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Home / Bitcoin Guide / Bitcoin Value vs Gold: Which One’s Higher? And Why?

Bitcoin Value vs Gold: Which One’s Higher? And Why?

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Bitcoin value, like that of gold or other commodities, changes over time. In 2014, it dipped because the largest exchange collapsed due to tech issues.

But what about now? What’s current Bitcoin value, and more importantly, what’s going to happen? Keep reading to find out!

Quick Bitcoin FAQ

So, What’s Bitcoin?

Simply put, it’s a decentralized digital currency. No government controls it, and Bitcoin value is defined solely by supply and demand. Hundreds of thousands of merchants accept Bitcoin payments, and millions of people hold Bitcoins as an investment.

Being digital, you can’t actually ‘hold’ a Bitcoin, and the fact that it requires no central repository or administrator has baffled policymakers the world over! The legal status of Bitcoin varies a lot from country to country. Many countries allow Bitcoin trade, while some have banned or restricted it.

How Does It Work?

Bitcoin uses the blockchain, a decentralized ledger that relies on powerful computers to make difficult 64-digit transactions (mining) that reward Bitcoins.

It’s used to process payments without fees and government intervention. Bitcoin is seen as the ideal tool for private, anonymous transactions.

Bitcoin is the most popular, but not the only crypto currency. While Bitcoin is completely safe and legitimate, some people leverage the anonymity to conduct illegal activities. That has given crypto currency an undeservingly bad reputation and has affected the price of Bitcoin since 2009.

Who Invented It?

Bitcoin was invented by an anonymous programmer, or a group of programmers, under the name Satoshi Nakamoto in 2008 and went live in 2009.

How Much Is It Worth?

Bitcoin value topped gold for the first time in March of 2017, with a Bitcoin valued at $1,268 and an ounce of gold at $1,233. Bitcoin has now risen above the $4,000 mark, which is an amazingly rapid increase!

Bitcoin Value vs. Gold Value

Bitcoin is now worth more than gold, and the trend is expected to go up, despite Bitcoin’s volatility.

Skeptics have been predicting Bitcoin’s demise for years, yet it’s still going strong. Despite being digital and somewhat unstable, it does not suffer from inflation or government regulations.

In the past few months alone, Japan approved Bitcoin as a legal payment method, while Russia makes moves to regulate its transactions. These decisions impact Bitcoin prices and make it volatile since investors are not quite sure what will come next.

Bitcoin Volatility

Yes, Bitcoin is volatile for numerous reasons. Is that a bad thing? Not necessarily, but it means that it won’t completely replace gold anytime soon.

According to financial and risk management expert Mark T. Williams, Bitcoin is:

  • 7 times more volatile than gold
  • 8 times more volatile than S&P 500 stocks
  • 18 times more volatile than the American dollar

However, volatility is not always a bad thing, as it can also mean a rapid increase in value, as we’ve recently seen.

While gold has been the standard of stability for many decades, Bitcoin value fluctuates widely. According to Forbes, there are many occasions where volatility does not matter, including:

  • International money transfers
  • Tipping
  • Online gambling

But, why is Bitcoin so volatile, and what does it mean for people investing in it?

Essentially, Bitcoin is a startup currency, and people are still experimenting with it. Investors are still trying to figure out how useful it is, and data is limited since Bitcoin has been around for less than a decade.

In short, nobody knows its actual potential, and this increases volatility. Ironically, the very reason behind volatility also affects value, driving it down due to uncertainty.

So, you can expect Bitcoin to remain more volatile than any other currency. This means it can’t really serve as a replacement to your trusted USD, but it does have many advantages that conventional money lacks.

Bitcoin Advantages and Disadvantages

Many people see Bitcoin as a replacement to good old dollars, but that’s too simplistic. Bitcoin is volatile, and therefore not a stable long-term investment. On the other hand, it does have a global reach and anonymity, which makes it useful for a number of niches where conventional currencies just won’t work.

Online Payments

Buying stuff online with Bitcoin can be cheaper, so should you use it over a less volatile currency?

If you consider volatility a factor, then you just have to find if the cost is reasonable for you. Accepting online payments via Bitcoin will save you a lot of fees, and the safety is on par with any federal reserve.

International Transfers

Another definitive advantage is international remittances.  More specifically, if you don’t care about exchange rates, Bitcoin pulls ahead of conventional currencies.

Sending money to friends and relatives overseas is often very costly. With Bitcoin, the only ‘fees’ you have to pay are the difference in price between the time you buy to the time you sell.

Anonymity

There are many reasons why you would want to maintain your anonymity. Many investors do not like to attract attention and prefer to conduct their online business discretely. The obvious downside to that is that the anonymity will also attract illegal activities.

So, Should You Invest in Bitcoin or Not?

Bitcoin value is UP and expected to keep trending up well into 2017 and beyond. Some experts predict an imminent dip in Bitcoin value and nobody really knows how popular it will be in the long term.

If you’re an investor or are considering investing in Bitcoin, you must research the market in depth and assess your financial goals before proceeding. While selling gold to buy Bitcoin might yield more profit, it’s a risky move.

On the other hand, Bitcoin has grown from less than $0.01 on 22 May, 2010 (the first transaction) to an all-time-high of $4,440 on 14 August, 2017. The moneymaking potential is HUGE, but the risk is also significant, so invest responsibly!

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