The heated argument on which gold and bitcoin is the better investment has been going on for a while. Since bitcoin has lost nearly 64% of its value in 2022, some investors might have lost support for cryptocurrencies.
Many bitcoin (БТК) skeptics say there is too much uncertainty and volatility surrounding the major cryptocurrency. Additionally, bitcoin needs to catch up to a number of the significant commitments meant to support its value proposition. For instance, the claim that it would protect against inflation or highly volatile markets.
Even if some of bitcoin’s flaws have undoubtedly been revealed this year, the following query is still pertinent: does gold represent a superior long-term investment to bitcoin?
Why invest in gold
Bitcoin is trading essentially like the shares of a high-risk, high-growth IT business. Based on the market-beating profits that firms may provide, they can make excellent investments during бикови пазари.
Investors, however, often go for less risky assets during bad calls, such as blue-chip stocks and gold. Based on this argument, gold is a safer investment option as long as concerns about inflation and the possibility of a recession continue to hang over the economy.
In addition, some may say that there are just no “non-speculative use cases” for bitcoin. In contrast, gold has valid applications that consistently increase demand for metal.
Why invest in bitcoin
The primary justification for bitcoin is that, historically, it has offered yearly returns much higher than any other asset. With annualized gains of 230.6% over the ten years from 2011 to 2021, bitcoin was the world’s best-performing asset. This was ten times better than the results of even the best high-growth tech stocks. And over its existence, bitcoin has given investors a return of more than 17,000%.
In contrast, traditionally, gold has produced meager annualized returns over more extended periods. The annualized return on gold from 2011 through 2021 was barely 1.5%.
Investors believed they were getting the best of both worlds with Bitcoin until 2022 because it offered a secure place to keep assets and the possibility of fantastic yearly returns. However, bitcoin didn’t provide either last year. On the other hand, gold fulfilled its promise. In contrast to bitcoin’s fall in 2022, gold is essentially flat for the year (down roughly 1%).
Although bitcoin had never developed into the payments network that many anticipated when it first appeared in 2009, there are indications that it is increasingly a viable choice for online transactions, especially now that the asset is recovering from the previous bear market turbulence. This is partly because of creative work to add speedier payment layers (like the Lightning Network) on top of its blockchain’s foundation layer. The recent slight comeback seems to be good news for various bitcoin enthusiasts.
Source: https://crypto.news/gold-vs-bitcoin-which-is-better-and-how-are-they-related/