Cryptocurrency

The rising frenzy over cryptocurrency has led many to think twice before investing in other assets. Cryptocurrencies are now becoming more popular than gold, say reports. A few weeks back we witnessed the digital currencies Ethereum and Dogecoin skyrocketing in their values and market caps. Ether, the second-largest crypto after Bitcoin touched a peak of USD4,372, with more than 500% of return this year. Another digital currency that stole the limelight is Dogecoin. This crypto, which is inspired by a Doge meme rose to popularity since its launch. However, a month back, the currency rose to more than 800% in market value. Apart from these relatively new cryptos, there is Bitcoin, which has been ruling the world of cryptocurrencies for a long time. Bitcoin recently soared over its USD1 trillion market capitalization value. According to the Fortune Business Insights report, the global Cryptocurrency market size is estimated to reach USD1,758 million by 2027, exhibiting a CAGR of 11.2%.

Gold vs Crypto

The increasing popularity and price of cryptocurrencies have led to the start of discussions, where investors are analyzing the potential of crypto and trying to understand if it is a better investment than gold. The crypto vs gold debate is heating up the internet world. Gold is considered a standard asset class that has been dominating for several years. According to an Economic Times report, Indian investors were confused during the occasion of Akshaya Tritiya, where people usually consider investing in gold as auspicious, if they should buy gold or invest in crypto. Gold is a scarce and valuable metal that is commercial and widely used. However, it cannot be considered par with assets like stock index and digital currencies. The metal has a great potential during market corrections, where usually the stock prices decline. In such scenarios, gold can be considered as a hedge investment since its value is not susceptible to these sudden declines. 

While we keenly observe these assets, it is evident that they are independent of the government, although prone to restrictions and other legal consequences. Gold has a high store of value, whereas Bitcoin is not very high in value considering its recent development. While gold in its true form is difficult to access, it is easier to trade and access cryptos using fiat, credit, and bank transfers. Gold is a non-fungible asset that cannot be easily tracked. It has an established system of trading, tracking, and weighing. But cryptocurrencies are not fully fungible as they are still prone to attacks and cyber corruption. Cryptocurrency are considered to have the safest trading platform built on distributed ledger-based blockchain technology. Although blockchain was initially associated with cryptos, it has now become widely used across several industries for its transparency and traceability. Since the integration of blockchain, the crypto trades can be tracked easily and is highly visible to the markets. 

But in safety, the digital currency has more hope than gold. Gold needs high-security precautions to secure it from theft, loss, etc. While cryptocurrency can be carried around easily without facing any physical threats as it is digital in nature and can even be stored in your smartphones and tablets. The open-source platform that hosts cryptos can save investors from usual cyber attacks. The crypto market is highly volatile, unlike gold, as it mostly remains at a static price value. There have been instances where experts warned investors about pouring their money into cryptocurrencies due to the risk concerning the market. There have been digital currencies like Tether that promise better stability, but it is not easy to vouch for its price stability. Both gold and crypto have their boons and banes. It might look like a crazy comparison since there are many differences and history that comes with these assets. However, experts have different opinions on these who wins who loses situation. 

We can take two expert opinions that have been published by the Business Insider as the concluding remarks. 

According to the report, Mike Venuto, Co-portfolio manager, Amplify Transformational Data Sharing ETF says, "I would probably pick bitcoin but why not both? Gold and bitcoin have a very similar aspect to the portfolio. I would add gold as a diversifier. I would add bitcoin as a diversifier. The hedge is diversification. Bitcoin is a tool to get there. Bitcoin is a hedge to losing money to something stable."

Another comment by David Rosenberg, President, and Chief Economic Strategist, Rosenberg Research say, "My vote would be for gold because it has thousands of years of a historical record as a store of value, has one-fifth the volatility of bitcoin, and doesn't face the same competition risk. The day that Queen Elizabeth trades in the five pounds of gold in her crown for crypto is the day I'll shift course."