With the high volatility of bitcoin and the slow but stead rise of gold
Which option would you choose?
The goal of a safe haven investment is to serve as a place to store your wealth so that it retains its value and potentially even grows in value during times of market, economic and geopolitical turmoil.
With the two commodities now in roughly the same price range, it’s worth putting aside some of bitcoin’s short-term volatility and liquidity concerns to compare them as long-term stores of value side by side.
Sure, you might argue bitcoin is newer and flashier, and that it has arguably more utility in the digital era than gold. But, gold has the indisputable track record, having been a cherished store of value for thousands of years across human civilizations.
However, bitcoin’s traits have led to those backing the cryptocurrency to believe it could potentially unseat gold over the long haul.
Inflation vs deflation
Another key advantage bitcoin has over gold is that its supply level is fixed and transparent – eliminating fears of the typical inflationary pressures associated with overproduction that could diminish the value of the asset.
Such characteristics, in theory, serve to increase bitcoin’s future utility as a means of account, exchange and storing value.
They also suggest that bitcoin’s value, usefulness and importance to society will only continue to grow as commerce becomes more digitized.
Slow and steady
The clear advantages that gold has over bitcoin are trust and reliability, according to those surveyed for this article. However, a change in consumer preferences, new technological disruption or a crackdown by a government could easily kick bitcoin to the end of the bench.
“Gold has something very important that bitcoin lacks: a more than 1,000-year history of being a decent store of value. This is very important for trust and people’s willingness to store value in that particular asset,” said Bogart.
Gold has also proven itself to be of value even when governments attempt to restrict its usage or outlaw it completely.
This happened in 1933, when President Franklin D Roosevelt implemented measures to prohibit and criminalize its possession in the US.