Cryptocurrency vs. Precious Metals

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What is Cryptocurrency?

Cryptocurrency is a digital currency that was created to be used as an alternative to standard currencies, such as dollars or euros. Cryptocurrency is supposed to decentralized, which means that it is not controlled by one government, bank, or entity.

The first coin created was bitcoin, and also the most expensive crypto. It was created by an individual or individuals under the alias Satoshi Nakamoto, whom have yet to seen.

The cryptocurrency market is volatile and unpredictable, making it difficult to know when or is cryptocurrency will be the future of money or just a fad.

One thing can be certain though, cryptocurrency has gained popularity over the years because there are no banks involved in cryptocurrency trades, allowing for faster funds exchanges without any associated fees.Cryptocurrency offers many benefits; one being anonymity because transactions cannot be linked to any identity. But if I’m not mistaken your crypto assets can be frozen, which makes it hard for me to understand the decentralized part.

What are Precious Metals?

Precious metals fluctuates in value based on supply and demand. Precious metals also possesses some non-monetary uses such as jewelry or decoration. It is believed that no one knows how much precious metals exists at this point. Gold and Sliver is basically a commodity and countries around the world often hold gold reserves to back up their currencies and as an economic safety net. The most common form of gold and silver that investors can purchase, trade, or sell are coins stored in banks or investments held with financial institutions. Of all the precious metals, gold is the most popular. Gold is used as a hedge against inflation and financial turmoil, and for many other reasons. The relative strength of gold means it’s more resistant to economic downturns than stocks or bonds are because its value doesn’t rely solely on monetary policy decisions. For these reasons and others, gold has served as both a haven asset during times of uncertainty but also a profit-making asset with historically high returns going back decades if not centuries.

Is Cryptocurrency a Safe Investment?

Cryptocurrency is not as liquid or secure of an investment because cryptocurrency exchanges are vulnerable to hacking attacks and government regulation, which may have a negative effect on the price. The only way to secure your investment with cryptocurrency to keep it off the exchanges on a hard wallet or cold wallet. Cryptocurrency, on the other hand, isn’t really an asset that can be physically held by someone but rather it’s digital money that exists within certain computer systems around the globe. This means cryptocurrency can easily be created or taken away depending on how society views cryptocurrency. When bitcoin was first introduced back in 2009, people could mine bitcoins themselves using their own computers at home to create new coins which would then increase supply. The majority of the good cryptocurrencies have maximum supplies, that means they are limited. Cryptocurrency is not a physical asset you can hold and touch like precious metals. I personally own some crypto myself and see challenges with owning cryptocurrency, but I don’t want be left behind either.

Are Cryptocurrency and Precious Metals Legal Tender?

Cryptocurrency is not yet legal tender anywhere in the world, whereas gold has been used as a currency standard for centuries and is accepted across borders. Governments will never be able to control it or refuse to accept gold as a form of asset, but cryptocurrency is not yet considered a legal currency. Another thing is – the price of gold fluctuates much less in times of economic uncertainty because it relies on simple supply and demand rather than speculative forces.Cryptocurrency can be more valuable when there are dramatic changes to the global economy that cause people to seek out alternative assets like Bitcoin. Government regulators may take issue with cryptocurrency being traded anonymously without any form of identification which could lead to tax evasion issues if they ever do become an official currency. With gold, tax invasion is not an issue because it does require identification. Gold is also considered to be much more stable in terms of value than cryptocurrency, meaning that when things get really bad and the economy goes into a meltdown, gold can still retain its worth assuming you have physical possession. Plus you can physical trade precious metals, as the saying go, if you don’t hold it, you don’t own it! Cryptocurrency is easy to store and keep safe, cold wallet and hard wallet. Just don’t lose your password phrase, or your asset will be lost forever. Precious metals take more effort to store in a safe secure way. People are most definitely trading crypto between peers and exchanges. The future is still yet to be determined.

Which one to Invest in?

Whether you should invest in crypto or precious metals depends on your risk tolerance, cryptocurrency knowledge, and also the length of time and amount of money you are investing. If you’re looking for a guaranteed return with low risks, then cryptocurrency is not what you should be considering. The market volatility can go up and down in days or even hours. So there will always be months when cryptocurrency has negative returns but it’s still possible to make money over a short period if done right. On top of that, depending on how much risk someone wants to take they could speculate on cryptocurrencies which typically have more swings in their values than traditional currencies do against one another as well as different coins having positive correlation vs each other. Precious metals is really a safer bet for someone who doesn’t want to take on too much risk. Over the long term, cryptocurrency will likely outperform gold but it’s also possible that cryptocurrency could lose out if you’re looking at a time frame of fewer than five years or so. Gold is a more conservative bet because as an asset class, it does not have such volatile swings in its values as cryptocurrency. As cryptocurrency and gold are both considered to be a form of investment. The cryptocurrency vs gold debate is ultimately about what an individual wants to invest in as there will not likely be many people who want or need to have investments in both cryptocurrency and gold at any given time. In my own opinion, I think crypto is a much more affordable and flexible form of investment with higher returns compared to gold. In fact, crypto is the future money. While I don’t see cryptocurrency killing gold soonest, it has the potential to disrupt gold as a cryptocurrency is much more democratic and can be used without involving any authority.