Experts have expressed confidence Bitcoin will undoubtedly become the gold of the future. Here’s why Bitcoin is the millennial gold.
Several researchers and financial market experts have established Bitcoin can serve as a better inflation hedge than gold. As one professor claims, Bitcoin has replaced precious metals such as gold and diamonds in the minds of young investors. While most young investors lean towards Bitcoin because of its technological edge, market statistics also show gold’s performance has been diminishing over the recent years. Here’s the bitcoin pro website to transact Bitcoin.
2021 was gold’s worst year since 2015, losing 5.81% of its value. However, Bitcoin gained about 60% as the S&P 500 rose by about 30% in the same period. Bitcoin is currently the most valued crypto, attracting investors worldwide. However, most people do not understand why it is increasingly replacing gold. The following article explores Bitcoin’s unique qualities to determine why some experts consider it the millennial gold.
Diminishing Returns
People have regarded precious metals such as gold as the most lucrative instruments for value storage for decades. However, those sentiments have increasingly taken a different twist since the inception of cryptocurrencies. One of the reasons for the sudden change is gold’s diminishing returns in recent years.
Gold traditionally emerged as an asset class with a hedge against inflation, but it has recently failed to meet investors’ expectations. Gold demonstrated one of the worst performances in 2021, closing the year at $1,800. Meanwhile, Bitcoin had surged by up to 70% by the end of 2021. One expert says every government is printing too much money, making gold worthless. That resulted in several investors supporting Bitcoin over gold.
A Better Inflation Hedge
Today, many investors are confident Bitcoin can provide a better inflation hedge than precious metals, as hinted above. Governments can usually influence gold supply and usage in their economies, mainly through monetary policies. That leaves gold open to various inflationary risks that could negatively impact investors if the markets start to take a hit.
On the other hand, Bitcoin is a decentralized investment asset, not tied to any central entity. That means no government or institution can manipulate its supply and usage. While Bitcoin’s prices are highly volatile, its inventors put proper measures to safeguard investors against inflation. For instance, Bitcoin has only a fixed supply cap of 21 million tokens. Miners have currently minted about 19 million Bitcoin.
Bitcoin supply is also subject to halving, a process that reduces the number of rewards issued to miners by half every four years. That keeps Bitcoin scarcer while its market demand grows daily, allowing it to appreciate over time. Bitcoin’s decentralization and limited supply enable it to withstand inflation over time, replacing precious metals.
Many early institutional investors skeptical about Bitcoin have recently shown a growing interest in Bitcoin, accumulating huge reserves to diversify and protect their wealth from inflation.
Industry reports show huge sums of money have been flowing out of gold into Bitcoin recently, driving the inflation hedge stance.
Innovative Edge
The world is quickly moving towards a digitized economy, which has prompted young investors to seek alternative technology-based investments such as crypto. Unlike gold, Bitcoin is a virtual asset transacted exclusively online. Several young investors view Bitcoin as an intelligent investment asset, well-suited to the digital economy. It is an asset that anyone can use to store wealth in the short term or long term worldwide, without external intervention.
Although Bitcoin has unique characteristics from gold, they also share some advantages. Nevertheless, Bitcoin has significant growth potential and an innovative edge that makes it more attractive to young investors. Besides, Bitcoin also offers a better inflation hedge than precious metals such as gold.
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