When I was younger, I often heard elders in my family talk about buying Gold as investments. Being from a middle-class family, I could never understand their fascination with saving Gold. My grandmother used to tell me that Gold is going to help you on a rainy day.
It was when I was in college, did I come to grasp concepts of economics like inflation, gold standard, deflation, recession, hedge, and so on. While I am sure my grandmother was not too proficient when it came to knowing about concepts, she knew the basics of it all.
I am stating what she had told me once- ‘every time money goes down in value, gold increases in value!’ This very simple statement outlines the security, which Gold brings to a fragile and distrustful economic and financial system.
In this article, we are going to explore the relationship between Gold and Bitcoins. We are also going to look at how investors looking to invest in Bitcoin should approach the topic.
Bitcoin And Gold: Why Experts Have Started Comparing The Two?
Let us get one thing straight right away. Gold was, is, and will always continue to be the best hedge against inflation and faulty financial policy money, leading to inflation in the economy and devaluation of fiat currency.
However, in recent times a new financial asset, Bitcoin is slowly making its presence felt and showing great promise as a unique and stable financial asset alternative. The steady rise in Bitcoin valuation during the Coronavirus pandemic shows that it is ready to be as solid a hedge against inflation as is Gold! If you are interested in bitcoin trading, you can visit the website crypto comeback pro or checkout the bitcoinfuture app.
Bitcoin is becoming a go-to destination as a store of value of a financial asset. It is very similar to how Gold is perceived in the world. Bitcoin also has a limited supply of 921 million, just like Gold. It can be used as an asset to calculate the value of real fiat currencies.
In addition, Bitcoin can also be transferable, just like Gold. The transfer does not erode its value. In recent times, banks in Germany have come to store Bitcoins on behalf of their clients. According to experts, banks are very likely to store Bitcoins just as they have gold holdings to manage their asset value and base.
How Should Investors Approach Bitcoin As An Investment Asset?
Experts state that there are two types of investors who invest in Bitcoins. One who is in it for the short term and out to make a quick buck. The other, who understands it as a long-term financial asset with strong potential for growth in the future.
The volatility and price fluctuations in Bitcoin valuation is driven by the habits and trading activities of the first kind of investors. The smash and grab activities are what drive drastic swings and create panic. The long-term investors are sitting on significant piles for at least four to five years.
They are not seeking to liquidate any time soon and are waiting for Bitcoin to reach its full potential. These people invested in Bitcoins when it was worth a mere few hundred dollars. Now they are multi-millionaires who are looking for the next jump in Bitcoin valuation.
One of the strongest attractions of Bitcoin is the fact that it is decentralized. Add to the fact that it is immune to inflation and government economic policies, and you have a dream source of investment, investors were waiting for a very long time.
Trade wars, natural calamities, ego problems, etc. are taking their toll on investor faith and confidence all over the world. That is why they are taking a keen interest in Bitcoins as a credible, safe, and high-value investment opportunity for the future.