By  Posted on Fri Apr 4, 2014

Bitcoin vs. Gold, Which Has Lasting Value?

 
Bitcoin vs. Gold, Which Has Lasting Value?

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Trying to decide on your next investment? If you are considering Bitcoin vs. gold, you may have a hard time determining which is better. Just like any major decision you make, it is best to do your research before you buy.

Bitcoin has caught a great deal of buzz in recent years catching the eye of a variety of investors all over the world. Many who have invested in the digital currency have gained considerable profits, but will the trend continue?

On the other hand, gold has had a great deal of value for centuries. But will gold still hold its value? Or will Bitcoin take over as a viable investment opportunity? We break down the newly debated topic on Bitcoin vs. gold.

An overview of Bitcoin and gold

Overall gold has maintained value throughout centuries of economic and global change. Bitcoin has only been around for a few years. It would only make sense to put long-term faith in a commodity that has proven valuable throughout the history of civilization. If you are looking to make a long-term investment, then gold is the better choice. There is simply no predicting what the market holds for Bitcoin a year or two from now.

Bitcoin has caught a great deal of interest from many recently. There are even Subway restaurants, pizza delivery services, and other places that will accept Bitcoin as a form of payment. This has increased its popularity and more investors want to get their hands on Bitcoin. The surge in popularity for Bitcoin can prove worthwhile for the near future.

Bitcoin flaws that could lead to lower value

The IRS recently ruled Bitcoin as property, not as actual currency. This makes it challenging for people who are interested in using or accepting Bitcoin to plan out their finances. From here on out everyone needs to legally mark down Bitcoins they receive, as an asset, not as money. This has made it more difficult for businesses and people to easily transfer Bitcoin, and is causing headaches for many. There is no telling how people are going to react to this in the coming months, so it may hurt the value of Bitcoin significantly.

Bitcoin could very well be a worthwhile long-term investment, but it is most likely going to lose momentum in a few years, as newer forms of digital currency that rival Bitcoin may take the spotlight. JP Morgan recently patented a Bitcoin-like form of digital currency, and could overtake the role as the premiere form of digital currency to use. The main reason why this may happen is because more people would trust digital currency coming from a respected financial institution, as opposed to a programmer on the Internet.

Bitcoin vs. gold: Which should you choose?

How does Bitcoin vs. gold compare, head to head? For comparison purposes, take a look at this chart created by Ticker Scores. This chart allows you to get an idea of how the two have progressed in value in recent years.

Bitcoin vs. Gold, Which Has Lasting Value?As of the end of the fourth quarter in 2013 gold is still more valuable than Bitcoin. At one point in late November Bitcoin almost surpassed gold in value, but it was unable to top the commodity that people have invested into for centuries.

The verdict

Look for gold to hold more long-term value, and for Bitcoin to fluctuate but have greater short-term value. Right now it is simply too early to tell whether or not Bitcoin can hold its value for decades at a time.

New digital currencies that pop up all the time, along with the latest ruling by the IRS to consider Bitcoin property, could lead to its downfall. Yet in a couple of months a new ruling or something in the news could make Bitcoin grow significantly in value. So if you want to try a short-term investment, Bitcoin is your best option. Either way, make sure you create a diversified portfolio to maximize your return on investments and profit potential.

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  • Neal Palmquist

    When Bitcoin crashes 98% from the all time high, I plan to sell silver for Bitcoin only trades. I will play chicken and race my silver against the Bitcoin all the way to the cliff. If Bitcoin goes over the cliff, I will follow.

    But if Bitcoin bottoms out and turns around, my silver will sell out as the price of Bitcoins recovers. This is because Bitcoiners are not very bright and can’t figure out which way is truly “up.” They are such fools they will think I am selling silver at a significant discount and will jump on the chance to grab what they believe looks like a bargain.

    After the recovery, I’m dumping my Bitcoins onto some poor fool with United States Dollars in a Bitcoin Exchange. I’ll use that cash to buy even more silver than I ever had before. Then I will wait for the next crash and do it again.

    • Neal Palmquist

      And why buy Bitcoins for the purpose of buying gold backed crypto currencies? That sounds to me like a very expensive way to buy gold. As a matter of fact, I bet those crypto creators are pocketing cash instead of buying gold to back their currencies. What is so great about infinitely divisible gold atoms?

      Watch what happens when gold trading closes. With no escape route from BTC to USD and into gold trading sessions, Bitcoiners are sitting ducks. It is like shooting fish in a barrel on the weekends. If you see Bitcoins precipitate in price, look at gold and see what is happening there. Bitcoiners are jumping into gold backed cryptos and those BTC are raining onto the exchanges faster than Bitcoin Merchant Services. Gold kills Bitcoins.