These days, you have the option of putting your money into something called crypto, which can be equally secure as gold, once considered the most secure store of value in times of unpredictability.
While both crypto and gold offer some degree of protection for your savings during times of economic uncertainty, the former has certain distinct advantages.
While both gold and digital currency offer some degree of protection for your savings during times of economic uncertainty, crypto has certain distinct advantages.
The Case for Crypto as a Safe Asset
Accessibility
Accessibility is the primary advantage of cryptocurrency as a safe-haven asset. Unlike gold, which necessitates physical ownership and custody, cryptocurrencies can be stored and traded online with relative ease. This feature makes it simpler for individuals to invest in cryptocurrency as a safe-haven asset, regardless of their location or investment amount.
Transparency
Gold has always been regarded as a protection against the risk of economic upheaval. However, cryptocurrencies are also gaining popularity as a risk-free investment choice. When the economy is volatile, having either gold or cryptocurrency can be a good hedge. However, there are compelling reasons why cryptocurrency storage is preferable to gold.
Image: CoinCentral
Decentralization
Crypto is less susceptible to market volatility and regulations from the government due to its decentralized nature. In contrast, market forces and government interference can make gold less stable as a safe-haven asset. During the COVID-19 pandemic, for instance, many countries implemented constraints on the gold market, resulting in a shortage of tangible gold and a price increase.
Volatility
Volatility is another attribute that makes cryptocurrency a superior safe-haven asset to gold. Some cryptocurrencies are extremely volatile, whereas others are relatively predictable. This means that consumers can select the crypto asset that best suits their risk tolerance. On the other hand, the price of gold is subject to fluctuation, which can make it challenging for investors to make decisions based on correct information.
Crypto total market cap sheds a few digits and currently at $1.23 trillion on the weekend chart at TradingView.com
Potential for Expansion
The potential for expansion is another benefit that makes cryptocurrencies a superior safe-haven asset than gold. The precious metal has been a safe-haven asset for many years, but it has limited growth potential.
Image: FXVNPRo
In contrast, cryptocurrencies are still in their infancy and have lots of room for exponential development. Therefore, investing in cryptocurrency as a safe-haven asset may offer both security and development potential.
Conclusion
To sum it all up, whereas gold has historically been considered a safe haven alternative, cryptocurrency is far superior. People looking for a stable investment option are increasingly drawn to cryptocurrencies due to their many attractive features, including their accessibility, transparency, decentralization, and high growth potential. Cryptocurrencies are a secure investment that are anticipated to grow in popularity as technology develops.
At the time of writing, Bitcoin was trading at $30,468, up 8.6% in the last seven days, data from crypto market tracker CoinMarketCap shows.
-Featured image from CoinNewsSpan
FAQs
Assessing a wide range of cryptocurrencies, Wang et al. (2019b) find that digital currencies act as a safe haven for most international indices examined.
Why is crypto better than gold? ›
Key Points
Gold's use as a store of value gained popularity in the 1970s when inflation ran rampant. Since the 1970s, gold hasn't kept pace with inflation. Although Bitcoin and gold have similarities, Bitcoin's decentralization, security, and true finite supply make it the superior asset.
Is Bitcoin a better safe haven investment than gold and commodities? ›
Using the DCC-GARCH model, concluded that gold is a safer haven asset than Bitcoin for global crude oil markets [32]. Furthermore, during extreme losses in equity markets, gold serves as a safe haven for domestic and foreign investors in more countries [33]. Gold is a safe haven and a hedge for SI, but not for GB [5].
What is the golden rule of crypto? ›
Investing in crypto, still a new and volatile asset class, follows many of the same rules as investing in other markets. The most important rule is never to invest more than you can afford to lose.
Is the US dollar a safe haven currency? ›
They are typically issued by economically robust and politically stable countries. The U.S. dollar, Swiss franc, and Japanese yen are often considered safe haven currencies due to their strong liquidity and stable political systems.
Where is the safest place to keep your cryptocurrency? ›
The answer to the question “what is the safest way to store crypto” is a self-custody cold storage wallet. As covered earlier, options include hardware wallets and paper wallets. But that's not to say that holding 100% of funds in cold storage is right for everyone.
Should you invest in gold or crypto? ›
If you're looking for an asset that you can quickly move in and out of without losing value in a short time (like Bitcoin can), gold might be a better option. However, stablecoins like Tether (USDT) maintain their value over short periods because fiat currency and other cash-like instruments are held in reserve.
Why is gold not the best investment? ›
There are several potential risks to investing in gold, including: Price volatility: The price of gold can be volatile, and it may fluctuate significantly over short periods of time.
Is gold more valuable than crypto? ›
CRYPTO: BTC
It's interesting to note that gold has also been experiencing bullish sentiment. Its price is in record territory as well. But when comparing these two assets, it's strikingly obvious that the top cryptocurrency has a huge edge over the precious metal. Let's take a closer look at Bitcoin and gold.
What is a better investment than cryptocurrency? ›
Crypto prices can fluctuate wildly on a daily basis, often driven by speculative trading and investor sentiment, rather than underlying business performance. Stocks, generally, are less volatile and are tied to corporate earnings.
Rarity: Platinum is rarer than both gold and silver, which may provide it with higher long-term value potential. Diversification: Platinum can diversify your precious metals portfolio beyond the more commonly held gold and silver.
Why Bitcoin can t replace gold? ›
Another reason why bitcoin may never fully replace gold is that it is highly volatile. The value of bitcoin can fluctuate significantly in a short period of time, which makes it a risky investment. Gold, on the other hand, tends to be much more stable in value.
What is the 30-day rule in crypto? ›
The 30-Day (Bed and Breakfast) Rule - When the same type of token is disposed of and subsequently re-acquired within 30 days, the cost basis of the disposal is matched with the re-acquired tokens using the earliest purchased tokens first.
What are the 7 C's of crypto? ›
On a panel hosted by CNBC's Dan Murphy at the Abu Dhabi Finance Week on Wednesday, the New York University professor said there were "seven Cs of crypto": "Concealed, corrupt, crooks, criminals, con men, carnival barkers," and finally, Binance Chief Executive Changpeng Zhao, known as CZ, who spoke on a prior panel at ...
Which cryptocurrency will rule the world? ›
Even though thousands of other cryptocurrencies are now available, the crypto world is still dominated by bitcoin and ethereum.
Is Bitcoin a safe haven or a hedging asset? ›
The findings of the current study suggest that bitcoin acts as a diversifier, hedge and safe haven against various asset classes over both daily and weekly data periods as well as during the COVID-19 period. However, all these characteristics of bitcoin are mixed and are in weak form.
Why is Bitcoin a safe haven asset? ›
Bitcoin's candidacy as a safe-haven asset is rooted in factors like its limited supply, perceived store-of-value capacity, and resilience to market fluctuations. Yet, skepticism exists due to the notable volatility of crypto, such as bitcoin, which brings both potential gains and short-term losses.
Why are crypto assets high risk? ›
You could lose all the money you invest
The cryptoasset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure. Staking cryptoassets involves a risk of slashing.
Is cryptocurrency safer than cash? ›
The FDIC (Federal Deposit Insurance Corporation) is a government agency that insures cash deposits at member banks. This means if you deposit your money in a member bank, the FDIC will insure up to $250,000*. There are no such organizations that protect against crypto losses.
