Bitcoin vs Gold as an Investment

Summary

Bitcoin and gold are both widely considered stores of value, but they serve different roles in an investment portfolio. Bitcoin is often referred to as "Digital Gold" by enthusiasts, and while supporters of each asset sometimes view them as rivals, the two share many properties. The choice between Bitcoin and gold depends on an investor’s risk tolerance, time horizon, and diversification strategy. Many investors choose to hold both assets to balance stability and growth. Platforms like iTrustCapital make it possible to buy and sell both Bitcoin and physical gold within a Crypto IRA or a Premium Custody Account for everyday investing.

What Is a Store of Value?

A store of value is an asset that retains purchasing power over time. Both Bitcoin and gold are considered stores of value because they maintain worth during periods of inflation, market volatility, or economic uncertainty.

Aside from annual returns, one of the most popular investment theses for precious metals like gold is its value as a store of wealth, or how well it retains buying power in the future. This is an especially important property in environments rife with inflation, market volatility, or economic uncertainty.

While gold doesn't provide positive returns year-over-year in terms of gold prices, its value as a store of wealth is largely attributed to consistent global demand. This is due to its limited quantity, as any new gold added to the circulating supply must be laboriously mined and extracted from the Earth. During times of inflation, assets such as gold with a limited supply cannot be quantitatively eased, making them viable stores of value.

However, using these same measures, Bitcoin may be a superior store of value. While gold's inflation is roughly 2% (meaning roughly 2% of the existing gold supply is mined every year), Bitcoin's annual inflation rate is lower. Bitcoin's monetary supply is programmatically halved every 210,000 blocks, or roughly every four years. As the laws of supply and demand dictate, Bitcoin's price historically tends to rise dramatically following halving events when its supply is reduced in conjunction with increasing demand. There will only ever be 21 million bitcoins in existence.

The April 2024 halving reduced the Bitcoin mining reward from 6.25 BTC to 3.125 BTC every 10 minutes. Historically, Bitcoin has entered bull market cycles following halving events, and many investors continue to watch for similar patterns.

How Does Portability Compare Between Bitcoin and Gold?

Bitcoin offers significant advantages in portability over gold. Bitcoin is easily divisible into precise fractions and can be sent digitally between two people on opposite sides of the planet in minutes.

Like gold, Bitcoin in its current form is not the most effective medium of exchange, but rather a valuable asset that maintains and even appreciates in value over time. In that sense, while some people do actively use it for transactions, it is largely purchased to accumulate rather than spend. But even as a medium of exchange, Bitcoin is far more fungible than gold ever has been.

Bitcoin requires no financial intermediary, third party, bank vault, armed security, paid overseas storage fees, underground hiding location in your backyard, or even shelf space in your home to be stored. It exists purely digitally on the decentralized Bitcoin blockchain and is unconfiscatable unless made otherwise by its owner.

What Are the Historical Returns of Bitcoin vs Gold?

Bitcoin has historically delivered higher returns than gold, though with greater volatility. The most important factor for any investment in a portfolio is its performance. For an asset to be a viable investment, it should be determined whether the asset can outperform an index fund of the benchmark S&P 500. Bitcoin has delivered strong historical returns in this regard.

Despite the high volatility during manic bull runs and depressive bear markets, the price of Bitcoin has grown from a fraction of a cent in 2009 to multiple figures in recent years. Bitcoin has been a lucrative investment for a variety of factors including its fixed supply, rapidly growing demand, decentralized infrastructure, faster transaction times and cheaper transaction fees than legacy financial technology, and global adoption. Past performance is not an indication of future results.

Why Do Younger Generations Prefer Digital Assets?

It's no secret that younger generations raised in the digital era have a natural attraction to digital assets. After all, they grew up on the internet with computers and smartphones, so why wouldn't they want their money to be digital, too? When posed with the prospect of owning Bitcoin or gold, surveys have found that a significant majority of Millennials prefer crypto to gold, with Gen Z also likely to be more taken with the digital asset than physical gold.

As younger generations with an eye toward technology and faster, frictionless payments continue to inherit wealth, they will likely continue to support growth and adoption in Bitcoin and other cryptos.

Start Investing in Bitcoin and Gold with iTrustCapital

Whether you're focused on long-term retirement planning or looking for a streamlined way to actively manage digital assets, choosing the right platform matters.

