure and often costly storage solutions.
Another aspect to consider is that the value of gold remains static unless additional quantities are acquired. That means one kilogram of gold will retain its weight and value over the next 10 or 20 years.
● Evaluating Bitcoin Investment
As per Coin Market Cap, Bitcoin maintains the highest market capitalization value, solidifying its dominance in the crypto market.
Moreover, Bitcoin is a liquid and easily accessible asset, mainly through platforms like Luno. With Luno, buying, selling, and exploring crypto becomes swift and convenient, allowing you to engage effortlessly anywhere, anytime.
An intriguing development occurred in March 2023 when Bitcoin’s correlation with gold surged, underscoring its potential as a risk-averse asset. Research conducted by analytical firm Kaiko, revealed that Bitcoin’s correlation with gold stood at 50%, while its correlation with stocks was only at 20%, positioning Bitcoin as a hedge against inflation and financial uncertainty, particularly amid the COVID-19 pandemic.
Eminent economists like Marion Labore from Deutsche Bank elucidate Bitcoin’s role as digital gold, emphasizing its finite supply — capped at under 21 million Bitcoins — and historical precedence of individuals seeking assets beyond governmental influence during economic turbulence.
However, notwithstanding its advantages, Bitcoin, like other crypto, harbors disadvantages. Being a volatile asset, Bitcoin’s value can fluctuate significantly within short time frames.
Every investment asset comes with its unique set of advantages and disadvantages. The crucial factor lies in comprehending your financial situation and objectives and thoroughly analyzing each investment option’s profile, approach, risks, and benefits.
Bitcoin and Gold Prices Over the Years
Let’s now explore a practical comparison of investment performance between Bitcoin and gold spanning five years.
Picture yourself investing US$100 in both assets half a decade ago. Back then, gold was valued at approximately US$42 per gram, providing you with around 2.36 grams for your investment. Meanwhile, Bitcoin was trading at US$3,850 per coin, giving you approximately 0.026 Bitcoin.
Fast forward to May 2024, and the scenario has significantly transformed. Gold’s price has risen to US$74.41 per gram, resulting in a current value of US$175.61 for your initial investment. Conversely, Bitcoin’s remarkable surge has propelled its price to US$62,783 per coin, skyrocketing your investment’s value to an impressive US$1,632.36.
The figures paint a clear picture: while your gold investment has grown by a respectable 75.61%, Bitcoin has experienced an astounding surge of 1532.36%. In terms of final value after five years, your Bitcoin investments have outpaced your gold investment by an impressive 9.29 times.
This compelling juxtaposition underscores Bitcoin’s potential as a superior investment avenue, offering exponential returns and surpassing traditional assets like gold.
Bitcoin: A New Way to Wealth Creation
Bitcoin earns the moniker “digital gold” for valid reasons. This asset is frequently likened to conventional gold due to its analogous traits: scarcity, limited supply, and divisibility.
An examination of the price movements of Bitcoin and gold over the past five years reveals that while gold remains a steady investment option, Bitcoin’s rapid ascent signals a new era of wealth accumulation and promising prospects.
Instead of abandoning gold altogether, diversifying your investment portfolio is crucial for mitigating risks and maximizing returns. The key lies in aligning your investment decisions with your financial goals.
Buy Your First Bitcoin with Luno!
Luno, a reputable crypto platform from the UK that operates in over 40 countries, has been catering to its dedicated users for over a decade. With Luno, you can purchase Bitcoin, securely store your assets, and seamlessly navigate the crypto sphere 24/7 from any location.
Visit www.luno.com for the latest insights from the crypto realm and embark on your Bitcoin investment journey by downloading the Luno app, available on Google Play and the App Store. Use promo code LUNOEZPZ while registering on Luno to get free Bitcoin worth Rp100,000.
Luno is registered and supervised by the Commodity Futures Trading Regulatory Agency (Bappebti). Trading and investing in crypto assets is a high-risk activity. Read more on our Terms of Use here: www.luno.com.