News

Events

Entertainment

Restaurants

Shopping

Business

Real Estate

Education

Education

Internet Services

Home / Features / Is Bitcoin the new gold?

Special Features

Is Bitcoin the new gold?

The global climate has a lot of people worried. Whether it's the perceived instability of the European Union thanks to Brexit and the political situation in Catalonia and Spain or the current war of rhetoric between Donald Trump and Kim Jong-Un that has the international community fidgeting in their seats, it's safe to say the uncertainty is a key theme across pretty much every discussion around economy, finance and politics across the globe.

With currency crises in countries like Venezuela and recent drops in usually strong currencies like the Pound and Euro, it is becoming increasingly difficult to bet on a safe return or predict what's coming next to try and turn a profit.

With so much instability in established currencies and safe haven investments like gold not performing as well thanks to this global instability, many investors are starting to look at the now established cryptocurrency market to get their investment moving.

The rise of Bitcoin

Back in 2009, not many people were excited about Bitcoin. With a concept stemming from peer to peer file sharing, the entirely digital currency took small steps initially, before media coverage and high profile investors caused the idea of online currencies to really take off. Now, an individual Bitcoin is worth over $5,000, with a recent surge thanks to further upcoming changes to help keep Bitcoin as open-source as possible.

Bitcoins are 'mined' just like gold, except the mining is done by computers that carry out complex calculations in the Blockchain, the network of independent systems that allows transactions to be stored in multiple locations to provide near impenetrable security. This degree of anonymity thanks to a lack of centralised records system and the ability to buy and sell coins using simple storage devices allows investors to make money without a middle man charging a fee.

Gold is similar, in that physical bars or holdings can be traded wherever and whenever with a trader or managed virtually with a broker, but gold is still pegged to socio-political events and global monetary decisions and outcomes. If the red button is pressed in Washington, gold values could soar, but if the status quo remains (as it likely will) then returns will always be limited.

Bitcoin on the other hand is somewhat independent. It isn't influenced by banks, governments or institutions, it currently has a constant demand and proven growth, it is finite and the number of coins available is down to how many people are currently mining (which is a lot). This independence is what is attracting investors and is a lot like the gold that would have been bought or sold during the major gold rushes of the 18th and 19th centuries. News and information took a little longer to arrive, so gold could be bought or sold at an advantage depending on geographic location and knowledge. Bitcoin is similar, but time replaces geography and buying power becomes knowledge.

Explosive growth can sometimes put investors off however, with lots of fingers burned during the Dotcom bubble. Looking at the growth graphs, Bitcoin and major tech investments in the late 90s and early 2000s shared the same path, but the big difference is the Bitcoin is still an unknown. The Dotcom bubble was reliant on lots of different organisations chasing different outcomes, whereas Bitcoin is built on a lot of people chasing the same goal. Whether this 'togetherness' will remain when the currency changes again.

Investors in Dubai are well placed to take advantage of the Bitcoin boom. With changes imminent and a further spike expected when the currency realigns itself again next month, it would make sense to check out the IG Dubai market, where UAE based investors can get advice and invest in cryptocurrencies.

What's next for Bitcoin investors?

Currently the majority of coins (supplies of which will eventually be exhausted) are being generated by Chinese miners using high-end supercomputers and software to generate coins faster. Bitcoin Gold is soon to be announced, a fork that will bring coin generation back to the homes of enthusiasts rather than in warehouses full of multi-million dollar equipment. The other huge change which could either make or break the existing system is the SegWit2x upgrade, which will effectively split the currency into two. Where the existing supports, developers and investors will go is still to be seen.

With an eventual slow rate of growth just like gold and a market cap that will eventually be reached, it is clear to see why investors are treating the two opportunities similarly. The big difference however is that gold won't split into two depending on which way the community wants it to. It seems that timing and the willingness to invest in something that is anarchical at its root, but lucrative in its nature that is making Bitcoin a better investment than gold currently.

We accept Guest Posts