Bitcoin vs Gold Argument: Why Bitcoin is Better Than Gold

July 2, 2020      Vandana Malik

Over the past few years, Bitcoin, the largest cryptocurrency has gained huge popularity and people are moving more towards it. During the time of financial crisis and inflation in various parts of the world, Bitcoin emerged as a saviour. People have started looking at cryptocurrencies, especially Bitcoin as a store of value. However, an everlasting argument always revolves around this which argues whether Bitcoin should be considered as a store of value and a popular one is Bitcoin vs Gold, where people keep comparing both these assets.

Traditionally people have been using gold as a ‘safe haven’ or ‘store of value’ which acts as a hedge against financial crises and problems that people face. Now people have started considering Bitcoin in place of gold. In fact, some claim it is far better than Bitcoin.

Why is gold valuable?

Gold is that precious metal which people have been using for centuries and is considered as a store of value. Over centuries it has been seen that gold has gained huge importance among people and has become highly precious among other metals. The major question that comes here is what makes gold valuable? In order to gain knowledge regarding the value of gold, one needs to understand that the price of gold has not been set by any government or organisations. The price of gold completely depends on its availability and production. This is the reason that in some countries gold is cheaper while there are several countries where the price of gold is very high. Now comes the reason why gold is highly valuable, here are several things which will justify this high price-

  • Higher production cost – The production cost of anything plays a major role in the final price of the product and here the production cost of gold is extremely high because of which this metal is highly expensive.

  • ScarcityThis is another major aspect because of which the price of gold is quite high. As compared to other metals, Gold is very rare and it takes a lot of money to find it and then mines it.

These two things play quite an important role in making gold highly valuable among other metals.

Is Bitcoin better than Gold?

Even though Bitcoin and Gold are quite different in nature, both of them are also similar in a lot of ways. Both these assets are obtained through mining, the only difference between both is that gold is physically mined while Bitcoin is mined virtually. Otherwise, there are a lot of similarities between both and the major one is that they are used as a ‘store of value’. Now people have started arguing whether Bitcoin is better than gold and there are a lot of things which proves it right. Here are few points indicating how Bitcoin is better than gold:

  • Liquidity – Liquidity has to be the most important thing which makes Bitcoin better than Gold. People can easily use Bitcoin in order to purchase their daily necessities these days but that is not the case with Gold. One cannot go to a grocery shop to buy things in exchange for gold.
  • Digital transactions When it comes to digital transactions, Bitcoin is the best choice because it is a digital asset. In this world of digitization, Bitcoin is far better than Gold in order to make digital transactions.
  • Highly portableOne can easily carry a Bitcoin wherever possible because of its highly portable nature. The reason being that it is digital and it does not take anything to carry it unlike gold. You can easily remember the codes of your Bitcoin in your mind and it will remain with you wherever you’ll go.

Comparison between Gold and Bitcoin

In order to make a comparison between both of these assets, there will be a need to find out the price of both Gold and Bitcoin over several years.

Here is a data which will show the price and trading volume of gold over the past three years – 

Years Average Price/Oz (USD)
2018 $1,314
2019 $1,282
2020 $1,514

These prices are recorded at the starting of each year and it has been seen that there have been both ups and downs in the price of gold.

The price of Bitcoin over the past three years-

Years Average Price/Bitcoin 
2018 $9,244
2019 $5,151
2020 $8,773

If the comparison will be made in both the charts, it has been seen that there have been several ups and downs in the price of both the assets over time. Their value isn’t fixed and completely depends on their availability and production.

Conclusion

The Gold vs Bitcoin argument will keep going on and even after so many benefits, there are people who will still stick to gold because of their emotions and trust associated with it. However, over the past few years, it has been seen that there is a subsequent growth in Bitcoin adoption and people have started moving towards it rapidly. This seems that they must have started considering Bitcoin as a safe haven and hence they have started preferring Bitcoin over Gold when it comes to safe-haven.

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Vandana Malik
Vandana Malik

Vandana has received Master of Arts degree in English from GEU Dehradun. She is currently working as a content writer with Agio Support Solutions and earlier worked as a sub-news editor at Business News and Information Services Private Limited. She is an enthusiastic content writer and aims to bring a compelling yet informative content to the audience. Meanwhile, enhancing her own knowledge in the cryptocurrency and blockchain industry.