Bitcoin versus gold, what is more valuable? Alexander Sivtsov.

Today there are more and more articles about bitcoin, that this is an excellent investment tool and, based on how fast the price of the most popular crypto currency is growing, you can not argue with this.

After in April 2017 the price for one coin exceeded the price of an ounce of gold, bitcoin became even more attractive to investors! This led to an even more significant increase in the price of the crypto currency, but the loud headlines that bitcoin exceeded the value of gold are greatly exaggerated.

Gold – time-tested value

From time immemorial gold was considered the most valuable metal. It was not just mined in various ways, it was hunted by both ordinary robbers and entire armies of different countries. But, was gold everywhere so valuable?

Gold was mined in ancient Egypt and was a very valuable metal. Then it was used for making coins and ornaments, since gold did not have any other value, and to this day, to a greater extent, it remains so.

For comparison, silver in ancient Egypt was valued at times more, since silver was not mined on the territory of the country. In addition to jewelry made of silver the dishes also were made of silver. It was also used for faster wound healing, thanks to its bactericidal properties. Egypt is not the only country where silver was valuable in its time. But, over the years the situation changed, for the simple reason that gold is less available than silver. After more than 5000 thousand years, the price of an ounce of gold is 73 times higher than the cost of 1 ounce of silver.

Supply and demand

Often, the cost of something on the market, is formed due to the supply and demand for a certain product or investment instrument, etc. In the modern world, the cost of both gold and bitcoins is affected not only by the balance of supply and demand, but by speculation in the market under the influence of various factors. Today between bitcoin and gold there is one basic similarity: both the number of bitcoins and the amount of gold are limited. This creates demand growth. There is also a difference: the amount of gold is reduced, due to its use in industry and to date there is no analogue to gold, while bitcoin in the future can easily be replaced by one of the altcoins.

Why gold is more valuable than bitcoin

Now we just move on to basic mathematics. According to some reports, the total gold reserves are approximately 171,300 tons, while the price per one ounce of gold is about $ 1,285.00. According to simple calculations, the total capitalization of the world’s gold reserves is more than $ 7 trillion. In turn, bitcoin capitalization, taking into account the fact that to date about 16.6 million coins out of 21 million are produced, is about $ 130.6 billion, or about 54 times less than the total value of world gold reserves.

Conclusion

Drawing conclusions on this article, as a tool for the preservation of capital, gold will maintain its leading position for a long time. As for the bitcoin, due to the growth of its popularity, the crypto currency is today one of the most attractive tools for investing and multiplying capital.

Look for more articles on this topic in the Trader’s Blog.

Alexander Sivtsov