GOLD vs. BITCOIN

GOLD VS. BITCOIN

Perhaps the most obvious difference between Gold and Bitcoin is this: Gold is a tangible physical Precious Metal, whereas Bitcoin is digital. Yet the distinctions between two-run much deeper. Today many big companies accept payment in the form of Bitcoin.

Physical Gold Metal

Gold Bars

Gold is a Precious Metal used by mankind as a medium of exchange for millennia. It is also useful in technology and manufacturing and is appreciated for its beauty in the form of jewelry, art, and keepsakes. Physical Gold is widely regarded as a sound long-term investment and a hedge against market volatility.Bitcoin, on the other hand, is a coded, crowdsourced currency that did not exist until 2009.

Bitcoin

Bitcoin

Bitcoin is the world's first decentralized digital currency. This novel system for virtual money was first proposed by software developer Satoshi Nakamoto in 2008 and made available to the public in 2009. This system allows members of the bitcoin community to mine new bitcoins using open-source software to solve complex mathematical equations. The total supply of bitcoins that can ever be mined is capped at 21 million. A bitcoin is represented by the record of its transactions between different addresses. Addresses consist of randomly generated sequences of letters and numbers. Users purchase bitcoin by using another sequence in the form of a private key that is kept secret. Miners must verify all bitcoin transactions.

BENEFITS AND RISKS OF BITCOIN CURRENCY

Bitcoins provide users with a unique trading experience. Unlike the American dollar and the British pound, bitcoin also referred to as cryptocurrency, is not regulated by a single central bank. In theory, this means the virtual currency is decentralized, democratized and can be accepted anywhere in the world. It also means that bitcoins are unregulated, which can open the door to corruption.

Growth of Bitcoin

In recent years, power struggles between key creators and traders have disrupted the bitcoin market. By the end of 2015, Chinese bitcoin miners controlled more than 50 percent of bitcoin currency creation, which significantly slowed the speed of transactions for non-Chinese users.

Digital Currency

Bitcoin

Bitcoins do not carry any personal identifying information such as names or physical addresses. The currency's potential for anonymous transactions made it particularly attractive on the black market. The Silk Road website, which was used to sell millions of dollars in illegal drugs and illicit goods, accepted only bitcoins. The website was shut down by the FBI in 2013 and its creator was prosecuted.

Value of Bitcoin

Because bitcoin is crowdsourced, its value is dependent on community participation. In its

Change in Bitcoin Value

early years, the cryptocurrency benefited from an enthusiastic base of developers and investors. Its popularity has since faded. In early 2016, Mike Hearn, a prominent bitcoin developer, declared the currency a failure and announced he had sold all of his bitcoins.It has failed because the community has failed. What was meant to be a new, decentralized form of money that lacked ‘systemically important institutions’ and was ‘too big to fail’ has become something even worse: a system completely controlled by just a handful of people.

INVESTING IN BITCOIN VS. INVESTING IN TANGIBLE GOLD

Value of Gold

As with any commodity, including physical Gold, bitcoin is subject to drastic price fluctuations. Between 2009 and the majority of 2013, the bitcoin price rose gradually from zero to near $200. The value of bitcoin then rose sharply to $1,242 in November 2013, nearly surpassing the price of Gold, which was trading around $1,250 an ounce. During the bitcoin price spike, dozens of websites launched to facilitate bitcoin investment. At the same time, bitcoin investing captured an enormous amount of attention in the media.

Investing in Cryptocurrencies

As more users chose to invest in bitcoin, miners worked to increase the worldwide supply

Bitcoin

and developers imposed higher transaction fees. Bitcoin could not maintain its peak price. Between the end of 2013 and the beginning of 2016, bitcoin's value steadily decreased to less than $400.
Investing in bitcoin was never guaranteed to yield returns. Bitcoin is not intended to be an investment and has always been advertised pretty accurately: as an experimental currency which you shouldn’t buy more of than you can afford to lose.

Supply and Demand

Similarly, market pressures drove the Gold price to historic highs between 2011 and 2013, exceeding $1,900 an ounce in September 2011. Prices remained above $1,000 an ounce into 2016. While Gold prices have responded to supply and demand, fluctuations are less extreme than many other investment commodities, including bitcoin

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