Observing Bitcoin’s growing popularity, Bidness Etc analyzes the advantages and shortcomings of the virtual currency and its similarities with Gold
Published: August 26, 2014 at 6:10 pm EST
By: Troy Kuhn
Bitcoin (BTC) has worked its way up to become a solid competitor to other forms of liquid assets like cash and checks. The virtual currency has grown significantly popular since its inception. Despite its unique identity, many associate it with gold.
Gold is a rare commodity. But so is Bitcoin. Their scarcity is one of the major reasons why they are more valuable than fiat currencies.
It is interesting how people in the Bitcoin community are also fans of gold, while at the same time, gold enthusiasts are not very fond of Bitcoins; they sometimes even vocally oppose Bitcoin trading.
Proponents of Bitcoin see it as an alternative to gold because they believe that an increase in capital investment in the currency will drive up the price of Bitcoins, even beyond that of gold, which makes Bitcoins a high-return investment.
However, high returns do not come without high risks . The volatile nature of Bitcoin is the reason why gold is more stable out of the two. The recent flash crash and the collapse of Mt. Gox are examples of how Bitcoin prices can sky rocket and then plummet within a short span of time.