Some peculiar characteristics of Bitcoin have qualified the digital currency to substitute the position of money, currency or commodity depending on the preference of an individual.
Bitcoin is similar to gold
Considering its identity as a commodity, a lot of people have considered the cryptocurrency to be similar to gold. Like gold, Bitcoin is durable, transferable, divisible, scarce, recognizable and fungible. These are the qualities that define sound money.
Comparing Bitcoin to gold, Netcoins CEO Michael Vogel says that he has always viewed Bitcoin as a digital alternative to gold and that most investors that believe in gold as an investment will likely have similar feelings about Bitcoin.
“A sizeable portion of Netcoins’ virtual ATM customers regularly tell us that they also invest in gold,” says Vogel.
However, according to Panos Mourdoukoutas, a contributor at Forbes, Bitcoin has been beating gold by a big margin so far this year. The digital currency has more than doubled in value, while the yellow metal has gained 8.73 percent; and both assets outperformed the S&P 500 and the twenty-year US Treasury bonds.
Why Bitcoin is performing better
From a short-term view, anyone would agree that the digital currency may appear to be more attractive than gold as an investment vehicle.
The CEO of Nexxus Partners and owner of Nexxus University, Bob Wood, attributes this prevailing display to the fact that Bitcoin is still relatively new in the industry, therefore it is yet to find stability.
“Bitcoin is newer and more volatile than gold, so it has more potential for large swings. As the base of Bitcoin users grows it will become more stable. Bitcoin is in the early adopter phase where less risk averse investors can take advantage of higher potential returns on investment,” says Wood.
However, Wood notes that there is not much of difference between Bitcoin and gold as it relates to the true definition of sound money as is contained in the courses at his college.
There’s still more gas in the tank for Bitcoin
Vogel tells Cointelegraph that the recent events surrounding Bitcoin have made him more optimistic than ever before about the prospects of the digital currency.
“I am more bullish on Bitcoin than ever. In 2016 we’ve continued to see new use cases for Bitcoin, the latest being the bank note crisis in India which has led to a surge of people trying Bitcoin for the first time. What’s interesting with India is Bitcoin users there are looking to use Bitcoin out of necessity, as opposed to simply curiosity,” he says.
However, Vogel believes that the true value of Bitcoin is as a transaction medium rather than an instrument of speculation. “Still, as a Bitcoin fan, it’s amazing to see the price reach a multi-year high and a fantastic performance compared to traditional investment vehicles like stocks and gold.”
He concludes by acknowledging how valuable gold still remains in certain industries where Bitcoin has no application, such as electronics, dentistry and jewelry. However, as a method of payment and ability to move funds around the world, Bitcoin easily wins over gold every time.