Bitcoin vs. Gold: The Safer Bet

You’ve probably gotten emails suggesting you invest in gold for the ultimate in economic security. Or maybe it was an ad praising the merits of Bitcoin. Which one is safer in today’s always changing world? Gold is well-known, but not practical for daily use. Bitcoins are, for the tech-savvy, easy to use but not at all practical due to limited acceptance.

What is Bitcoin?

Bitcoin is a digital currency that was created in 2009, can be used by anyone and is not regulated by any country’s government. Unlike American dollars, which are divided into 100 cents, Bitcoins can be divided into a million parts, so the smallest unit looks like this: .00000001. What’s unique is that more Bitcoins are constantly being created, though that number will gradually decrease until there is $21 million in circulation, at which time no more Bitcoins will be made. Coins are “mined” by servers and then distributed to the people whose server provided the power for the coins to be mined.

Some companies accept Bitcoins as payment for services, and the currency can easily be sent from one person to another, without any intermediary like a bank. Merchants who now accept Bitcoins are printing business cards at to update their cards with this new information.

Gold Tumbles, Bitcoin’s Unpredictable

From 2003 to 2011, gold saw record highs, but now prices are falling rather rapidly. Leading up to the end of it’s run, people were stocking up as the European economy was on unstable ground. More recently, gold prices aren’t breaking any records. In fact, according to (1), so far in 2013, the price is taking a dive. That’s a sharp contrast to it’s hefty 30 percent increase in 2007. Also, as banks all over the world print more currency, the price of gold will continue to decrease.

However, Bitcoin isn’t without its problems, either. The price has gone all the way from $7, when it was first introduced, to more than $230 per coin at it’s highest. While many monitor the Bitcoin’s value against the US dollar, its exchange rate against other currencies, like the Australian dollar, known as bitcoin aud, also reflects significant market interest and fluctuations.

Besides being extremely volatile, the currency has proven susceptible to hackers. Venture Beat details the story of Instawallet, which was hacked and subsequently shut down, with the company refunding customer funds until better security measures can be put into place.

Which is the Better Investment?

While Bitcoin is the trendy currency, a good portion of Americans have a poor understanding of, or interest in, this digital currency. Unlike gold, it’s not something they’ve grown up knowing and trusting in. Sure, gold prices go up and down, but it is no different from any other investment that you could make. Gold has been around for thousands of years, while Bitcoins have only been around for little more than a thousand days — it doesn’t carry the same credibility as gold.

In the end, the decision is up to you. Any type of investing comes with risk, be it a tangible asset like gold, or a digital currency like the Bitcoin. Remember to be responsible and never invest money that you can’t afford to lose, and only invest in something which you truly understand.

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