This is the first time ever that bitcoin investment is now more profitable than gold investment. Bitcoin’s value, which is the most mainstream of all the other cryptocurrencies, has exceeded the cost of 1 oz of gold. However, this is also true that gold has always acted as the safest medium for capital. On the other hand, nowadays people buy genuine gold from the market, but later they debase the quality of gold while doing the capital exchange. Unless you are updated from authentic sources like News Spy, you can easily get tricked.
One such case has been recently found by a gold depositor in the United States. They discovered that the gold bars delivered to them were not pure gold. Yet all these treacheries aside, 1 oz of gold (no matter how much impure it is) is an ounce of gold. At least that is what people like to consider it to be.
The same case is with the gold buyers these days; they are more likely to pay for a gold bar that is hard to fake than to (entirely) trust on the paper works, thereby swapping their money to the seller. Well, many other such awkward things are there about this gold investment that makes it quite difficult for the buyers to invest on. Fear of loss is a primary factor, but it is not the only reason behind the insecurity in gold investment. Gold is an odd asset for storing a significant amount of wealth. No matter what the weight of your asset is; be it 100 pounds to 2000 pounds, it is still an awkward investment if its only purpose is to serve the owner in times of recession or a major disaster. It is typically for the billionaires, if any, reading this. This is because when the price of the gold falls drastically, then wealth is simply what you carry (i.e. the cash).
Well, that was a torrential viewpoint, which a true fan of gold should always consider. But, extreme times are never static, they keep coming and going. While some buy gold as a haven, some buy it with the hope that its value will rise in the future. But in reality, it is a different scenario. The value of gold has failed to shoot up significantly ($100 to $200 rise, at its best), whatever the state of the global economy be. Now, to worsen the matter, bitcoin came into the picture along with the sister counterparts. These cryptocurrencies have dramatically impinged on the main use cases of gold, including safe asset and flight capital investment.
Now, coming directly to the point here is why investors have more upsides in bitcoin investment than in gold investment, and that is issuance.
Every year, about 3,300 tons of gold, worth $200 billion, is produced- which must be consumed by the buyers every year. Plus, it is so good that there are 7 billion people on this globe, most of whom are quite fond of gold as it takes only $20 (at most) per capita each year to clear up the supply. The price of gold is never in the downward trend as the never ending supply of new gold always keeps adding into the market every year. The world economy winds it up.
Now let’s check bitcoin. Each year, (say) $10,000 a coin, there is this new supply worth $6.5 billion, which must be cleared up by new demand, in order to maintain the value. Well, that’s just a minuscule fraction of new gold issuance. What’s more? The issuance gets halved by the following year.
So the conclusion is that whether it is $200 billion or $6.5 billion, none is a huge amount to be consumed by the world economy. Clearly, bitcoin will be winning the race and a lot quicker than gold. Even without doing any modification in the dynamic, while it is possible for the gold issuance to increase a bit through mining by next year, bitcoin’s will reduce to halve.
As such, the upside in bitcoin investment is relatively and dramatically higher with the coin creation getting halved at every 4 years interval or so. This implies that the value of bitcoin should act how the gold value would if half of the global mines were shut down every 4 years. Plus, after some years, say 10, the output of gold would sink down to nearly 90%.