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.
|SPDR Gold Shares (NYSE:GLD)||8.73%|
|Bitcoin Investment Trust Shares (OTCQX:GBTC)||+107.42|
|iShares 20+ Year Treasury Bond||-0.59|
Source: Finance.yahoo.com 12/5/2016
Does this make Bitcoin a better long term investment than gold?
It’s hard to say, as past performance isn’t a guarantee for future performance, as the old adage goes in Wall Street. Besides, Bitcoin has been around for a short period of time.
Still Bitcoins have two advantages over gold. First, they can be used as a convenient medium of payments, though for a limited number of transactions, a function gold is missing. Second, the Bitcoin supply is expected to be limited to 21 million. The supply of gold, on the other hand, is expected to increase anytime its price rises, as it provides an incentive for gold miners to mine for gold.
To be fair, gold has its own advantages, too. It can be used as an outright gift, to make jewelry, and in manufacturing of certain products.
That’s why investors shouldn’t rush to substitute the yellow metal for the digital currency in their portfolio.