If you are interested in productive money-investments, there are two extremes – a currency based on the innovative technology – bitcoin, with severe fluctuations of exchange rate, or the investment “to the end of times” – gold, reliable, but with little profitability.
Which investment option is more lucrative? Which one will take the dominance in financial investments arena? Let’s clear it up.
Who will win the battle?
- Twin-brothers? What is common between gold and bitcoin?
- Without knowing the history of assets, it is impossible to build a successful future.
- Buying assets: terrifying truth about scammers.
- Divisibility – secrets of purchasing small assets.
- What will happen when bitcoins and gold come to an end?
- Liquidity: which products can be bought for these assets?
- Why can you face prison for some deals?
- Main question: how much profit can you make on these investments?
Twin-brothers? What is common between gold and bitcoin?
Some people call bitcoin digital gold. And there is a reason for that. These both types of assets have four common features.
Firstly, it is a limitation of mining and quantity of asset. New gold will not appear on our Earth, as well as mining of bitcoins is limited up to 21 mln. coins. However, experts of crypto-industry forecast the correction of coins’ quantity.
Secondly, it is a security of investments. Gold and bitcoins can be saved for infinite period of time.
Thirdly, assets are easily understandable and available to every person. You don’t need to have special education, in order to understand key aspects of these assets.
Fourthly, both assets can be divided in smaller pieces.
To understand which investing is more profitable for having passive income, it is reasonable to look at the development and prospects of assets according to their history.
Without knowing the history of assets, it is impossible to build a successful future.
Gold has been used as a mean of payment during the last 2700 years. Some things have changed when paper money and US dollar appeared. America started to impose its currency to all other countries in the world, by making it the main international payment currency. Gold, at the same time began losing its value, while people started to use it more in industrial processes, for example, in dental industry and for making jewelries.
However, any asset but gold can crash. It cannot be affected by time. It doesn’t require constant renewal. It is hard to damage.
Bitcoin, from the moment of its appearance, is at risk of being lost, stolen or destroyed. Moreover, this currency is completely depends on technologies, the development of which is hardly forecasted.
1:0 in favor of gold and its security during ages.
Buying assets: terrifying truth about scammers.
But don’t jump to conclusions by giving your favor to gold. Let’s study the possibility to buy these assets. It’s seems easy to buy gold, for example, in a bank or with the help of reliable agents. In fact, this operation is very complicated.
It is impossible to buy just a small piece of gold. Let’s assume you have decided to invest $200 000 in gold. For today, it is about 5.5 kg of gold. This weight requires submitting declaration to customs, payment of fees, storage and transportation expenses, while crossing the border (if you are buying outside your country). Do not forget about expenses for security measures, proofs of identity and insurance.
You are not in any way secured from gold forgery by tungsten (yes, still today that can happen). Moreover, if you want to buy something in exchange for gold, you will lose a lot for conversion. Your expenses will be equal to 1 kilo of gold.
Buying bitcoins is simpler. The main thing is to use reliable exchange markets, and store coins in approved wallets. You don’t have to think about any expenses for security measures, insurances, declarations, fees for border crossing and other unnecessary paperwork.
1:1 – 1 score goes to bitcoin basket for purchase simplicity.
Divisibility – secrets of purchasing small assets
Not everyone has $200 000 for buying 5.5 kg of gold. In spite of this, if an investor inside you, you still wish to make investments. Here comes the divisibility of assets.
And if gold’s minimum weight is 1 troy ounce (31.1035 gram), or $1131, bitcoin is more free to be divided. You may even buy cryptocurrency for 10 cents (minimum amount will depend on the exchange or exchanger, where you want to buy bitcoins)
1:2 – in favor of bitcoin for its flexible divisibility.
What will happen when bitcoins and gold come to an end?
As you may know bitcoin is limited in terms of coins quantity that can be mined. But what will happen when the last ounce of gold is excavated and the last bitcoin out of 21 million is mined (as forecasted by the end of 2140)?
