Is Bitcoin the “New Gold”?

Bitcoin and Gold Bullion Investment

Some economists and investors are adamant bitcoin is the new gold. Though bitcoin’s price has tumbled a bit to start 2018, such profit-taking is only natural for any investment that has soared in a relatively short amount of time. Bitcoin is still hovering around the $10,000 mark for good reason. Bitcoin, like gold, is a safe haven to park money during times of economic and political uncertainty. If risk is elevated, gold and bitcoin are excellent places to position money for growth with minimal risk.

Bitcoin is a Necessary Hedge Against the System

Federal banks control the supply of money, interest rates and all sort of other aspects of our economy. The beauty of bitcoin is it is independent of such control. Bitcoin is its own unique currency that can be traded without any type of oversight thanks to the flawless security provided by the blockchain. This is precisely why bitcoin is the perfect hedge against the current system. There is no reliance on the federal government to issue this currency. No country or bank controls bitcoin. Rather, the network is operated by an array of computers that perform complex mathematical equations to produce bitcoins and allow for their subsequent digital trade.

Bitcoin’s Limitation is Also Its Strength

If an endless amount of bitcoins could be produced, this cryptocurrency would not have much value. The same is true of gold. The scarcity and intrinsic value of both investments is what makes them so appealing. It is becoming increasingly hard to product bitcoins. An abundance of computing power and time is required to create these finite digital assets. At some point in the future, 21 million bitcoins will be on the market. This is the point at which no more bitcoins will be produced. However, you do not have to buy an entire bitcoin. If you do not want to invest the $10,000 or so required to buy a whole bitcoin, go ahead and purchase 0.1 bitcoin. Lock in the current price and you will own this percentage of the globe’s supply of bitcoin across posterity. This percentage can’t be diluted as only 21 million bitcoins can be produced.

Bitcoin is Going Mainstream

Those who are hesitant to invest in bitcoin tend to argue it is a shady product. It is certainly true bitcoin had a public relations issue when it first hit the scene. Some hackers raved about bitcoin when it first arrived in reverence of its highly secure digital blockchain technology. However, this cryptocurrency is now mainstream thanks to enhanced news coverage, web hype and the society-wide hoopla over its rising value. The truth is there is nothing illegal about bitcoin. Though some unscrupulous parties have used bitcoin for dark web transactions, regular currencies are also used to purchase drugs, stolen guns and other illegal items.

Bitcoin Brings Legitimate Value to Societies Across the Globe

Take a moment to think about how lovely it would be to purchase a flight, pizza, soda, coffee, a newspaper and other niceties with your phone. This is possible with bitcoin. A growing number of global merchants are willing to accept bitcoin for goods and services. It won’t be long until you can use bitcoin in any major city on the globe. There is no need to worry about a wallet, cash or credit cards. This is a large part of the value bitcoin provides. This cryptocurrency makes economic transactions that much more efficient. Furthermore, bitcoin can’t be manipulated by a federal bank or another power broker.

Why Bitcoin has Increased in Value

Part of the appeal of bitcoin is its secure distributed ledger known as the blockchain. Transactions are performed with cryptography. You do not need an in-depth understanding of these terms to invest in bitcoin. If you are looking to make money or at least park your money in an investment the federal banks can’t manipulate, bitcoin is worth considering. After all, Wall Street investors and others looking for a store of value like bitcoin tend to be a little bit hazy when it comes to understanding the nuances of cryptocurrencies. The blockchain technology, network nodes and bitcoin mining are certainly complex yet this complexity has not stopped investors from pumping money into the cryptocurrency. The bottom line is few investors fully understand the technologies or businesses they invest in. What matters is whether that investment increases, stagnates or decreases in value.

People are Growing Distrustful of Central Banks for Good Reason

As the gap between the world’s rich and poor continues to grow, more and more people are pinning the blame on central banks. Indeed, plenty of bankers have manipulated currencies, the money supply, interest rates and other economic tools for personal benefit. At the very least, these bankers’ actions helped their cronies obtain significant financial gain. If you are concerned about the performance of traditional currencies or the actions of central banks that back them, it is time to hedge with bitcoin. Think of this hedge as similar to a position in gold taken to offset inflation. In fact, the price chart of bitcoin is similar to that of gold. So don’t panic if bitcoin continues to slide in February or beyond. In the long run, it appears as though this cryptocurrency will serve as an important investment tool to minimize risk posed by central bank-backed currencies, stocks, mutual funds and so on.

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