There are many types of investments to choose from, but in times of economic uncertainty, investments in stocks, bonds, mutual funds, and the like have proved risky. It's because many believe these types of assets depend on the economy. That's why many people are turning to gold and cryptocurrency investing as a better option.
Crypto Vs. Gold: An In-Depth Comparison
If you're new to investing and torn between buying gold or crypto, here are some differences between the two to help you decide:
1. Form Of Ownership
Gold is a tangible asset. The most common form of gold for investment purposes is gold bullion in bars and coins. There are different categories of gold bar, and each type depends on its weight. Tight budget investors may buy as small as a 1-gram gold bar, and big investors can buy as heavy as 1-kilo weights. That's why any gold bar investors will have no problem looking for the actual bullion they want.
Cryptocurrency, on the other hand, is a digital asset. If you want to invest in cryptocurrency, you need to either store it in a digital wallet or keep it on an exchange platform for holding. Each cryptocurrency denotes a specific unit, and developers measure them with a unique name. For example, Bitcoin's smallest denomination is called Satoshi. 0.00000001 BTC represents one Satoshi.
While gold is a rare precious metal with limited available supply, it still doesn't have a capped quantity as people are still discovering new gold mines across the world.
Each cryptocurrency, on the other hand, has a limited supply. Whether it's pre-mined or created through mining, once the entire supply has been mined and distributed to its users, its value will entirely depend on its circulating supply and market demand. Many investors believe that cryptocurrency's market capitalization depends on its supply. That's why a cryptocurrency's total supply is a vital aspect to consider before investing.
Gold isn’t as volatile as crypto. What's certain about gold is its price history shows stability over time, making it a good investment for investors in the long run. Gold investments may provide low returns compared to crypto, but they’re safer for many.
Crypto shows a lot of volatility. New cryptocurrencies get introduced into the market, and existing ones continue to compete as they try to maintain or rise in market value. There are cryptos which price will skyrocket right after its launch date but will eventually lose value hours after its price surge.
Many countries haven’t yet recognized cryptocurrency as a legal asset. Some countries even banned crypto transactions because they believe people can use cryptocurrencies for illegal activities like money laundering, weapons trafficking, and the like. That's why those who invest in crypto, which is located in these countries, might be putting themselves at many risks.
Gold is a physical asset recognized by the world as a legally accepted asset. Countries may have different opinions about gold investment, but no government has banned gold and its transactions.
Crypto's security is limited to the assets' value and its investors. But since crypto's values are in circulation, keeping them in a wallet or exchange is enough to make them vulnerable as they're still subject to the risk of being stolen by hackers.
Gold, on the other hand, is a solid physical asset. Investors can easily keep it at home or in a safety deposit box. Buying gold bars and coins requires minimal security measures. You can be discreet about it, so no one knows you have them.
Gold investments are subject to taxes depending on the value of your gold bar or coin collections if it's in your possession.
Crypto, on the other hand, is still not subject to taxes in most countries. But this may change soon as some countries are already discussing the possibility of taxing crypto assets just like they tax other investment and property assets.
If you're looking for a safe investment with stable returns, gold might be your best and safest option. History shows that gold keeps its value over time, so if you prefer a chill and secure investment with an acceptable return, this might be your best option.
But if you're willing to take risks, enjoy the potential of a huge return, and experience a lot of highs and lows, then crypto is your ideal choice. But considering the risks it brings to the table, only invest what you can afford to lose.
In the end, it's up to you which asset will work for you. See that your choice appeals to you and suits your goals, then invest and reap the benefits.