Gold has been the go-to hedge asset for asset managers and institutions for hundreds of years. However, it is quickly losing its edge against bitcoin. On the other hand, Bitcoin has been able to stay at the 2.0 ratio, which shows that it is doing well during its first possible recession. The 2008 financial crisis caused the last long-lasting global recession. This was a year before Bitcoin was created.
Bitcoin has grown in a world economy that is doing well. The COVID-19 deadline of early 2020 was passed because trillions of dollars came into circulation, with a lot of them going into cryptocurrency. As the world deals with the effects of the rapid increase in the amount of money in circulation, Bitcoin seems to be holding up better than other high-risk investments.
Mark Cuban, a billionaire entrepreneur, has long advocated for the feasibility of bitcoin, and despite its volatility, he considers it a superior investment to gold. Cuban stated on the “Club Random with Bill Maher” podcast, “If you possess gold, you are stupid.” “This is not a protection against anything. Bitcoin is a store of value similar to gold. You don’t own the gold bar, and you know what would happen if everything went to hell in a handbasket and you had a gold bar. Someone would beat or murder you, then steal your gold bar. It is pointless.”
Some of the financial experts with whom we contacted agreed with Cuban, including Fraser Matthews, president of the Canadian cryptocurrency trading platform Netcoins.
“Bitcoin’s limited quantity makes it scarcer than gold,” he explained. The fact that bitcoin is decentralized, meaning it is not controlled by any government or central bank, has the potential to make international money transfers secure, inexpensive, and efficient. Bitcoin’s high level of volatility allows it to be used as a hedge against inflation, but gold cannot.
“Although both bitcoin and gold are regarded as wise long-term investments and gold is a tangible object that has served as a solid store of value for millennia, the cryptocurrency appears to have a greater potential to create considerable returns over time,” he concluded.
Not everyone agreed with Cuban’s viewpoint.
“The greatest issue with Mark Cuban’s statement is that he thinks all investors have the same aims and risk tolerance,” said Richard Gardner, CEO of Modulus and cryptocurrency specialist. Gold has long been recognized for its capacity to retain value and minimize volatility.
“If you’re a millionaire, it’s easy to declare that bitcoin is a better investment than gold,” he remarked. “Given the present unprecedented inflation, someone who is nearing retirement and may not have a huge financial portfolio may find solace in gold. If Cuban claims that bitcoin has greater upside than gold, he is likely correct. However, this benefit could vanish entirely if regulatory organizations move against cryptocurrencies. The ‘correct’ investment depends as much on the investor as on the investment’s return.”
Robert R. Johnson, Ph.D., CFA, professor at Creighton University’s Heider College of Business, similarly stated that he would chose gold over bitcoin, although he would not encourage investing in either asset.
“Investment-wise, choosing between gold and bitcoin requires choosing the lesser of two evils,” he stated. “From this perspective, there is no doubt that I would choose gold. It has a long history as a store of value, as well as industrial and jewelry usage. However, as a long-term investment, gold cannot compete with the stock market.”
The host of the YouTube program The Trading Fraternity, Josh Answers, does not feel that one asset is fundamentally superior to another.
Since 2002, gold has been a solid investment for many people, but it is not as lucrative as bitcoin, he stated. “The prudent course of action is to invest in a variety of areas and not have too much capital in one field. This is especially true for industries whose value can swing by $2,000 overnight! Be patient and properly investigate every investment before making a choice.”
Read More about Cryptocurrency at: Best Undervalued Cryptocurrencies To Buy for 2023