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Investment Assets to Hedge Against Market Volatility: The Old vs. The New

Investment Assets to Hedge Against Market Volatility: The Old vs. The New

The stock market continues to plummet, pushing investors to alternative assets. Now, there’s a new player in the game that’s also attracting many savvy investors – bitcoin. As more and more decide to pull out of Wall Street and weigh their options, we decided to take a closer look into how the newest investment option (Bitcoin) compares to the oldest investment (gold). Which is right for you?

Similarities: Bitcoin vs. Gold

  • Used as currency – 2017 showed an increasing acceptance of using bitcoin and gold in place of federal currency
  • Benefits beyond investment – gold is utilized in tech and jewelry and the foundation of bitcoin, the blockchain, has spurred innovation such as smart contracts
  • Require mining (through immense effort and cost) – though one mined in the physical sense, while the other is strictly digital
  • Not government-backed or dependent upon the central banking system
  • Trade on the futures market
  • Limited quantities available – Only 21 million bitcoin can be mined and gold is a nonrenewable resource (in fact, the world is running out of mineable gold)
  • Both can be stored in a vault – Did you know you can store your Bitcoin off the computer in a protected vault/safe?
  • Ease of investing – It’s pretty simple to invest in either asset… and you can use your IRA funds, making it even easier

Differences: Gold vs. Bitcoin

  • Gold is tangible, created by the earth whereas Bitcoin is digital, created with code by humans
    • Question for investors: Are you more comfortable with assets you can hold in your hand, or more comfortable with technology?
  • The contrast in tangibility creates differences in safeguarding the investment – typically the greatest risk in terms of theft for bitcoin is a hack (though you can download and store it in physical form) and for gold is being physically robbed
    • Question for investors: Will you remember where you stored your gold (or hid, which we do not recommend link to NG hiding places blog), or are you more likely to remember where you stored you bitcoin password?
  • Gold tends to increase in value, whereas bitcoin experiences much more fluctuation
    • Are you looking for a high risk, high reward asset or are you more comfortable with an asset with a long track record and steady gains?

Gold vs. Bitcoin? They’re both great alternatives to the stock market.

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