All eyes are now in gold as the ultimate safe hull asset. Gold has only reached $3,000 per ounce, making it the highest ever record. It comes amidst a stock market correction, a significant decline in the crypto market, and widespread concerns about what will happen next in US economic policy.
But don’t forget about Bitcoin (Cryptography: BTC)is often referred to as “digital gold.” Today, the top investors on the rise believe that Bitcoin is superior to physical gold as a valuable storage, hedge against inflation, and a safe haven amid economic uncertainty. But is that?
To answer that question, it is important to understand the unique features and characteristics of Bitcoin. Most importantly, the total lifetime supply of Bitcoin is concluded with 21 million coins, with 20 million coins already in existence. It infuses Bitcoin with incredible rarity. Almost all Bitcoin that exists already exist.
But that’s not all. Bitcoin is also completely decentralized. This means that central banks, sovereign governments, or Wall Street Investment Banks cannot change the underlying Bitcoin algorithm.
One of the unique features of this algorithm is the Bitcoin Harving mechanism. Every four years, the percentage of new Bitcoin supply is reduced by half, and over time it becomes a fired assets. This is the main reason why many people believe that Bitcoin will be a powerful hedge against inflation.
Due to the encryption nature of blockchain technology, Bitcoin is also highly resilient to government expropriation and other forms of asset attack. This is one of the reasons billionaire Ricardo Salinas (now one of Mexico’s five wealthiest people) calls Bitcoin “the world’s hardest asset.”
And there’s one more feature of Bitcoin, which makes it very unique. It is purely digital and can move across boundaries almost instantly. Bitcoin was originally designed to be a peer-to-peer digital currency without the need for a third-party intermediary. The cost of transferring Bitcoin to someone else is not free, but banks and other financial institutions do not have to intervene and collect fees.
For discussion, let’s assume you are not planning to invest directly in Bitcoin or gold. That means I don’t plan on buying Bitcoin on Spot Crypto Market, and I don’t plan on buying Gold Bars on Costco.
Instead, you could potentially invest in both Bitcoin and Gold via Exchange-Traded Funds (ETFs). This will allow you to easily and effectively change the portfolio allocation mix. The most popular spot Bitcoin ETF is iShares Bitcoin Trust (NASDAQ: IBIT)So let’s compare that performance with that of our cousin, Ishares Gold Trust. (nysemkt:iau)for the past 15 months.
The story continues