In recent times crytocurrency sector is emerging like never before. And the first and foremost name that comes to mind among cryptocurrencies is Bitcoin, referred to as digital gold also by many trade enthusiasts.
When we talk of digital gold, its comparison with real gold cannot be brushed off. Just like gold unquestioningly rules among precious metals, Bitcoin is the most trusted and valuable of the cryptocurrencies.
Bitcoin had been outperforming gold till last couple of years. But in the more recent times gold has beaten not only bitcoin but, virtually, all form of investments. It could also be setting for a powerful multi month rally that could also surprise to the upside in the current year.
Gold has always been regarded as tangible store of value which could be exchanged for materialistic things. It could also be stored anywhere. Bitcoin has an intrinsic value of zero. It is just an electronic intangible currency.
Gold has predominantly been used as an inflation hedge where bitcoin hardly comes handy. One can buy and sell bitcoin, trade its future contracts. Maybe someday it may have an intrinsic value.
Just as we talk of differences in these two alternative investments, there are many similarities too. Scarcity of each must be made note of. There can only be about 21 million bitcoin whereas commodity gold is around 180,000 tons, according to recent estimates. Both have a limited supply that gradually increases over time as a result of mining.
While gold has invariably been used as a tangible asset, bitcoin is more frequently been used as a speculative asset.
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