The fact is that more gold than is present in the Earth’s crust cannot be excavated. However, modern technologies don’t stand still and soon artificial gold can appear, having the same characteristics and properties as natural one. In this case the price of natural metal will crash.
With every mined out bitcoin, the mining speed decreases, the process becomes more complicated, and the price of currency grows. Nevertheless the coin can be divided again (as it was with bitcoin cash), and the final number of bitcoins can be enlarged.
1:2 – still in favor of bitcoin, as no one gets any score in this lap.
Liquidity: which products can be bought for these assets?
Which asset will bring more profit gold or bitcoin? We could not find any product that can be purchased in exchange for gold. In modern life, it is uncomfortable, due to expenses, which are required for such a transaction. In addition, things made of gold, on the secondary market, are bought very cheap, because they considered to be junk metal.
Bitcoin is oftener considered as a mean of payment. You can pay with it in a café, airlines, as well you can get and exchange it in ATM. You can buy tours, excursions, goods on Amazon and Ebay, cosmetics, sex toys in exchange for bitcoins.
1:3 – 1 more score goes to bitcoin basket for growing demand and vast possibilities for every-day use.
Why can you face prison for some deals?
In Africa, Australia, New Zealand, Germany, Switzerland and the United States, even tourists can mine gold. The only thing which is needed for that is a simple and cheap (up to 300-400 euros) license. You can mine and do whatever you want with your gold.
All over the world, there are no serious penalties for mining and storage of gold in small quantities. While in China, Bangladesh, Ecuador, Kyrgyzstan, Bolivia and Vietnam, any operations with cryptocurrency are forbidden, failure to comply with this law is a criminal offence.
In the US, for any transactions using bitcoin, you need to pay tax. In Germany, Australia and Singapore, taxes must be paid from profit, if you get income in bitcoins. It sets criminal offence for violation of this law.2:3 – now score goes to gold for recognition and legality of use by people all over the world.
Main question: how much profit can you make on these investments?
The most interesting question for us as investors is how much profit can be made on investments in gold or bitcoin. Here we will not consider trading, but only passive income.
You can invest in gold ingots or collectors’ coins. Investing in collectors’ coins will bring you about 15-20% per year, as they emitted in limited edition and their price grows.If you have decided to buy gold ingot, weighing 31 troy ounces, in 5 years time its price can raise by about 100$, according to the chart below. That means the price will grow by 1.66% per year and by 8.3% per 5 years taking into account the purchase at the lowest price, while selling at the highest price.In this case, for the period of 10 years your deposit will enlarge by $625 at the same circumstances, meaning by 70% and 7% per year. Please take into consideration, that there is a taxation policy regarding such types of assets in many countries. So, the net profit rate can be less due to this fact.Less, but more reliable.
How much profit can be made on bitcoin investments?
Which asset is more profitable: gold or bitcoin? Let’s consider investments in 1 bitcoin during two periods: 5 years and 10 years.
So, investing $135 in 2013, you would get $6500 in 2018. In such a way, for the period of 5 years, investing in bitcoin could bring you $6365 or 4715% according to the chart below. Or if we take 1 year, it means 948% per year.Buying 1 bitcoin in 2009 for $0,005, or 10 000 BTC for $50, your investment in 2018 would be equal to 127 300 000% for the whole period of time. And 12 730 000% per 1 year.
Taking in account, that bitcoin can add about 1000% per 1 year, you can earn on investments in multiples on 1000. However, currently the bitcoin rate is unstable. Even though, the growth is obvious.
2:4 – and bitcoin snatch victory from gold.
It can be clearly seen, that investments in bitcoin will bring hundred times more profit than investments in gold. It is also worth remembering the risks, that are hundreds times higher while investing in bitcoin, respectively. We recommend to diversify your investment budget evenly between these two assets in long-term perspective in gold, while in short-term perspective in bitcoin. This will bring you richness and prosperity, by doing nothing.