With inflation rising and economic uncertainty, investors are looking for safe havens to invest, gold has always been at the forefront and some even offer digital currencies.
For many years, it has been the norm for investors to hold onto their savings, be it real estate, stocks, bonds or gold.
For centuries, gold has been viewed as an important hedge against inflation, but more and more people are starting to see cryptocurrencies as a store of value, and thus Bitcoin has earned a reputation as “digital gold.”
And the well-known American website “investopedia”, specializing in investment education, was published An article Explain the difference between investing in bitcoin and gold.
The report initially indicated some important definitions:
What is a store of value?
A store of value is an asset that does not lose value over time.
There’s no question that fiat money is a bad store of value: cash can be used as an everyday medium of exchange and short-term liquidity, but it will lose its value over time.
What is Inflation?
Inflation is the primary tool used by governments around the world to control the money supply and price movements.
Authorities devalue their currencies a little each year, prompting people to spend or invest more in the hope that this will stimulate economic growth through job creation.
Therefore, money loses value over time, that’s why savings need to be stored in an asset that will hold its value, and that’s why people invest in buying gold or stocks, bonds, real estate and other assets that hold the value. their value or even increase their value over time for profit.
Invest in gold
When financial markets are under stress, investors buy gold as a “safe haven,” and even when the economy is booming, they buy more jewelry.
One of the important points supporting investment in gold is that its ownership is spread all over the world and it is mined in almost all countries.
He points out a report It was published by the website “The Motley Fool” and compared investments between gold and cryptocurrencies, indicating that gold’s performance amid high inflation this year has not been good, and despite its circulation as a scarce commodity and safe-haven, its prices fell about 20% last September from what it was at its peak last March.
He points out that one of the main drivers for gold’s performance is the strength of the US dollar, which has reached its highest point in two decades during the recent period, and with the economic slowdown in China and Europe, investors have poured into it, which means that investing in gold tends not to pay off when the dollar is strong.
Investing in digital currencies
When compared to gold, we find that demand for cryptocurrencies is limited to “speculation” and investors view them as “a high-risk bet with high returns”.
The report indicates that digital currencies are subject to large price fluctuations, as their prices rise and fall according to the “accumulation of speculators”.
Although digital currencies are available to everyone, entities in 5 countries control 80% of the mining capacity of the Bitcoin network, and 2% of the owners of this operation own 95% of all available bitcoins.
The report shows that gold moves in isolation from equity markets, while digital currencies do not follow this pattern.
He claims that Bitcoin and digital currencies are still a longer time away from knowing whether or not they can be an effective hedge against inflation.
It shows that it is relatively easy to buy and sell digital currencies and gold, but gold still has a bigger “established” edge in its trading.
