The last year has been an economic recession due to different reasons. The analysts have predicted that the downward curve after many years of the bull market might have been the result of the pandemic. Nevertheless, investors have understood the possibility of incurring much loss unless they begin to search for alternatives to shift the investments into safer havens.
During the recession phases, the traditional move has always been to use gold as the hedge against the stock market's volatility. But the scenario changed entirely with the invention of a newer approach, which is challenging but safe. With its launch in 2009, Bitcoin ushered in a new era of digital currencies. With many platforms like the Bitcoin confirmation simplifying the concept of crypto, Bitcoin has gained incredible traction among retail investors.
Undoubtedly, Bitcoin remains the dominant cryptocurrency. It definitely has some features of the available currencies, but it has a set of distinguishable characteristics that make it the safest option still now. However, due to sudden fluctuations in the market in the past few months, many of you might be in doubt about whether Bitcoin is still digital gold. Well, the answer is affirmative.
Gold: the precious metal
There are numerous reasons why gold will be a strong-haven asset. The primary reason is the reliability of the source of protection that has already stood the test of time. But as the popularity of Bitcoin is increasing, the digital asset is all set to dominate the economic aspect of the world. Just check the market cap of Bitcoin and other cryptocurrencies, and you will know which one is more capital attracting.
More about the limited resources
Both Bitcoin and Gold are non-renewable resources. The quantity of gold present on the planet is finite and exhaustible. The only possibility of extracting the gold is to dig into the surface of the earth.
On the other hand, Bitcoin is the product of blockchain technology, and the programming claims to create 21 million of them. As both have limited supply, both products will reach higher prices as the demand increases.
Key reasons to add digital gold
Going against the trend has already proved highly profitable for those who were intelligent enough to add the crypto to the portfolio long back. Therefore, it is time for you to take a peek into the reasons that make Bitcoin the digital gold and might become a better option than the real gold.
Gold is one of the most precious metals, but it is heavy and clunky.
- Therefore, it can be difficult sometimes to transfer the same from one part of the world to the other.
- And, even if you somehow manage to execute the process, you have to pay huge charges for the transportation.
Bitcoin is digital, and you can transfer or send Bitcoins within seconds with one click on your smartphone. Not to forget, there is no need for intermediaries.
The transactions of Bitcoins are unique in a way that two parties can have involvement in the trade without even knowing anything about each other. Also, you don’t have to be present physically with the other party at the same time and same place for the transaction.
- Digital signature of the transaction is possible without involving some third party.
- Secure and private data management.
- Complete backup of data in case of digital emergencies.
What more one can expect for safety? Its safety level is better than handling physical gold.
Bitcoin works on the Distributed Ledger Technology or DLT. Hence, it is secure due to blockchain, with each node of the ledger open to verification independently. Precisely, it is possible to verify individual transactions.
On the contrary, gold does not have much protection by any sound technology, and counterfeiting is easy. In fact, every year, counterfeit gold bars worth millions of dollars enter global circulation.
It is digitally possible to divide Bitcoin into smaller parts, and each of these fractions is called Satoshi, which will be one hundred millionths of a single Bitcoin. But gold is indivisible unless you melt it down, which will demand money and time.
Hence, all analyses show that Bitcoin is right now in a winning situation compared to dominant precious metals like gold.