Most wealthy people earn their nest eggs through one of two ways: inheritance or investment.
Recent statistics indicate roughly 40 percent of parents leave an inheritance for their children or other family members. Similar statistics indicate the average American’s inheritance — counting only those who actually leave assets behind to younger generations through wills — at roughly $177,000.
Such a sum of money is great and all, but it is certainly not enough for one to be considered wealthy.
Wealthy individuals accumulate and maintain wealth through investments, like stocks, bonds, and commodities — like gold — and, more recently, cryptocurrencies like Bitcoin.
However, although Bitcoin is considered a form of currency, one has to wonder if it has the potential to not only become a commodity, but to replace gold as well. To accurately answer that question, one must first understand what purposes both gold and cryptocurrencies like Bitcoin serve.
What is the difference between gold And Bitcoin?
Gold is a commodity, and the most popular precious metal that people invest in. Since 2010, the lowest price of gold was roughly $1,233 per ounce. The highest price from January 2010 through today came in the middle of 2011, when it scraped the bottom of $2,000 per ounce; today, gold as an investment holds a value of roughly $1,310 per ounce.
Over the past four years, gold has held a steadier price than ever before.
Bitcoin is a cryptocurrency, or, in other words, a digital currency. Despite Bitcoin’s classification as a currency, it is actually used primarily as an asset of value. Unlike gold, however, the price of bitcoin is extremely volatile.
The mother of all cryptocurrencies — Bitcoin — was founded in early 2009, but did not come into relatively widespread use until 2010. As such, a comparison of the cryptocurrency’s price to gold, as touched on above, is not fair.
Let us look at Bitcoin’s price in late 2013 — roughly $750 per coin. Over the next two years, it dropped as low as $240, though recently rose to $20,000 in late 2017. It fell as low as $6,000 just two months ago, but sits above $10,000 today.
But can it replace gold?
Gold is not used as a currency. Neither is Bitcoin, due to slow transaction times. However, other cryptocurrencies have quicker transaction times, making them viable for more widespread use than Bitcoin.
Will Bitcoin ever replace gold? For now, the only safe answer is perhaps. Although it is far more volatile than gold, Bitcoin is inherently utilized for different purposes and is likely to continue gaining credibility over time.