Recently, people referred to Bitcoin as the gold-like asset of the 21st century, or, in simpler terms, digital gold. That’s because the asset achieves something that few people dreamt of: stability. One of the most volatile cryptocurrencies ever existing has found balance, and it’s been like this for the past five years, showing an irrevocable path to development for digital assets.
Hence, learning how to buy Bitcoin on Binance wasn’t prone to significant spikes in the past years, although we went through different altcoin seasons. This, among other factors, contributed to Bitcoin’s path to regulation, as it’s seen as a security, while the rest of the altcoins are only commodities.
Since Bitcoin has a thorough legal framework, users are more likely to feel safer when investing or trading because they acquire more experience and also use services approved by the government. As Bitcoin develops and gets closer to its limited maximum supply, it can be established as a reliable financial tool. This is why many people see it as digital gold. But how accurate is this description?
What are the reasons for Bitcoin’s gold-like fame?
Bitcoin is one of the most challenged cryptocurrencies, going through considerable price spikes, frequent financial troubles and a lack of regulation. However, after all these years, the assets are still going strong, as they even get included in businesses and daily transactions of regular people.
Therefore, a few reasons make Bitcoin comparable with gold assets. First, the limited availability and scarcity make the coin similar to gold, as its value increases due to this factor. Bitcoin was intended to be limited to the matter of coins, which is the opposite of fiat money that is printed constantly.
At the same time, Bitcoin keeps its value no matter what, similar to how gold behaved in the past decades. Regardless of the outside events and the socio-economic challenges, both gold and Bitcoin have sustained a constant value, even though some moments were detrimental in their usage within the economy.
Finally, Bitcoin and gold are accessible worldwide, promoting financial inclusion and equal rights for anyone to use money. Contrarily, official financial institutions don’t ensure financial coverage in all areas. They don’t even make it easy for a category of people to open their own bank account, which considerably affects the local economy.
However, Bitcoin is more challenged compared to gold assets
Gold has a serious history of presence among people. At the same time, it was also valuable and more straightforward to understand since it’s a palpable asset, which, compared to Bitcoin, is easier to understand and use because it doesn’t require extensive knowledge.
This might be the main reason why Bitcoin adoption is taking so long because users must prepare considerably before using it. Besides the best way to leverage investing strategies, one must also consider the risks and its limited financial situation.
Even Bitcoin mining is difficult to achieve because as the asset gets closer to its limited coin supply, the demand for it increases, and so does the difficulty of solving complex puzzles.
Mining requires expensive computational power in order for users to reach considerable profits, so the upfront payment might be difficult to handle for many.
That’s why Bitcoin and sustainability aren’t aligning. Although the blockchain is decentralized and there isn’t a single decision point, this might challenge validators and developers in making the best decision since there are so many things to maintain.
Is Bitcoin better than gold?
After comparing the two particular assets, we can all get to the same curiosity: Is Bitcoin better than gold or not? The discussion can extend because many factors must be considered in this comparison. Still, if we get into the main points of the argument, we’ll have an idea of how accurate this analysis is.
First, regulations are quite different. Bitcoin can be used in certain countries, but not fully and with some restrictions. When it comes to gold, it’s usually known that you can’t cross borders with this asset without getting permission from an official body. At the same time, you must buy gold from registered dealers if you want to invest in it.
When it comes to utility, gold is useful worldwide in numerous situations. On the other hand, Bitcoin is also valuable, but more so in the online environment and only through a few companies. However, the number of uses is steadily growing.
The liquidity of both assets depends on the market, which is challenging in both ways. The crypto market is considerably more volatile due to many cryptocurrencies and rapid changes in user sentiment. Gold, on the other hand, is significantly more liquid because it can easily convert to cash.
Long-term, Bitcoin might be better than gold
Some investors and experts believe Bitcoin is a better investment choice than gold long-term. After some analysis, it seems like even gold traders experience considerable price declines for a prolonged period. But with Bitcoin, it usually doesn’t take more than two or three years to get back on track after a bad period.
Bitcoin can also be a better inflation hedge, even if gold is generally considered the best tool against inflation since its price usually increases along with the living cost. However, this has proven not to be the best solution for maintaining wealth for longer, which is why Bitcoin might
be a better choice to invest in despite the volatility and price declines.
Bottom line
Bitcoin has been recently seen as an asset similar to gold because it resisted challenging situations, is scarce and has grown in popularity over time. That’s why some investors and traders are switching from gold to Bitcoin because it ensures better results in the long term.