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Gold or Bitcoin

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Some investors are starting to invest in cryptocurriences in lieu of gold and silver.  But is this trend really the way the investing world is going, and if so what does that mean for the physical precious metals?

Why Cryptocurrencies?

These e-currencies have been an interesting study as they started in the glittering vacuum of the internet superhighway and they quickly became the darling of the more elicit parts of the internet marketplace. The value of BitCoin (BTC), the most well-known of the internet currencies, has a worth that may surprise those who haven’t been following digital currency.  In March of 2017 the value of an individual bitcoin reached and then passed the value of an ounce of gold.
Cryptocurrencies share certain benefits with gold, including their independence from fiat currencies and lack of dependence on central banks. However, they also lack the solid, physical foundation of gold.  One of the greatest concerns of gold bugs is the trend moving us towards digital currency.  Hardly anyone carries cash anymore, and the birth of cryptocurrencies seems to be just one more move in that direction.2

What about Gold?

Gold has a few benefits above cryptocurrencies, starting with it being possible to hold gold in your hand, store it in a vault, or otherwise secure a physical asset rather than owning a purely ephemeral asset.  Add to that a pedigree of thousands of years that give it an incredible respectability as an asset and coin of exchange.  The entirety of human civilization has recognized the value of gold, and it’s unlikely that it will be disappearing as a valued asset anytime soon.

Further, advances in technology haven’t eliminated golds value, instead it has retained it as an investment.  Admittedly, recent events have shown a bit more volatility in gold than we’re used to.  This is due in part, in securitization that has permitted small quantities of gold to be traded easily, as well as the slow but steady growth of available gold as more is mined.

An Incredible Compromise: OneGram

Since the creation of the cryptocurrency, it’s always come down to a choice between investing in gold, or investing in cryptocurrencies, one simply could not simultaneously invest in both.  This is where OneGram comes in – a technology company that is partnered with GoldGuard.  Every token sold by OneGram is represented by one gram of physical gold, meaning you can invest in both a cryptocurrency and gold at the same time.

 OneGram came into existence in response to the growing Muslim population in the world a population that, until now, had been unable to invest in cryptocurrencies due to them not being compliant with Sharia Law.  The policies that OneGram operates under are in compliance with Islamic practice, opening the cryptocurrency market to the 1.8 billion Muslims in the world today.1

 OneGram isn’t the first company to do this, in March of 2017 US based company OzGonld.com launched in Austin, Texas with their cryptocurrency OZcoinGold, or OZG.  This company backed its currency with 600,000 ounces of gold, and has assayed reserves of 10 million ounces of gold.

Both of these companies are in excellent positions to hybridize gold-backed currency and digital currency, but only time will tell whether gold or cryptocurrencies, even gold backed ones, win out as the superior investment.2

 So Which Way to Go?

Ultimately this remains up to the investor, as each form of currency has its benefits.  Currencies like Bitcoin have been frozen in their quantity, there will purportedly never be more than 21,000,000 bitcoins in existence, making it immune to inflation.  Even Gold is susceptible to inflation, though not at nearly the rate of most fiat currencies.  Gold is constantly being mined, and the more that is up out of the ground and available for trade, the more the value of the metal is affected. Perhaps diversification is the answer?

Happy Investing!

Dr. Kal KoTECHa

 

  1. https://www.forbes.com/sites/rogeraitken/2017/05/02/dubai-trading-platform-onegram-in-500m-gold-backed-crypto-venture-sharia-compliant/#2e66b81bf56a
  2. http://www.thedailyeconomist.com/2017/03/bitcoin-vs-gold-how-about-new-crypto.html
  3. http://www.coindesk.com/bitcoin-gold-better-long-term-bet/

 

Currently, I am not currently an investor in OneGram or OZG nor do I own any crypotcurriences.

  

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