Is Bitcoin Issuance Similar to Gold?

6 min read

When we talk about gold and bitcoin it is known that many people use them to invest and save their savings. Both can be used as a speculative investment.

Although it is said that these two are very similar, they have certain important differences. These would range from something as simple as holding to the very nature of these assets such as that gold is a tangible product, but bitcoin is a digital creation.

Those thinking of trading this can benefit significantly from buying and saving them until they go up in price, if they decide to buy bitcoins and save them, they can do so on our page.

Gold

Gold was originally used as currency, over the years more gold has been found in mines, and it has been recovered from Spanish ships that sank with large amounts of gold. To which we gain access when they are recovered from the bottom of the sea or are mined.

When mined or recovered, it can be used in jewelry making. In addition to this, investors can buy this precious metal in many ways, such as bullion or coins, as well as they can invest in exchange-traded funds and gold futures.

Gold has frequently generated significant attention as a safe-haven asset. The precious metal rose to an all-time high of more than £1,400 in late 2011, reaching these levels as debt issues brewed in both the United States and Europe.

Bitcoin

This is a digital currency. Like gold, this is also achieved through mining, but this process is totally different from normal mining is a totally electronic mining. That is, bitcoin miners verify transactions and combine those transactions into blocks, which in turn make up the digital currency’s blockchain.

Every time miners succeed in completing a block, new bitcoins are released. Under the bitcoin protocol, these new bitcoins are created roughly every 10 minutes. People can use these units of digital currency to make transactions. They can also use the units to invest.

Differences

The key difference between these two is that gold is a physical precious metal, while bitcoin is a digital cryptocurrency that is completely intangible.

In addition to this the maximum supply of bitcoins is a known number that is to say that the bitcoin protocol limits the total number of these digital currencies to 21 million.

But if we talk about gold, nobody knows how much of this precious metal is left in the world. Miners can find gold both underground and on the ocean floor, and it is hoped that some asteroids can be mined for gold as well.

Gold has a longer trajectory and is more recognized for this since more than 2 thousand years ago gold was already used, unlike bitcoin which began its trajectory in 2009.

Another one of these key differences between these two is that gold is a commodity while the classification of bitcoin turns out to be a bit more difficult, since bitcoin happens to have its own asset class.

Similarities

Gold and bitcoin have both been identified as safe-haven assets. While gold has long been identified in this way, bitcoin has more recently become something that investors flock to in times of distress.

Unlike bonds and stocks, bitcoin and gold are a speculative investment. For example, gold has acted as a safe-haven asset in many cases but risen alongside riskier assets at other times.

In his time the president of the federal reserve, told the congress that he was not sure what really determined the price of gold since nobody really understands the prices of gold, as well as bitcoin market analysts have provided several ways to value digital currency. But none in particular since as its users grow the value of the digital currency increases rapidly.

Dan Davies, a senior research adviser for Front line Analysts, asserted that transaction volume drives bitcoin’s value. “It’s not a security with some intrinsic value, rather it’s a currency that in the long term is governed by an exchange rate driven by trade or volume of transactions,” he said.

Last words

Both gold and bitcoin are investments that have attracted the attention of investors seeking a haven for their assets. Although they have some important differences that gold is a physical product and bitcoin is purely electronic, they are not so different from each other.

However, the two also have similarities. They are both speculative investments, in that their prices are not based on more basic fundamentals like revenue, earnings or interest payments.

Before purchasing or speculating on either gold or bitcoin, investors can benefit significantly from conducting thorough due diligence. Plus, they should keep in mind that risk is inherent to investment, so they shouldn’t invest any money they cannot afford to lose and remember this is not financial advice but only an opinion if you want you can contact one to guide you in this world of cryptocurrencies.