Bitcoin has made news recently due to the fact that a single coin is now currently worth more than twice as much as an ounce of gold. As a growing number of people and companies are coming to accept this relatively new cryptocurrency, investors are naturally left wondering if it is now time to purchase Bitcoin in place of gold.
Following is some insight that can help individuals make a well-informed decision.
Is Bitcoin Really as Valuable as it Seems?
There are two important things to know about Bitcoin’s value. The first is that there are far fewer Bitcoins than there are gold coins. This plays a large role in the value of Bitcoin currency. While the $2,600 price tag for a single Bitcoin looks impressive, this doesn’t necessarily mean that Bitcoins are actually more valuable than gold; to the contrary, experts note that a single Bitcoin would need to be worth well over $300,000 for this currency to exceed gold’s value.
It is also extremely important to note that Bitcoin is far more volatile than not only gold but even traditional paper investments such as stocks, bonds and mutual funds. Its price has risen and fallen dramatically over the years due to a number of factors. This means that investors who try to cash in on Bitcoin’s value while the prices are high stand to lose tens of thousands of dollars with little or no warning.
Understanding What Bitcoin has to Offer
While investing in Bitcoin is risky, there are a few reasons why it can be a good move. Many individuals and businesses now accept Bitcoin payments, making it easy to use the cryptocurrency to purchase items or make business investments as the need arises.
Investors who are saving up for retirement and frustrated with the Federal Reserve’s low interest rates may find that buying Bitcoin makes it possible to turn a profit, or at least avoid losing money due to inflation.
Furthermore, Bitcoin is fast becoming popular around the world, and this popularity can boost the currency’s long-term value in a way that has not been seen in the past.
Japan recently recognized Bitcoin as legal tender in April of this year. South Korea and many other Asian countries now have Bitcoin money transfer businesses for those who want to send cash to relatives or friends in a simple, cost-effective manner. Bitcoin B2B transfers in America and Europe now represent over 25% of all B2B payments.
What is more, ransomware is becoming all too common – and ransomware creators only accept Bitcoin as payment. This illicit activity is not necessarily seen as good news by Bitcoin aficionados, but it does drive the currency’s value upwards as more people and businesses have to buy it.
Over 4,000 ransomware attacks have taken place every day since the beginning of 2016, and they are expected to spread faster and easier than before in 2017.
Bitcoin vs. Gold for Preppers
An EMP or other, similar catastrophe would naturally make Bitcoin worthless, as a lack of electricity or internet would make it impossible to trade Bitcoin for needed items. Bitcoin can also be stolen by savvy hackers who use the fact that Bitcoin transactions are irreversible to make thousands of dollars in a matter of minutes.
On the other hand, gold is also vulnerable to loss unless it is kept at home instead of a bank or 401(K) account.
In Summary
Bitcoin clearly cannot take the place of gold. The precious metal is a tried and proven investment that has remained valuable for thousands of years. Bitcoin, on the other hand, is a relatively new type of currency that has not proven its worth long-term.
However, investors who are willing to do careful research and take some risks may find that Bitcoin is a great investment in addition to traditional gold investments. It is not controlled by a central bank, is fast becoming a popular means of exchange, and it is possible to make money from this currency by purchasing it when prices are low and selling when prices rise.
Those who have some cash to spare and don’t want to leave it sitting in a bank and/or are wary of paper investments may find that Bitcoin has a lot of potential.
Regards,
Ethan Warrick
Editor
Wealth Authority
