Bitcoin vs Gold
Every week in our blog, we bring stories from the crypto world, and today we are talking about the differences between gold and Bitcoin. Through the differences, we also explain the advantages of Bitcoin as an option for long-term savings, but also for quick earnings. Well, let’s go!
For starters – You can buy Bitcoin as opposed to gold on Kriptomat – with us, with the lowest commission in Croatia of 4.5%. In addition to Bitcoin, we also have other cryptocurrencies available, such as Ethereum, Litecoin and XRP, whose values on the stock exchange you can follow on our web. Find out which cryptocurrencies you can sell and which you can buy:
Buy: Bitcoin, Ethereum, Litecoin, Ripple, Dogecoin, DAI, Bitcoin Cash;
Sell: Bitcoin, Litecoin;
Similarities and differences
The main similarity between Bitcoin and gold is that they are limited in their quantity. Gold is one of the rarer metals, and Bitcoin is rare compared to other cryptocurrencies. However, the fundamental difference is in the background factor that affects the limitation. Gold is a natural resource, and thus its limitation in nature is conditioned. Conversely – with Bitcoin, the limit of the amount is artificially generated by encoding in Bitcoin’s source code. In order to remember the differences and similarities between Bitcoin and gold well – “take a look” at our current Instagram post that through infographics in a simple way points out the main differences.
Bitcoin as an option for long-term savings, but also for making a quick profit?
There is no simple answer to this question, but generally speaking – Bitcoin is a better choice for investors who want to make money on a change in value in the short term, but also – Bitcoin is not a bad option when it comes to long-term savings. Namely – “savers” who opt for long-term savings in Bitcoin are exempt from paying taxes on cryptocurrency in their possession, if they own it for more than two years. Unlike gold, Bitcoin varies considerably more in price – that is, it has a much higher volatility than gold. In practice, this means that investing in Bitcoin is generally easier to make a profit, but thus the risk of investing is much higher. In other words, with this type of investment, higher earnings are possible, but a greater loss is also possible. That is why Bitcoin is attractive to those who see the opportunity for quick earnings in the frequent price difference.
Be that as it may, each of the options has both pros and cons, and it’s up to you to assess as much sense as possible in your case – investing in Bitcoin or in gold. That assessment comes down to your goals and investment opportunities. Ask yourself – do you enjoy speculation, or are you focused on long-term savings; What is your risk tolerance, and how much capital you can afford to lose if the market turns.
The good news is that one does not exclude the other, so more and more investors are opting for both Bitcoin and gold. So – compromise is not necessary, and so an increasing number of portfolios contain precious metals in addition to crypto assets. What makes a difference in such hybrid portfolios is the share – which in the case of short-term investors goes in favor of cryptocurrencies, and with long-term oriented savers – it favors gold.
How does strengthening the dollar affect the attractiveness of investing in Bitcoin and gold?
Given the growth of the US dollar lately – Bitcoin and gold are no longer the first choice for investors to protect themselves from inflation. The current turbulence in the world financial markets, the energy crisis and the overall uncertainty – have resulted in a decline in the value of Bitcoin, but also gold.
On the other hand, they unexpectedly contributed to the strengthening of the dollar, which investors turned sharply to. While we’re not financial experts who advise you on investments and savings – if we’re asked – strengthening the dollar seems like an immediate but not long-term trend. Although for Bitcoin 2022. it hasn’t been a great year – it’s important to point out that this world’s largest cryptocurrency still ranks among the best performing assets in five years. Bitcoin has been around since 2017. until July 2022 it recorded an increase of as much as 840%.
Why can't gold keep up with Bitcoin?
As we stated earlier, although due to a similar nature gold and Bitcoin are often compared, the precious metal still has a hard time keeping up with Bitcoin. When Satoshi Nakamoto created Bitcoin, he set a strict limit on the number of Bitcoins that could ever exist. This limitation, known as the hard cap, is encoded in bitcoin’s source code, and directly affects its value. Like gold and real estate investing in Bitcoin is a successful preservation of purchasing power over time. Thanks to halving, it becomes more difficult to produce as every four years the speed of release of new coins gradually decreases. According to estimates, the last bitcoin coins will be mined in 2140. year. Precisely because of this limitation of currency and halving, the long-term value is expected to increase, and therefore it is worth investing in bitcoin.
Contrary to Bitcoin, gold due to its traditional stability is a safe haven for investors. This precious metal has remained stable to this day, and what works in its favor is that no capital gains tax applies to gold. In other words, by buying gold, you preserve the purchasing power of money by protecting it from inflation, and when selling – you do not pay tax on the yield made on the difference in the buying and selling price of gold. However, as we have stated before – bitcoin is also tied to tax-free, if the investor owns the cryptocurrency for more than two years. We are constantly witnessing global turmoil and fears that initially favor gold as investors turn to it as a safe harbor when the market situation stirs. Despite this, after the initial growth, Bitcoin takes away the advantage of gold. While Bitcoin initially responds to each of these rises more vulnerable ly than gold, we note with detachment that Bitcoin has risen by more than 15.5%, as opposed to gold, which has risen by just 1.6% (As of May 2022).
Review of bitcoin's advantages over gold
- Gold is harder to send, compared to digital currencies;
- In the case of larger quantities – sending gold requests a third party;
- Gold quality control is a lot more complicated;
- The amount of gold as a noble resource found in nature is unknown, while Bitcoin’s current as well as maximum amount in circulation is known;
- You keep Bitcoin on your hot or cold wallet, which is always available to you – wherever you go; while gold is more difficult to transfer and stored in a vault or bank;
- Bitcoin is not limited by physical boundaries or location;
- Due to the digital nature, Bitcoin is easier to store and transfer compared to gold;
- More and more young investors are choosing digital assets as a means of investing.
Where and how to buy / sell Bitcoin and other cryptocurrencies through Kriptomat?
If you opt for Bitcoin for trading or long-term savings, you can make a purchase at one of Kriptomat’s two locations in Zagreb.
- CBD Automat Shop La Canntina, Trg Josipa Jurja Strossmayera 8, 10000, Zagreb
- Avenue Mall, Avenija Dubrovnik 16, 10020 Zagreb
Come and see us.
To ensure the high quality of your customer experience, we use the latest generation of Kriptomat devices that provide you with a secure, fast and quality cryptocurrency exchange service. For amounts less than HRK 15,000.00, you do not need to register with us. All you need is a cell phone number and a crypto wallet. On the other hand, for larger amounts, you need registration with an ID card, a “selfie”, an email address and a mobile number. Learn more about all the steps through our buying and selling instructions.
Whatever your choice – investment, savings, gold, crypto or combination – we keep our fingers crossed, and we hope our article helped you make the right decision. In the next blog, we talk about cryptocurrency taxes in Croatia.
Until the next blog,
Your Kriptomat.hr Team
