If you don’t know what Bitcoin is, you were probably living under a rock of gold or earning for a chunk of gold. Bitcoin being the world’s first and most successful cryptocurrency. It is completely decentralised and can be used as a full fledged mode of peer-to-peer transactions for goods and services and is traded in cryptocurrency exchanges just like any other commodity is.
Decentralization brings in an added benefit – there is no organisation or government that has any control over Bitcoin or its network. The payment distribution system is handled by miners and users across the globe aka nodes. BTC is transferred anonymously and directly between the users over the internet without undergoing any regulatory house or authority. These transaction charges are much lesser than any other traditional method.
Considering the last few months, in net returns, BTC has left gold in the dust. Bitcoin Investment Trust (GBTC) shares have nearly tripled in worth in the recent 12 months, gaining over 30% alone in the last 3 months. In the meantime, SPDR Gold shares have been down 3.78% in the last 12 months and up 4.49% in the last 3 months.
Bitcoin is increasingly becoming more popular amongst investors than gold. Is it entirely hyped or is there demand for the leading cryptocurrency?
What’s not difficult to state is that there’s a developing distrust for national currencies, after doubtful government policies that have diverted people’s attention to Bitcoin.
However, there are a few clean sweep benefits of Bitcoin that make it superior to gold, at least for the millennial generation. They understand digital currency better than the people from baby-boomer generation. For example, Bitcoin is also a convenient payment method around the world unlike gold.There is also a limited supply of Bitcoin, restricted to 21 million which further rules out induced inflation. But the supply of gold can almost be considered unlimited in comparison, giving an encouragement for gold miners to mine for more gold if prices are bullish.
To be fair, there are advantages of owning gold as well. It has its own uses. That is the reason investors mustn’t hurry to replace their yellow metal with digital currency, particularly,especially if they do not exactly understand the characteristics/risks of digital currency.
You can probably say gold is rare, but Bitcoins are rarer — one of the major reasons why Bitcoin truly stands out is its limited availability. Beyond that availability, no new Bitcoin can be mined. This is critical to comprehend because whenever the demand is more and supply is limited, the value goes up. Contrary to that, gold’s availability depends on “controllable” supply-and-demand cycles wherein the high demand for gold gives incentive for the gold miners to find mine more.
Bitcoin will probably acquire more public acceptance after in the years to come, since users can stay anonymous while purchasing services and products online, transactions charges are much lower than traditional payment networks and anyone can access the public ledger, thereby maintaining transparency which can be utilized to regulate fraudulent practices.