Bitcoin is barely a decade in existence while Gold has been the go-to commodity investment in times of turmoil throughout human history. No matter what the New Year brings, the cryptocurrency will outperform the ancient metal in investment portfolios again in 2021. Here’s why.
Both Gold and Bitcoin are seen as stores of value, as protection from political and economic turmoil, and as safe havens from the unbridled expansion and subsequent devaluation of major fiat currencies like the US dollar. Both will continue to be used by investors to preserve least a portion of their wealth. But Bitcoin has some inherent advantages over gold, advantages unique to today’s fast-paced electronic world that will enable Bitcoin outperform Gold for a long time to come.
Investment demand for both Gold and Bitcoin comes from people wanting a unique asset that is: (1) limited in supply; (2) easily bought and sold, (3) widely accepted as a universal medium of exchange; and, perhaps most importantly, (4) perceived as a stable store of wealth when other investments are threatened by economic and political whirlwinds.
Gold and Bitcoin meet the above four criteria. Investors will buy both for portfolio protection and diversification, but Bitcoin edges out Gold in each category. It is significant that Bitcoin’s advantages are nascent and accelerating, which is why Bitcoin will continue to outperform Gold in 2021 and beyond, perhaps to a degree as yet unimagined by most investors whose last name isn’t Winklevoss.