Bitcoin versus Gold

If you haven't heard, this thing called "COVID-19" is going around, causing a little stir. None of the planet is exempt from this epidemic, and those that are long-sighted look beyond health problems to economic issues that are sure to be similarly long-lasting. Unemployment is a big problem globally, and many conventional economies still have to rebound at the beginning of the year.

Bitcoin has often been raised as "digital gold" - that is, a stable long-term store of value, especially when its ability to act as a real currency has often come into doubt. But can the BTC really play this position in times of crisis and uncertainty as much as gold can? Another question is the first step in answering this question: what are desirable traits in a 'safe haven' asset?

Assurance of value

Of course, you don't want your safe haven asset to be vulnerable to drastic change because of its worth. In maintaining anti-inflationary properties, scarcity and demand play an important role, and both gold and BTC are also scarce - but Bitcoin has the advantage that its current and potential supply is precisely defined, while gold is much more unpredictable and difficult to quantify.

One significant downside of gold is that by added impurity, it is easily counterfeited or devalued. An expert can help avoid this challenge, but there is no such problem with BTC - any potential party to a transaction can transparently check it. Bitcoin is simply difficult to counterfeit.

Security, storage and portability

Any safe haven asset needs to be safe, stored and portable - this is one reason why real estate in uncertain times is not so attractive as you can not pack up a piece of land and take it with you if you need to switch places.

It is worth remembering at this point that not all gold investments are equivalent - there is real gold, and there is paper gold. The only way to guarantee that you are not left with a worthless receipt is actually actual gold - but its physicality, on the other hand, can be a drawback. Good luck with gold in making foreign payments of any kind. And you'd better think long and hard about where to store your gold, because for robbers or other stakeholders, it's an obvious and easy goal. Securing gold in a safe at home is simple enough, but when you're on the go, it gets much more difficult.

Bitcoin shines here, on the other side. It brings options - you can choose a safe, easily disguised physical wallet. Or you can hold a digital wallet, which doesn't take up any space, obviously. Either way, there are no external or physical indications demonstrating how much value is contained, even if someone happens to lay eyes on your BTC wallet. Of course, you can be scammed out of your Bitcoin, which is why it is vital to always uphold good security practices. As long as there's a willing taker, BTC also provides the great value of virtually limitless portability and usability. Here, BTC is the clear winner.

Acceptability, durability and liquidity

Durability is key in a safe haven asset - this is actually one of the reasons why precious metals such as gold are considered precious, as, unlike other metals such as copper or iron, they are highly resistant to physical harm and deterioration. As long as we still have web infrastructure & strength, Bitcoin is, of course, endlessly resilient. However, gold isn't far away.

Acceptability is a bit of a paradox, as in terms of being accepted as a commodity, Bitcoin is lagging behind gold. Everyone in the world knows that gold is precious - yet there are still countless millions of crypto skeptics, and even more people who haven't even heard of Bitcoin, considering the breakthrough the cryptocurrency has created.

Conversely, in many places, Bitcoin is widely accepted as a payment method, and its adoption is only likely to become more common as time passes. You can't walk up to several traders, put some gold on the table, and expect a smooth transaction to take place. Not to mention divisibility - for the average individual, gold is very difficult to break up for use in smaller pieces. BTC couldn't have been simpler.

Thoughts

Gold or Bitcoin? Ultimately, only you can make the correct decision for yourself, and much more data and research is available than can be contained in a single post. And all that said, diversification never hurts. But honestly, both of them might very well be winning options to ride out the coming storm.