Investing in assets is a great way to grow and diversify your portfolio. And when it comes to investing, two common assets come to mind: cryptocurrencies and gold. In this blog post, we'll compare cryptocurrency and gold investment to help you decide which one makes more sense for your investment goals.
Cryptocurrency vs. Gold: Volatility
One of the most significant differences between cryptocurrency and gold is their volatility. Cryptocurrencies, as you might know, are highly volatile. The prices can fluctuate significantly in just a matter of hours, making it a high-risk investment asset. In contrast, gold prices are relatively stable, changing only a few percentages each day.
For instance, in September 2020, the price of gold was around $1,900 per ounce. In September 2021, it had increased by about 8% to approximately $2,050 per ounce. Meanwhile, Bitcoin, the most popular cryptocurrency, increased by about 410% during the same period.
Liquidity
Liquidity is another factor that investors consider while investing in assets. Liquidity is the ease with which an asset can be bought or sold, and the value at which it can be traded. Gold is a highly liquid asset, with a universal value that is recognized globally. This means that you can easily sell your gold at market rates without any restrictions or penalties.
On the other hand, cryptocurrencies have lower liquidity than gold. However, this depends on the type of cryptocurrency, as some are more likely to be traded than others. For example, Bitcoin has higher liquidity than lesser-known cryptocurrencies.
Security
Security is a significant concern in the digital world. Cryptocurrency transactions are anonymous and decentralized, which means that they cannot be traced or hacked by external parties. However, if you lose your wallet's private key, the cryptocurrency is lost forever.
Gold is a physical asset, so its security depends on how safely you store it. Moreover, gold is usually insured when held at reputable storage firms, so investing in gold is usually considered a secure investment.
Which one to choose?
As stated earlier, both gold and cryptocurrency have their advantages and disadvantages. If you are looking for a stable investment with lower risks, then investing in gold might be a better option. However, if you are willing to take on high risks and invest in a new technology, then cryptocurrencies might be worth exploring.
Ultimately, the best investment choice depends on your personal preferences, financial circumstances, and risk tolerance. We recommend that you always consult with a financial advisor before investing in any asset.