The pandemic has taught us one of the most important lessons i.e the need of saving and investing. Those who made wise and conscientious financial decisions were able to maintain their standard of living throughout the tough shutdown.
Gold and Bitcoin are frequently viewed as means to diversify a portfolio or as a hedge against paper money inflation caused by unstable fiscal and monetary policies and are often termed as safe-heaven.
Bitcoin, often known as “digital gold,” has long been seen as a high-risk speculative investment for people seeking quick returns. Gold, on the other hand, has traditionally been seen as a safe-haven asset.
Several consumers flocked into safe-haven investments. Gold investments have produced high profits initially. However, as gold’s luster fades, cryptocurrency has outperformed gold in terms of returns. And it is for this reason that bitcoin has emerged as the latest trend in terms of investing.
The World Gold Council, which seeks to promote and sustain demand for gold, contends that gold, a high-quality liquid asset, is more practical, with more varied supply sources and less concentrated ownership.
Gold is a great safe-haven asset due to several characteristics. It’s rare and precious as a material for consumer products like jewelry and electronics. Supply stays disproportionately low, regardless of demand. Gold cannot be created in the same way that a corporation can issue new shares or a federal bank can print money. It must be dug up and processed from the ground.
In terms of energy consumption, Gold mining firms adopt the World Gold Council’s Responsible Gold Mining Principles, which address ESG requirements for the sector, including water management and climate change. Natural processes produce gold. Once a unit of gold is mined and extracted, it consumes no more energy and maybe traded or utilised as a store of value without harming the environment.
On the other hand, Reports from digital galaxy assesses Bitcoins yearly power utilization to remain at 113.89 (TWh) per hour, including energy for miner demand, miner power consumption, pool power consumption, and node power consumption. This sum is, at any rate, multiple times lower than the cumulative energy devoured by the banking system (263.72 TWh) and the gold industry (240.61 TWh) on a yearly premise.
According to studies and interviews, the US investment sector is on the verge of a significant revolution, with bitcoin and other digital assets potentially replacing gold in investor portfolios. According to Nate Geraci, president of ETF Store, 90% of his millennial clients hold bitcoin in their portfolios.
Millennials have grown up alongside the internet’s growth and have been shaped by it. They prefer digital wallets and online banking, therefore Bitcoin, as the money of the digital world, appears considerably more organic to millennials. Arsen Torosian, CEO of Tap Global, commented,
Millennial investors are very eager to invest in cryptocurrency assets. Tap Global has already grown significantly since it’s public unveiling. A survey conducted by Tap Global showed a majority of our user base consisting of individuals between the ages of 18yrs to 29yrs.
Bitcoin currently is seen as more precious than gold since it has surpassed $1 trillion in market value in just 12 years, outperforming Apple, Google, and Amazon. Gold should hand over the baton to Bitcoin. Since Bitcoin cannot be falsified or seized, it has all the characteristics of a superior asset to gold, and there will only ever be 21 million Bitcoin, hence it is deflationary. Anthony Pompliano of Pomp Investments and Morgan Creek Digital Assets stated that,
Bitcoin is a 100x improvement over gold as a store of value. The world is realizing this and beginning to reprice digital currency in real-time. Although bitcoin has increased hundreds of percent in the last few months, it is likely to continue appreciating in US dollar terms over the coming years. I suspect that bitcoin’s market cap will surpass gold’s market cap by 2030. For this reason, I own no gold and have a material percent of my net worth invested in bitcoin.
Bitcoin’s huge price fluctuations may be difficult for the average investor to accept as a volatile and hazardous asset. This volatility derives from several factors, including China’s anti-cryptocurrency campaign and Elon Musk’s remarks on digital assets. Despite these failures, experts believe Bitcoin has the potential to be a valuable asset in portfolio.
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Authors contribution: Varun Goel
Disclaimer: Trading/Investment in cryptocurrencies are subject to market, technical and legal risks. The views and opinions expressed in the article are solely those of the author and do not reflect the views of Todayq News.