What are the similarities between Bitcoin and gold?

Due to their negative correlation with the performance of large economies, precious metals, Bitcoin and other commodity investments are often seen as safe havens from the risks of conventional paper currencies. 2014 was an unusual year for these alternative currency investments.

Strictly speaking, alternative currency investments do not always move inversely to conventional currencies, but generally speaking, this trend is true. When the dollar or the euro is troubled by various problems, investors usually choose more stable alternatives, and many investors choose to buy a large number of resources with a uniform pricing model, which are generally not affected by economic turmoil.

For most of the past 10 years, gold and silver have played the role of such resources. In the early days of Bitcoin, this new virtual currency also caught the tail of this trend for a time - its price surge in the second half of 2013 proved this. But in 2014, the recovery of the US economy seemed to change this situation: since January 2014, the prices of Bitcoin and gold have both plunged and hit their respective lows. The two have shown a similar trend.

Bitcoin is similar to gold in that both are viewed as alternative currencies of high value. But the two differ in supply: Bitcoin's supply is predetermined, while gold's supply (although ultimately finite) is still increasing as mining continues. But the comparison should not stop there, it should also extend to the way they are acquired. For example, Bitcoin is bought and sold over the Internet, while gold can now be bought and sold through independent websites, and from this perspective, gold is also like a virtual currency. Websites such as BullionVault provide investors from all over the world with access to a vast amount of precious metals through the Internet, and during this process, the gold is stored in warehouses without investors even seeing the gold bars. In other words, investors can choose to buy and sell gold through physical delivery, or just buy and sell it online, as Bitcoin does.

If we ignore the simple collection and storage issues and only consider the purpose of investment, Forbes contributor Michael Lingenheld believes that both Bitcoin and gold can help private investors to prevent the risks and controls associated with the conventional banking industry. For example, the banking industry can legally confiscate individuals' savings in banks, while there is no such risk in the virtual currency or precious metals market. These examples may be extreme, but they do represent some investors' concerns about transactions with the conventional banking industry, which makes alternative currency investments more attractive.

What makes Bitcoin different from gold is their future. Due to its unique characteristics, Bitcoin is being accepted as live currency in more and more online stores and venues, making Bitcoin not only an alternative investment, but also a currency in itself. Is this an advantage or disadvantage for Bitcoin? This question will take time to answer. But for now, Bitcoin and gold have much more in common than just price trends. In addition, their purposes, methods and even trends are the same.