Cryptocurrency vs. Precious Metals: Which One Wins?
Precious metals represent financial strength and have been the ideal store of value for investors throughout every age. However, the unexpected and astronomical rise of cryptocurrencies has baffled economists and sparked a global interest in digital currencies.
Many have predicted the emergence of cryptocurrencies to mark the beginning of the end for paper money. Even if this prediction holds, are cryptocurrencies strong enough to knock precious metals such as gold and silver off their pedestals?
The most popular cryptocurrency Bitcoin may have fallen drastically from its all-time high, yet the value of one coin still hovers around $10,000, according to Coinbase. In this blog, we’ll compare cryptocurrency with precious metals to determine the investment of choice.
Bitcoin is more volatile
Bitcoin may have been termed as “gold 2.0”, yet it has failed to display the same stability as gold and is highly volatile. Large price fluctuations have historically been the norm even during when Bitcoin was in full swing. For example, the digital currency rose by nearly 1,800% in 2017 but the prices fell by 80% from the peak value during the subsequent year.
On the other hand, gold has remained stable during times of economic crisis and war. In fact, following the global financial crisis of 2008, the value of gold nearly doubled over the next two years.
Bitcoin carries greater risks
Cryptocurrencies offer a far greater chance at financial rewards, but it also comes with greater risks. Aside from the price volatility, investors also have to deal with the threat of frozen accounts or having their Bitcoins stolen by crypto hackers.
Counterparty risks and scams have also marred Bitcoin’s reputation. From the early days of the Mt. Gox fiasco to the more recent Quadriga, millions of dollars have been stolen or lost.
Physical gold carries zero counterparty risks. Historically, there hasn’t been a single currency in existence that’s held its value as consistently as gold. It’s also an excellent hedge against rising inflation, exchange rates, and volatile stock markets.
Gold has higher liquidity
Market downtimes for cryptocurrency result in lags in transactions that not only cause the prices to fluctuate drastically but can also cripple transactions speeds by a couple of hours. Gold or silver coins can be bought or sold with little or no delay.
In conclusion, cryptocurrencies may be a superior tool for growing your investments, but it doesn’t possess the same stability as gold. If you’re interested in buying gold or silver bullions, Orion Metal Exchange is included in one of the top gold investment companies in the U.S. Here you can safely buy gold bullions online. Contact us today for more information.