Is Bitcoin a better investment than Gold? That’s what we would like to know in the context of 2020. Our Founder Wincent and CEO Clement each bought 1,000 grams of Gold and the equivalent in fiat value for Bitcoin. The objective is to take this apple to apple comparison in fiat value and see which asset delivers the greater ROI by the end of 2020.
As of writing this article the current bid price for an ounce of Gold is US$1,748 and the current price of Bitcoin is US$9,729. Bitcoin is currently in the lead with a ∆ of +1.28% versus +0.22% for Gold in the past 24 hours. But it truly is too early to tell how things will play out over the next 7 months.
Gold & Bitcoin Starting Prices
Result: Bitcoin Scores a K.O. Victory!
Which asset delivers the greater ROI in 2020, Bitcoin or Gold? To be honest, we surely have confidence in Bitcoin’s prospect, but the actual results made us overjoyed!
Boosted by an institutional-led rally, in mid-December 2020, Bitcoin surged past $20,000 to reach fresh all-time highs. It is currently trading above US$21,000 (17 Dec 12pm HKT). From a low point of around US$3,800 in March 2020, Bitcoin surged by more than 400% this year.
Back to the result of our experiment, Bitcoin recorded a 124% growth in the seven-month period, in contrast, the price of traditional safe-haven asset Gold, was up by merely 6.8%.
Thus in the great Gold VS Bitcoin (a.k.a. “Digital Gold”) debate, we can now determine the winner!
Why is Bitcoin Called "Digital Gold"
Bitcoin is often referred to as “Digital Gold” primarily because of its scarcity as well as the fact that it’s the original cryptocurrency. It’s also worth noting that from a production standpoint, after Bitcoin’s halving last week to 6.25 BTC per block mined. The rewards for Bitcoin mining match the annual output production wise for Gold. This means that all things held equal, they have effectively the same scarcity (production wise).
The Gold Standard
The U.S government used to hold US$35 per ounce of Gold. You could literally go to a bank and exchange your fiat to gold coins. However, in August 15th 1971, Richard Nixon’s administration changed everything. They abandoned the gold standard for the current fiat monetary system we have today.
When we launched this experiment, we expected Bitcoin to win the battle, based on the bullish signs in the market after the last Bitcoin halving event.
We firmly believe that Bitcoin will in fact be a better investment than Gold. This experiment is significant because in the last 7 months, we found that we are not alone, with investors of all types joining us looking at Bitcoin as a better performed store of value than Gold!
The market has seen an institutional-led rally boosting Bitcoin to reach fresh all-time highs in 2020! Beyond the price recovery, this represents the rebuilding of market confidence and investors’ faith.
For those who believe in the potential of crypto, Bitcoin’s institutional-led rally in 2020 begins a new phase in Bitcoin’s history!