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Sep 16

Gold vs. Cryptocurrencies: The Pros & Cons

Reading Time: 3 mins

Many have been anxious in 2020 with keeping money in stocks.

While markets have been doing relatively well due to the variety of government-stimulus endeavors to keep the economy afloat, many are skeptical about long-term stability.

Smart investors understand holding cash is not an optimal solution, especially if fiat currency does not keep pace with inflation. As a result, many are exploring alternative investments like cryptocurrencies and bullion, like gold.

Gold has long been seen as a stable store of value and medium of exchange. Countless civilizations, including the world today, view gold as a desirable asset.

Cryptocurrencies like Bitcoin have been called ‘digital gold’ due to their vast potential. The crypto market contains many different coins with a variety of use cases and end purposes.

Some coins even try to combine traditional financial and virtual currency. Gold-backed cryptocurrency is a stablecoin backed by physical gold bullion. These coins are attractive to investors since they keep pace with the spot price of gold (at minimum), but can even trade above if popular and heavy transacted.

Many thinking for the long term are curious about the benefits and drawbacks of investing in cryptocurrencies and gold. Each has pros, cons, and risk factors investors should be aware of.

Gold Pro: Stable & In-Demand: Gold has long been a safe haven asset for many reasons. Aside from its desirability, it is still used as a material in consumer goods like jewelry and electronics. The time and energy it takes for gold to be mined, processed, and introduced to the market give the precious metal a limited supply.

Gold also has nearly no correlation with traditional fiat currency. This makes it very useful as a hedge in times where the value of fiat currency or the stock market declines.

Gold Con: Fraud & Security Risk: Since gold is a valuable asset, it is also commonly faked. Fake gold is a massive issue across the world. In the last few years, more than $50 million dollars worth of gold has been stamped with Swiss refinery logos that did not actually produce the bullion.

Those looking to store gold have numerous security implications to consider. Gold bars are heavy and can be cumbersome to store and manage. A proper safe and security measures can cost bullion stackers large amounts of money. Keeping large amounts of gold on your personal property also opens up the risk of robbery.

Bitcoin Pro: Limitless Potential: Bitcoin is attractive as an investment because of its nearly limitless potential. The recent halving will only limit the future supply of the cryptocurrency, driving up value as more people become invested in Bitcoin when they learn more about virtual currency and want to invest.

Speculation is Bitcoin’s value will only skyrocket as it is accepted as a method of payment by businesses,  and as the unbanked become more comfortable with using the cryptocurrency to send money. The growth potential for Bitcoin is vastly superior to gold.


Bitcoin Pro: Safe & Secure: While crypto exchange hacks have made headlines, storing and transacting with cryptocurrencies like Bitcoin is significantly safer than physical bullion.

All Bitcoin transactions are recorded on the blockchain, a distributed ledger that maintains a verifiable and incorruptible transaction record.

Bitcoins are not able to be copied or counterfeited, unlike gold. Bitcoin transactions can be conducted in seconds for little fees. Large amounts of money can be sent and received in a secure manner. Holders of Bitcoin can store their coins in cold storage wallets, which is significantly easier to secure and access than storing large amounts of gold bullion.


Gold vs. Bitcoin – Who Comes Out On Top?

The debate between gold and bitcoin has several legitimate arguments. Both are valuable, in limited supply, and are easy to buy and sell. However, Bitcoin’s growth potential remains vastly above gold’s, but the precious metal’s stability is desirable with a volatile cryptocurrency market.

Investors should do their due diligence with both assets before making an investment decision. Those looking to get the ‘best of both worlds’ should look into cryptocurrencies backed by gold to have an opportunity to invest in a stable digital asset.


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