Should You Invest in Cryptocurrency or Stick to Gold?

October 4, 2018 at 7:03 AM Leave a comment

In the last few years, cryptocurrencies have been on the ascendant, attracting all sorts of investors from around the world and plenty of discussions and interest on the matter. Bitcoin is the best-known cryptocurrency around the world, and its rapid rise in value comes as a direct result of more and more folks wishing to invest in it as major world currencies are going through a phase of value fluctuation due to political and economic factors. Brexit was only two years back and this adversely affected the value of both the pound and the Euro, while other major economies are going through turbulent times of their own. The dollar might be relatively strong right now, but the situation could change at any time. India also is a major economy, and in the last few months, the rupee has fallen to record lows that are simply unprecedented in the history of that country’s independence. It’s in this context that cryptocurrencies have really taken off, even if gold was traditionally what investors would go for in such circumstances. You may have also heard a lot about the Forex market, where investors can buy, sell, exchange, and speculate on currencies. Forex is a good investment, but it largely depends on how you trade.

Bitcoin has been a hot topic since the beginning of 2017, and is indeed that trend has not really slowed down as of yet. As the oldest and largest cryptocurrency, Bitcoin is also the best-known investment option. Yet as history has shown, Bitcoin has also been known to lose value and thus illustrates the point that cryptocurrency investors should not put all of their eggs in one basket. Other cryptocurrencies include Dogecoin, Litecoin, Manna, and Ethereum as well as a number of others that might be worth looking into – the important thing is to look at how a given currency is trading and to otherwise do your homework before investing much in it. After all, there are investors literally throwing millions of dollars into cryptocurrencies of questionable values – which could well pay off, but also is a huge risk that you shouldn’t put your life savings into.

Any given cryptocurrency is essentially just a chain of digital signatures stored in a public ledger, and that ledger is known as a blockchain. Blockchain technology is revolutionary at any rate, but having any money denominated in cryptocurrency means that you’ll also have a private key which is basically just an elaborate password that allows you to send that money to somewhere else. This system is kept secure from hacking attempts by having validators, which use one of several consensus mechanisms – typically proof-of-work or proof-of-stake. Depending on which cryptocurrency you’re talking about, it can either be created through mining (like Bitcoin) or simply through allocation (like Manna).

While cryptocurrencies might be a great investment option, it’s not as if gold has lost its sheen as the go-to choice in the face of economic uncertainty. The value of the Indian rupee has reached record lows in the last few months, and since Indians have traditionally invested their wealth in gold this will only create more demand in the world’s largest democracy. Since more demand means higher prices, it can only be expected that this precious metal will become all the more precious globally in such a scenario. Furthermore, the cryptocurrency boom is still in a bubble phase, and that bubble could burst at any time. Gold, on the other hand, has always been valuable and while it might fluctuate to an extent, is still a much more stable investment.

Ultimately, it seems that there’s still a lot of money to be made off of cryptocurrencies, even as China has banned exchanges and in spite of the potential bust that could happen at any time. If you stay on top of the current trends with cryptocurrencies, there’s a good chance that you can make a bit of money even if they’re uncertain for long-term investments. Since prices have risen rapidly, there is a definite risk of collapse at any time, so you should definitely do your homework before deciding to invest any significant amount in them. However, the technology in use is groundbreaking, and you can definitely see some huge short-term gains whilst the bubble lasts. Even in the long-term, some cryptocurrencies might very well succeed and so you should definitely consider investing in them. But if you’re looking for a more stable investment option in light of fluctuating exchange rates and uncertain economies, gold is a far safer bet. It all depends on the sort of investment that you want to make and how much risk you’re willing to take. After all, this so-called bubble could very well not actually be a bubble at all.

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