It seems that more and more people are justifying their investment in cryptocurrencies by claiming that the cryptocurrencies are an effective hedge against the instability of gold. But, is this really true?
Here’s a look at why investing in gold bullion remains a better choice over cryptocurrencies.
1. Gold Has an Accessible Liquid Market
It is true that an asset is only valuable if others are prepared to trade it in return for other assets, goods or services.
And, there’s no denying that gold is the most liquid asset there is. You can convert gold into cash right away and its value isn’t bound by national borders. Put simply, gold is gold no matter where you find yourself in the world. You can even exchange it for whatever the local currency may be.
You can’t say the same about cryptocurrencies. While they are certainly being more widely accepted, mainstream acceptance is still a long way away.
Yet, what makes gold liquid is the pure size of the market. The larger a market is for an asset, the more liquid the asset is.
You can buy gold bars with the best deal in Brisbane or in trusted dealers in your local area.
2. Many Cryptocurrencies May Be Wiped Out
There are many Wall Street veterans who compare the rise of cryptocurrencies with the introduction of the internet in the 1990s.
Many of the stocks that had risen when the internet first soared were wiped out after the burst of the bubble in the early 2000s. In turn, that crash gave rise to more sustainable online companies, such as Amazon and Google, which continue to thrive.
Some predict the same will happen with cryptocurrencies. Most will be wiped out in the first major correction and only a few will go on to become the standard – but at this point, nobody can tell which ones.
What’s more, if major countries jump in and begin creating their own digital currency, they’re likely to make private currencies illegal.
While it is highly likely that cryptocurrencies will stick around for years, the question is, which ones will still be around? There is no need for guesswork when it comes to gold.
3. Lack of Security
Security seems to be a major drawback that the cryptocurrency community face. We’re hearing of major hacks involving Bitcoin on an almost monthly basis. In comparison, when was the last time we heard of a gold depository being robbed? Also, most depositories have comprehensive insurance coverage.
4. Speculation and Hype
The value of Bitcoin has quadrupled, which is an incredible spike in value that’s seen investors rushing to invest in more and more cryptocurrencies. But, this may well be a mere market bubble. Unlike gold, cryptocurrency has a volatility to it and is a highly speculative market. It’s a bubble.
Overall, gold is gold – reliable without the guesswork.