With iTrustCapital, investors can access both cryptocurrencies and physical precious metals in one place. Through a Crypto IRA, individuals can buy and sell assets in a tax-advantaged environment, helping align their portfolio with long-term retirement goals. For those seeking flexibility outside of retirement accounts, Premium Custody Accounts (PCA) offer a secure, closed-loop system for buying and selling crypto 24/7/

This dual offering allows investors to:

Diversify across Bitcoin, gold, and other digital assets
Choose between tax-advantaged or everyday investing strategies
Buy and sell assets 24/7

Platforms like iTrustCapital make it possible to build a diversified portfolio across both digital and traditional stores of value, all within a single ecosystem designed for accessibility and security .

Frequently Asked Questions

Is Bitcoin better than gold as an investment?

Bitcoin and gold serve different purposes in a portfolio. Bitcoin offers higher potential returns with greater volatility, while gold provides stability as a traditional store of value. Many investors choose to hold both assets for diversification, and at iTrustCapital you can purchase both. Past performance is not an indication of future results.

Why is Bitcoin called "Digital Gold"?

Bitcoin is called "Digital Gold" because it shares key properties with gold: scarcity, durability, and independence from centralized authorities. Bitcoin's fixed supply of 21 million coins mirrors gold's limited availability, making it attractive as a potential store of value. If you want to buy and sell Bitcoin, you can do so at iTrustCapital.

What is Bitcoin halving and why does it matter?

The Bitcoin halving is a programmed event that occurs approximately every four years, cutting the rate of new Bitcoin creation in half. This built-in scarcity mechanism reduces supply over time, which historically has coincided with price increases as demand remains steady or grows. If you want to buy and sell Bitcoin, you can do so at iTrustCapital.

Can I buy Bitcoin and gold in an IRA?

Yes, through a self-directed IRA platform like iTrustCapital, investors can buy and sell both Bitcoin and physical gold within the same tax-advantaged retirement account. This allows for diversification across both digital and traditional assets.

Can I invest in Bitcoin and crypto outside of an IRA?

Yes, investors can also use iTrustCapital’s Premium Custody Account (PCA) to buy and sell crypto outside of a retirement account. PCAs are designed for everyday investing with a secure, closed-loop structure that avoids connections to external wallets.

What are the tax advantages of holding Bitcoin in an IRA?

Holding Bitcoin in a self-directed IRA allows transactions to occur within the account without triggering immediate capital gains taxes. Depending on whether you choose a Traditional or Roth IRA, your investments may grow tax-deferred or potentially tax-free upon qualified withdrawal. If you want to buy and sell Bitcoin in an IRA, you can do so at iTrustCapital.

Is gold or Bitcoin safer during economic uncertainty?

Both assets are considered potential hedges against economic uncertainty. Gold has a longer track record as a safe haven asset, while Bitcoin offers digital portability and a fixed supply. Investors should consider their risk tolerance and investment goals when choosing between them. If you want to buy and sell Bitcoin or Gold in an IRA, you can do so at iTrustCapital.

How do I get started investing in Bitcoin and gold?

To invest in Bitcoin and gold within a retirement account, you can open a self-directed IRA through a platform like iTrustCapital. The process involves opening an account, funding it through a transfer, rollover, or contribution, and then buying and selling assets 24/7 through the platform.

Categories:

DISCLAIMER

This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.

iTrustCapital is a cryptocurrency IRA software platform. It is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not affiliated with and does not endorse any particular cryptocurrency, precious metal, or investment strategy.

Cryptocurrencies are a speculative investment with risk of loss. Precious metals are a speculative investment with risk of loss. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner. The self-directed purchase and sale of cryptocurrency through a cryptocurrency IRA have not been endorsed by the IRS or any regulatory agency. Historical performance is no guarantee of future results.

Some taxes and conditions may apply depending on the type of IRA account. Investors assume the risk of all purchase and sale decisions. iTrustCapital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrustCapital does not provide legal, investment or tax advice. Consult a qualified legal, investment, or tax professional.

iTrustCapital makes no representation or warranty as to the accuracy or completeness of this information and shall not have any liability for any representations (expressed or implied) or omissions from the information contained herein. iTrustCapital disclaims any and all liability to any party for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising directly or indirectly from any use of this information, which is provided as is, without warranties.