The question is asked often, what is a better investment? Bitcoin vs Gold.
Bitcoin is often considered “Digital Gold” by enthusiasts and believers in the digital currency. While many supporters of Bitcoin and Gold are staunch rivals that refute one another, the two financial assets share many similarities, and for good reason. However, Bitcoin shares a number of properties that are equal or greater than that of gold. They are both often long term considered safe haven assets against fiat currencies.
Store of Value
Aside from annual returns, one of the most popular investment theses for precious metals like gold is its value as a store of wealth, or how well it retains buying power in the future. This is an especially important property in environments rife with inflation, market volatility, or economic depression.
While gold doesn’t provide positive returns year-over-year in terms of gold prices, its value as a store of wealth is largely attributed to consistent global demand. This is due to its limited quantity, as any new gold added to the circulating supply must be laboriously mined and extracted from the Earth. During times of inflation, assets such as gold with a limited supply are unable to quantitatively eased, thus make for a viable store of value.
However, using these same measures, Bitcoin may a superior store of value. While gold’s inflation is roughly 2%, meaning roughly 2% of the existing gold supply is mined every year, Bitcoin’s annual inflation is 1.76% with 6.25 new tokens “mined” every 10 minutes. However, Bitcoin’s monetary supply is programmatically halved every 210,000 blocks, or roughly every four years. As the laws of supply and demand dictate, Bitcoin’s price historically tends to rise dramatically following halving events when its supply is reduced in conjunction with increasing demand. It’s important to note that there will only be 21 million bitcoins ever in existence.
The next scheduled ‘halving’ event is scheduled for May 2024 in which the Bitcoin mining reward will halve from 6.25 BTC to 3.125 BTC every 10 minutes, at which point many speculate Bitcoin will then be ushered into another bull market cycle.
Like gold, Bitcoin in its current form is not the most effective medium of exchange, but rather a valuable asset that maintains and even appreciates in value over time. In that sense, while some people do actively use it for transactions, it is largely purchased to accumulate rather than spend. But even as a medium of exchange, Bitcoin is far more fungible than gold ever has been. Bitcoin is easily divisible into precise fractions and can be sent digitally directly between two people on opposite sides of the planet in minutes.
Bitcoin requires no financial intermediary, third party, bank vault, armed security, paid overseas storage fees, underground hiding location in your backyard, or even shelf space in your home to be stored. It exists purely digitally on the decentralized Bitcoin blockchain and is unconfiscatable unless made otherwise by its owner.
The most important factor for any investment in a portfolio is its performance. For an asset to be a viable investment, it should be determined whether the asset can outperform an index fund of the benchmark S&P 500. Bitcoin shines in this regard and has a historical average year-over-year return of over 200%.
Despite the high volatility during manic bull runs and depressive bear markets, the price of Bitcoin’s growth has gone from a fraction of a cent in 2009 to well into the five-figures in 2021. This has left investors modeling price targets that are one to two orders of magnitude higher. In 2020 alone, Bitcoin posted an over 300% gain. Bitcoin has been and continues to be such a lucrative investment for a variety of factors including its fixed supply, rapidly growing demand, decentralized infrastructure, faster transaction times and cheaper transaction fees than legacy financial technology, and of course, global adoption.
Younger Generations Want Digital Assets
It’s no secret that younger generations raised in the digital era have a natural attraction to digital assets. After all, they grew up on the internet with computers and smartphones, so why wouldn’t they want their money to be digital, too? When posed with the prospect of owning Bitcoin or gold, a 2019 survey found that 90% of Millennials prefer crypto to gold with Gen Z also likely to be more taken with the digital asset than physical gold.
As Baby Boomers and older generations continue to die off, younger generations with an eye toward technology and faster, frictionless payments will likely continue to support growth and adoption in Bitcoin and other cryptos, especially as they inherit tens of trillions through 2030.
Bitcoin and Gold in Retirement Accounts
The great thing about modern investment platforms, is that you don’t need to choose one or the other. Platforms like iTrustCapital allow you to hold both Bitcoin and Gold inside of your same retirement account. This means that you get the stability and “tried and true” Gold as an investment vehicle, while getting the modern “Digital Gold” Bitcoin as well. This is done through the iTrustCapital modern 24/7 IRA trading platform. You need to only open one single IRA, and you get to access cryptocurrencies and precious metals all within the same account, for one small monthly fee. In addition to Bitcoin and Gold, you can even invest into other cryptocurrencies like Ethereum, Polkadot, Litecoin, Stellar and more. If you want some exposure to Silver, that is available as well! We don’t cater only gold bugs, we have something for every investor. Alternative Assets have never been more exciting than they are now.
If you haven’t started investing in cryptocurrencies and precious metals within your retirement account, now might be a great time to receive our Free IRA Investment Guides. Our Crypto IRA Guide gives you an insiders view into how a Crypto IRA works and why it’s an excellent tool for your retirement investment plans. Our Gold IRA Guide digs into the Gold IRA industry and why iTrustCapital is the clear leader. You can request them now at iTrustCapital.com