Over the past year or two, investors have turned to gold and cryptocurrencies as alternative investments to safeguard their money and potentially as a hedge to combat inflation.
Lets have a look at what are the similarities between the two asset classes.
Price Volatility
Gold and cryptocurrencies prices fluctuate over a period of time. Gold price volatility is attributed to market risk factors and in times of economic uncertainty, war, crisis and newfound mine supply.
Cryptocurrencies may rise or fall depending on recommendations from social media influencers, the number of users increased or decreased and market perception.
However for both, it is very difficult to predict the price movements.
Finite Nature
Gold and cryptocurrencies are limited in availability, therefore may be relied upon as a long term store of value.
Usability
Gold and cryptocurrencies are both accepted as forms of payment.
Gold is generally more acceptable however cryptocurrencies are increasing in its appeal as payment by many investors and organizations.
Decentralized
Cryptocurrencies, as with any blockchain tool, is decentralized. It is totally removed from any central bank and government oversight, so works independently.
Gold can be considered as decentralized as it cant be directly controlled by a government.
Privacy
Trading in gold and cryptocurrencies have some degree of privacy. You can trade an ounce of gold with your neighbor and make payments with cryptocurrencies. No one can stop you.
Accessibility
Both are easily accessible through online channels.
The million dollar question is which asset class would you invest in if you can only choose one?
- Gold
- Cryptocurrencies
