Is Bitcoin a Good Investment Vs Gold?

Is Bitcoin a Good Investment Vs Gold?

Every year thousands of new bitcoins are mined and added to the market, but unlike other types of currency and valuables like gold, this digital alternative has a cap. As soon as their volume hits 21 million, that will spell and end on any further production. Experts have predicted that the day will come sometime in the year 2140, which might seem a long time away – but in reality the coins are already showing the signs of a slower production.

Why is this?

In order to sustain their value, bitcoins rely on their scarcity and although there will eventually be 21 million of them one day in the future – for now they are traded with in much the same way as gold and other precious metals. In fact, many experts have found themselves comparing the investment potential between gold and bitcoins.

Is Bitcoin a Good Investment Vs Gold?

As of March 2017, the average bitcoin is being traded for roughly £500. Unfortunately this digital currency doesn’t have a weight, so it isn’t always easy to compare the value to that of gold. What can be done however, is to work out how much gold could be purchased for (around £500) and then gauge whether it would be easier to get hold of than bitcoins.

Right now £500 could purchase one bitcoin on average, or just under 1kg of gold. What this means is that 10 kilograms of gold would cost roughly £5,000.

This would make 10 bitcoins equate to roughly 10kg of gold on average – making them pretty balanced as far as the numbers are concerned, but there is one important factor to consider. It can impact both types of resource; and it is depreciation. In simple terms, gold can vary in value depending on when it is purchased, or when it is sold.

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As more and more gold is uncovered, the supply of it will be more readily available and the easier that something is to get hold of, the less competitive the market. The less competition is present, the lower the value of the particular resource – and as far as gold goes, this isn’t the most appealing prospect.

What it actually means is that in the future, gold could be far less valuable, so investing in it can be pretty tricky – unless things change and gold completely runs out. On the other hand the value of an individual bitcoin is actively increasing, as opposed to depreciating. This is because the digital coins are becoming less and less common and once they reach their limit, they will be at their most valuable; when supply will be at an all-time high.

Therefore, investing in these coins now can offer the potential for huge rewards in the future, with their value expected to almost double in just two decades.

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