Sylvia Carrasco, founder and CEO of Goldex, explains the ongoing debate dividing the investment community about whether to buy cryptocurrency instead of gold.
The conversation really heated up last year when the value of Bitcoin equalled the price of an ounce of gold and then surpassed its value by a long shot. By December 2017, Bitcoin had reached $17,900.
Some analysts concluded that the definitive moment had arrived and gold would be knocked off its perch by the new, modern and more profitable and headline grabbing Bitcoin superstar.
Investors are still attracted to the allure and excitement of cryptocurrencies, but the fact remains that gold is still a dominant force to be reckoned with. Forget the sensational headlines behind Bitcoin and its soaring value. Gold is here to stay – and the global investment cognoscenti know it too.
While in recent years people have invested heavily in Bitcoin, 2018 witnessed many Bitcoin traders flocking into gold. There are three main reasons why this happened – and why gold remains an enduring investment vehicle that trumps anything else:
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- Transparency and safety. It is extremely difficult to steal or fake gold. While it’s true that Bitcoin is also hard to corrupt, there is no infrastructure to ensure its safety currently. Bitcoin is also difficult to track – unlike gold.
- Liquidity. It is very easy to get cash for gold than cash for Bitcoin. Therefore, Bitcoin is not as liquid as it could be. Bitcoin’s market is limited unlike gold, which has a huge market globally.
- Value and versatility. Bitcoin’s applications have not yet been clarified. It has a limited utility as currency. Gold, on the other hand, can be used to make jewellery and many other goods. This makes it highly valuable.
Gold has been part of our history, part of the present and will be part of our future. It still remains a preferred long-term investment vehicle over many cryptocurrencies due to their strong volatility and unpredictability.
Instability kicks volatility and it is precisely volatility what makes cryptocurrencies an attractive speculative asset. Think about this simple question: would you put your parents’ lifetime savings into cryptocurrency in order to protect their wealth? Unless you are a gambler (or a careless son/daughter), the answer is probably, no.
Of course, we should ask the same question in regards to gold, but how many people do you know that actually own gold? When people think of gold, they usually think of rich people and private brokers – not millennials trying to save for a down payment for a new flat or pensioners protecting their life savings.
New FinTech innovation, however, is making it easier, cheaper and accessible for anyone to be able to own the world’s oldest, most reliable and most trusted monetary asset.
Thanks to digitisation, advanced data analytics capabilities and mobile connectivity, we are able to disrupt a space that up until now has remained a safe haven just for the privileged few. Being able to provide inclusion to gold investments to people from all walks of life and regardless of their wealth has become a lifelong personal ambition as we believe the future of gold should be open for everyone.