Is Bitcoin a better store of value than gold? My opinion is: YES!
Bitcoin was originally created to be used as digital currency, but the high fee structure in transactions has really hampered its ability to be widely used. Gold has had a similar story, as it can also be a sort of financial medium, however, the constantly changing prices, inconvenience of use, and difficulty in changing it into other currencies has hampered its ability to be used as an alternate currency as well.
Gold has become a safe haven asset class, and I believe that is where Bitcoin will ultimately be put as well in many investors’ portfolios. The high cost of mining gold and declining availability worldwide with each ounce mined is similar to Bitcoin mining, with the algorithm on Bitcoin to produce less in the future with more computing power, and therefore cash, required.
With all the similarities of being a primary store of value between gold and Bitcoin (arguments can be made that there are other values to them which need to be considered), the question is which one will have a price increase at a higher rate. My opinion is that it will be Bitcoin, but the answer for me is supply and demand based.
Gold is out there to be found and mined. I do believe gold will go higher as the population increases and demand goes up accordingly, as well as inflationary costs in order to mine the gold itself. These factors make it so that I do believe demand will outpace supply and current sellers, which is the formula for a price increase in gold. However, I do believe that these demand increases will be slowed down by an increase in supply due to technology advancements, as gold can be found quicker and mined more efficiently as technology gets better. I look at Bitcoin as a “buyer demand vs sellers and new Bitcoin mined” equation as well. Similar to gold, I do believe Bitcoin demand will outpace current sellers and new Bitcoin coming to the market based on the mining. Demand will increase due to more knowledge, easier/safer options to hold Bitcoin, and greater adoption by the investment community as an alternative/safe haven asset class. There are certainly risks that would make Bitcoin not get to this point allowing sellers/miners to outpace demand, such as no wide adoption by the investment community, better alternatives, legal/regulatory restrictions, market sentiment (from stories/scams), and technology advancements.
I am of the belief that Bitcoin has a future with sensible regulations that will allow for adoption into investment portfolios and that demand will continue to outpace supply at a greater rate than gold. I am not sure what the best entry point is, but averaging in seems sensible, and holding Bitcoin as a store of value expecting increasing demand should pay off for those who are willing to make the investment, though the risk is certainly higher than holding gold at this point in history.
As always, these are my opinions and you should always do you own due diligence before making investments and never invest more than you can afford to lose.
Would love to hear your thoughts!
Brian