“Make new friends, but keep the old; one is silver and the other is gold.” The nursery rhyme really just doesn’t have the same ring when you change the word “gold” to “Bitcoin”, but according to a Bloomberg report, “buy Bitcoin” has become a more commonly googled phrase than “buy gold”.
Bitcoin’s surge over gold also comes at a time when the United States Stock Market is doing especially well–a factor that normally contributes to a dip in gold’s value. This is because gold is often used by stock investors as a sort of safe haven, a stable placeholder when the stock market gets rocky.
Research director Adrian Vash of the London-based BullionVault said in a recent report that in addition to the well-performing stock market, the “noise” around cryptocurrency is “distracting” investors. These two factors combined have “made interest from new gold investors the weakest since the metal’s half-decade price lows of end-2015.”
While the price of Bitcoin is extremely volatile, more and more investors are turning from traditional assets towards cryptocurrency. Despite its volatility, Bitcoin has risen more than 700% in value in just the past year, while gold has risen 11% over the same timeline – not a bad return in the world of traditional investing, but not comparable to Bitcoin. According to Bloomberg, Bitcoin’s growth was thirteen times the growth of the “best-performing commodity” that it was tracking.
Both Bitcoin and gold are continuing to be mined, though the mining process looks extremely different for each one. One Bitcoin is currently worth about US$7400; an ounce of gold is about US$1320. According to a report from Thomson Reuters GFMS, the estimated market cap for gold when all of the gold in the world has been mined is approximately US$7.07 trillion dollars.
Bitcoin’s future is very uncertain, but if the token value of Bitcoin manages to reach approximately US$33,700, the market cap for when all 21 million Bitcoins have been mined will match that of gold. Some analysts expect Bitcoin to reach US$10,000 before the end of the year.
All that being said, gold has “demonstrated reliability”, in the words of APMEX. The precious metal has been held and traded as a commodity for centuries, and that will not change overnight, no matter how quickly Bitcoin and cryptocurrency in general continue to skyrocket.