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Cryptocurrency vs Precious Metals (Gold): Which is the Better Investment

May 23, 2018
Precious metals vs. Cryptocurrency
Which is the better investment: cryptocurrency or precious metals?

If you’ve ever had heated discussions with friends, family, and strangers over cryptocurrency, you will have undoubtedly heard of a few points being discussed: value, risk, and advancements. Those in favor of precious metal investments will inevitably push the point that you can see, feel, and hold precious metals, while cryptocurrency investors will sell the lucrative investment opportunities of cryptocurrency.

To help secure a real winner in the cryptocurrency vs. precious metal battle, we’ve outlined a few factors below.

Cryptocurrency vs. Precious Metal Value

Traditionally, the value of something was based on its scarcity. The less of something there is, the more valuable it becomes. However, the value can now also be measured in usefulness. Something can be rare, but if it’s useless, it’s surely not worth as much. If it’s plentiful and useful, it too, might not be worth as much either. Therefore, those on team cryptocurrency or team precious metals will continually go around in circles as they work out which is more valuable: precious metals or cryptocurrency.

While many cryptocurrencies are infinite – meaning there is no limit to how much of them you can mine (such as Ethereum for example), Bitcoin is a coin that is finite. With around four million out of 21 million left to mine, it is thought that the scarcity will continue to build on its value.

Precious metals, too, are finite. You can only physically mine so much of them before there is none left to mine. Therefore, they too will continue to increase in value. The disagreement between precious metal and cryptocurrency investors, however, is how digital scarcity is remotely similar to physical shortage. Both cryptocurrency and precious metals have to be useful to be worth something.

The only way in which to secure cryptocurrency’s future as a worthwhile investment is by ensuring that it can be used as a tradable commodity. If you can’t buy anything with it, sell it, trade it, or use it, then precious metals will continue to be the more worthwhile investment.

Cryptocurrency vs. Precious Metal Risk

By definition, investment is a risk. No matter what you invest in, you will find there is always going to be a significant amount of risk involved. Precious metals and cryptocurrency are both no different. However, the risks associated with both are vastly different. If you invest in cryptocurrency, there are two risks. You can spend $10,000 purchasing something that is worth $5,000 the following day.

However, there is also the risk that a dramatic internet outage, hack, bug, or a hard fork can deem your investment entirely worthless. In fact, it might even appear as if it never existed at all. This is where precious metals have their place in the modern-day world.

Gold and silver are physical possessions. When you buy them, they are your property. An ounce of gold stored away in your safe is always going to be an ounce of gold. The only risk with its ownership is that one day it might experience a dramatic drop in value.

Cryptocurrency vs. Precious Metal Advancements

Regarding advancements, cryptocurrency can far surpass precious metals regarding how lucrative an investment it will be. As cryptocurrency uses a blockchain network, it’s continually evolving to be more mainstream. Businesses use it for their cloud-based activities, and the need for decentralized applications is only growing stronger by the day.

Regarding precious metals, the future isn’t looking as advanced. With a finite supply both in circulation and yet to be mined, the price can either go up or down based on supply and demand. If a new pocket of gold or silver is discovered during mining operations, supply then overtakes demand – thus dropping the value.

It’s clear to see that there are advantages and disadvantages of investing in either precious metals or cryptocurrency. Whether you choose to invest in one or the other, or both, you will find that during your time as an investor, you will experience some, if not all, of these ups and downs. Investment, as a whole, is not something that comes without its pitfalls.