Buying Bitcoin Or Investing In Gold: Best Reasons To Purchase BTC Vs The Top Precious Metal
Reasons To Invest In Bitcoin Today
It’s a question investors have asked themselves for a decade: should I really invest in bitcoin?
It’s not too late to invest in bitcoin. Sure, it would have been nice to buy bitcoin for pennies back in 2010. But let’s be honest: you would have sold it the second the price hit $1, $100 or $1,000. Nobody expected bitcoin to rise to $20,000 in December 2017.
Why should you consider investing in bitcoin today? Are you too late to invest in bitcoin?
Bitcoin supporters will argue that the same fundamental reasons to invest in bitcoin still exist today. Critics, of course, will say that bitcoin could become value-less in the near future. Both of these people are right.
Our friends at DropGold.com, a website devoted to convincing users to sell gold and buy digital currency, recently published a guide asking the simple question, “Why invest in bitcoin?”.
Bitcoin Is Still In The Early Stages Compared To Other Financial Assets
Bitcoin might seem huge – but it’s a small fish in the ocean of financial assets. The entire market cap of bitcoin, or the value of every bitcoin in circulation put together, works out to around $90 billion.
Compare that number to the trendy FAANG stocks, which have $3,219 billion of market value, or mobile payment stocks with $1,153 billion. The value of all the physical gold in the world added up accounts for $7,700 billion.
For the really big fish, we can look at the market value of all global stocks ($78,107 billion) or global debt ($244,000 billion).
These numbers matter: if only a small, tiny, fraction of a percentage of this money gets diverted to bitcoin, it can catapult the cryptocurrency to new heights. Bitcoin’s market cap could multiply in value 10 times over and still not be worth the same as all mobile payment stocks added together.
In other words, bitcoin’s price and market cap still has significant room to grow if it’s going to catch up to even the smaller financial markets. For optimists, there’s enormous disruption potential.
We’re Going Through A Generational Wealth Shift
As Baby Boomers retire and die, they’re passing their wealth onto the next generations: Generation X and Millennials. These generations aren’t investing the same way as their parents and grandparents did.
Over the coming decades, Baby Boomers will pass an estimated $68 trillion of wealth onto Gen Xers and Millennials. All of this wealth has to go somewhere.
Sure, some of the younger generations still invest in gold. But there are plenty of polls indicating that younger generations are increasingly turning towards unique assets like bitcoin.
In one study, researchers found millennials were five times as likely as older adults to say bitcoin is the best way to save for the future.
Gold has been a tried and true investment asset for thousands of years. However, the digital age is new, and gold may not survive the rise of the ‘digital gold’ of bitcoin.
Bitcoin’s Fundamentals Remain Stronger Than Ever
The same fundamental reasons to invest in bitcoin for years remain in place today. Over 100,000 merchants worldwide accept bitcoin. There are more active bitcoin wallet addresses on the network than ever before. Bitcoin usage continues to increase. Apps and payment platforms are being actively developed every day. It’s easier to store, send, and use bitcoin.
There’s also one of the most important fundamentals of bitcoin: you can carry $10 million on a USB stick in your pocket without needing to trust financial middlemen or other intermediaries. You are in complete control of your own money.
In short, the fundamental properties that make bitcoin great not only still exist – but they’re getting better and better every year.
Bitcoin rose to its all time high in December 2017 with worse fundamentals than it has today.
Bitcoin Can Provide Highly-Coveted ‘Alpha’ And Diversification As Markets Drop
Markets worldwide have surpassed all time highs. Experts have been warning for months that a downturn is incoming. When a downturn arrives, your portfolio might drop enormously. So why not buy bitcoin to even things out?
Bitcoin has proven itself to be insulated from wider market movements. Bitcoin isn’t tied to the economic performance of any particular country, nor does it rise and fall with a fiat currency like the USD. Instead, bitcoin has proven itself to be mostly separate from the wider market.
Smart investors diversify. Today, bitcoin might be one of the best diversification options, delivering that highly-coveted ‘alpha’.
Of course, bitcoin might do more than just sustain its value in a market downturn: the price of bitcoin could actually skyrocket as investors seek a safe haven. Investing even a small portion of your portfolio (1% to 5%) in bitcoin could help you make money while the rest of the market plummets.
Our friends at Drop Gold compared how your annualized returns would change based on investing 1%, 3%, or 5% of your portfolio in bitcoin. Their research indicates your change in annualized return would be 4.88% higher with 5% bitcoin in your portfolio and 2.92% higher with 3% bitcoin.
For all of these reasons, optimists will tell you that the age of bitcoin has just begun.
Reasons To Not Invest In Bitcoin
To present a balanced argument, let’s take a look at some of the reasons to not invest in bitcoin:
Ordinary People Aren’t Using It: Some say that the majority of bitcoin transactions involve money laundering, drugs, and other illegal activity. These naysayers claim that if illegal activity disappeared from bitcoin, then bitcoin transactions would drop by 90%.
It’s Slow and Clunky: Bitcoin, by nature, isn’t designed to be used to buy cups of coffee. Instead, it’s a slow and secure network where transactions are processed every 10 minutes. Do people really want to store their wealth in an asset that is difficult to access?
A Better Crypto Will Come Along: Bitcoin is great – but there are plenty of faster cryptocurrencies out there. Will another cryptocurrency eventually come along and usurp bitcoin? It’s certainly possible.
Bitcoin Could Be Banned or Heavily Regulated Overnight: With a single decision, organizations like the SEC could make it difficult for Americans to access bitcoin. Does that sound crazy? In the 1930s, the U.S. government made it illegal for ordinary Americans to own gold. Americans were forced to give their gold to the U.S. government as part of the Gold Reserve Act of 1934.
We are not licensed investment advisors. This is not investment advice. We do not recommend investing in bitcoin, nor do we recommend not investing in bitcoin. Instead, we recommend speaking with a trusted, licensed investment advisor to determine the best course of action for your unique financial needs.