Is Bitcoin Golden

Is Bitcoin Golden For Strategic
Investors in 2018 and Beyond?

Marcia Bell
03/06/2018
Bitcoin is billing itself as ‘digital gold‘, and a ‘safe haven for investors to park their assets’. These
days, Bitcoin is thriving quite well, and there is no question that its here to stay. So how does it hold
up to gold.
Bitcoin and its blockchain buds, Litecoin, Ethureum,
Ripple, Dash and over a thousand of others. Bitcoin
was developed in 2008 by Satoshi Nakamoto (not his
real name), actually as open source money. It
established itself as the first
decentralized cryptocurrency the following year. Of
all virtual currencies, Bitcoin is the most widely used
and valuable. By 2015, its price rose to more than $6
billion. Not too shabby. What adds to Bitcoin’s
attractiveness to investors worldwide is that only21 million
Bitcoins will be mined (think minted).
Although Bitcoin is not regulated, central banks have been
taking a close look at cryptocurrencies and ledger
technology as they become more recognized as a tradeable
commodity in both the digital and physical marketplaces.
Also, Internet with based payment and savings,
cryptocurrencies continue to emerge as a viable alternative
to physical money, checks and other types of monies.
On the short-term, Bitcoin must diligently promote itself for government approval. Once regulated,
there’s a strong potential to sweep the competition – at least for some time. In the interim, it is
important for digital currencies out perform its rivals in areas such keeping fees low and high
quality cyber security and ease of use.
Although Bitcoin is not regulated, central banks have been taking a close look at cryptocurrencies and
ledger technology as they become more recognized as a tradeable commodity in both the digital and
physical marketplaces. Also, Internet with based payment and savings, cryptocurrencies continue to
emerge as a viable alternative to physical money, checks and other types of monies. In the short-term,
Bitcoin must diligently promote itself for government approval. Once regulated, there’s a strong
potential to sweep the competition – at least for a time In the interim, it is important for digital
currencies out perform its rivals in areas such keeping fees low and high quality cyber security and ease
of use.
Gold, on the other hand is a physical asset with quite an impressive record of performance and
resilience dating back thousands of years. To this day, it continues to be trading by dealers and strategic
investors throughout the world. Another thing about this precious metal is that it will never lose its
intrinsic value, as may Bitcoin. And like Bitcoin, gold is a finite object. Only so much exists of it. This
certainly adds to its value, plus its pretty to look at and wear.
Columnist, Guy Christopher explains, ‘when you value your metals in ounces and not dollars, you’ll
see your paper dollar for what it’s worth – a mere fraction of an ounce of gold or silver. You’ll discover
that fraction is becoming smaller over time’. The main factors that influence gold prices include
inflation, exchange rate, bond prices, market performance, seasonality, income, oil prices and business
cycles.
During weakness in any of these areas, alert investors add them to their portfolios as as a safe haven.
Furthermore, gold is dominated by the US dollar in the international market, and is said to be the
best commodity used to hedge against the recession to preserve financial resources. Indeed, the dollar
and other types of capital have come under scrutiny for its inability to consistently retain value with
basically no real commodity backing it – a position once had by gold.
Strategic investors understand that trading of commodities all carry some degree of risk. There’s no
way around that. Investors can control some of the risk in their portfolio through strategic an well
advised diversification. An action both assets for both are highly suited.
At this time, Bitcoin is still a relative newbie into the financial arena and much more volatile and
less solid than gold – in the physical sense. However, this is not, by any chance necessarily a bad
thing.
References
AMEX. (2018). Precious Metals Investing | Investment Guide and Learn How to Invest in Gold &
Silver. Retrieved March 04, 2018, from https://www.apmex.com/education/investing
Bitcoin. (2018, February 14). Retrieved March 05, 2018, from
https://www.regalassets.com/cryptos/bitcoin/
https://bitcoinexchangeguide.com/cryptocurrency-vs-digital-currency/
https://blog.evercoin.com/bitcoin-isnt-tulips-it-s-open-source-money-67e2286ff142
Bouri, E., Molnár, P., Azzi, G., Roubaud, D., & Hagfors, L. I. (2017). On the hedge and safe haven
properties of Bitcoin: Is it really more than a diversifier?. Finance Research Letters, 20, 192-198.
Cryptocurrencies are No Substitute for Gold | World Gold Council. (2018, January 25). Retrieved
March 04, 2018, from https://www.gold.org/research/cryptocurrencies-no-substitute-for-gold
Cryptocurrency Market Capitalizations. (2018, March). Retrieved March 04, 2018, from
https://coinmarketcap.com/exchanges/volume/24-hour/
Capie, F., Mills, T. C., & Wood, G. (2005). Gold as a hedge against the dollar. Journal of International
Financial Markets, Institutions and Money, 15(4), 343-352.
http://fortune.com/2018/02/08/bitcoin-price-cryptocurrency-gold-price-
Little, K. (2018, January 25). If You’re Afraid of Risk, Don’t Invest. Retrieved March 05, 2018, from
https://www.thebalance.com/understanding-risk-3141268
Mai, H., Schildbach, J., AG, D. B., & Schneider, S. (2018). Why would we use crypto euros?
Mo, B., Nie, H., & Jiang, Y. (2018). Dynamic linkages among the gold market, US dollar and crude oil
market. Physica A: Statistical Mechanics and its Applications, 491, 984-994.
Why a Gold IRA? (2017, May 23). Retrieved March 05, 2018, from https://www.regalassets.com/why-
a-gold-ira/

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